HMRC’s new Making Tax Digital scheme came into effect on April 1, which means that all subsequent filings from VAT-registered businesses in the UK must use accounting software or a bridging tool to file online via the MTD portal, as well as keeping compliant records of VAT transactions.
The easiest way to ensure that you’re compliant is by using online accounting software to ensure that your books are kept correctly, automatically track VAT in your transactions and which, once linked to your MTD account, allows you to make your monthly or quarterly VAT returns in a couple of clicks.
Here, we’ve highlighted some of the best MTD-compliant accounting suites for small and medium businesses in the UK, between them suited to a wide range of budgets and requirements.
QuickBooks is an absolutely top-notch accounting suite, with features that include time tracking and full payroll with support for PAYE income tax and deductions for staff, billed at £1 per employee per month.
Bank accounts can be linked for automatic syncing or, with a bit of fiddling, added to your Chart of Accounts by hand so you can manually upload statements. It’s extremely polished and comfortable to use, with one of the best web interfaces we’ve seen in an online accounting suite and a similarly efficient mobile app.
Note, though, that QuickBooks’ entry-level £8 per month Self-Employed tier doesn’t support MTD VAT filing and its higher tiers don’t support self-assessment. This means that Quickbooks is a better choice for bigger SMEs, while sole traders and freelancers should look at alternatives such as FreeAgent.
Charities and rights organisations should also be aware that there’s a cloud over Intuit’s ethical credentials due to its US lobbying efforts to keep the government from allowing private citizens to file personal taxes online without the use of commercial software such as their own TurboTax product.
Price when reviewed
QuickBooks Essentials: £15 per month (exc VAT)
QuickBooks Plus: £22.50 per month (exc VAT)
Read our full Intuit QuickBooks review for more information.
Unlike some services, which restrict the number of clients or invoices you can work with at cheaper tiers, FreeAgent’s UK subscription tiers give you everything your businesses can legally take advantage of, with no other restrictions. Its interface and documentation are also excellent and we were very pleased to find that FreeAgent, almost uniquely, uses UK data centres.
Thanks to integrated self-assessment submissions, it’s extremely well suited to sole traders and freelancers, whether in service or sales-based industries, while its tier for limited companies includes full real-time payroll filing and PAYE support.
Other features include project and time management, bank account linking and manual account and statement tracking for transaction reconciliation, multicurrency support across all tiers and a detailed automated reminder system for overdue invoices.
Its pay-monthly price is a little more expensive than rivals such as FreshBooks and QuickBooks but, for VAT-registered small businesses, the features FreeAgent provides mean that you’ll never outgrow your accounting software and you won’t have to pay for extra bolt-ons.
Price when reviewed
Sole Traders: £19 per month (exc VAT)
Partnerships: £24 per month (exc VAT)
Limited companies: £29 per month (exc VAT)
Read our full FreeAgent review for more information.
A wealth of features at even lower subscription tiers, along with the already-great value pricing, makes Zoho Books a very worthwhile choice for small businesses on a budget.
It provides an excellent set of tools for managing your business’s incomings, outgoings and VAT. Its top Professional tier is particularly good for sales-oriented businesses that need inventory tracking. Multicurrency support, time tracking and MTD-compliant VAT returns are present at all tiers. The only major downside is that it doesn’t have any kind of payroll facility – you’ll have to rely on third party software or services for this.
Its entry-level Basic tier is limited to 50 contacts – customers or suppliers – but includes both bank linking and manual statement upload for transaction reconciliation, custom invoices, expense tracking, projects and timesheet. The Standard tier increases your contact limit to 500 and adds support for more automated workflows and modules, plus the ability to log bills, issue vendor credits, use reporting tags, require purchase approval and receive SMS notifications.
The top end Professional tier has unlimited contacts,10 user seats, purchase and sales order, an inventory for basic stock control and support for a custom domain name.
Its interface is a little more complex than some of its rivals, but Zoho Books doesn’t skimp on features. If you can do without integrated payroll, this one of the most cost-effective ways to track your finances and make sure you’re MTD-compliant.
Price when reviewed:
Zoho Books Basic: £5 per month (exc VAT)
Zoho Books Standard: £10 per month (exc VAT)
Zoho Books Professional: £15 per month (exc VAT)
Read our full Zoho Books review for more information.