Making Tax Digital: is QuickBooks right for you?
How QuickBooks Online handles MTD for VAT and Income Tax, which plan to choose, what it does well, where it falls short, and how it compares with Xero.
PFC Accountants and Business Advisors
The short answer
QuickBooks Online is a good choice if you want detailed reporting, strong invoicing and a mobile app for receipts and mileage. It’s HMRC‑recognised for Making Tax Digital. Choose the plan carefully: the Sole Trader Plus plan can’t file VAT returns and doesn’t offer payroll, so VAT‑registered businesses and employers need Simple Start or above.
Is QuickBooks compatible with Making Tax Digital?
Yes. QuickBooks Online files VAT returns to HMRC under MTD for VAT, with an error check before you submit, and offers HMRC‑recognised options for sole traders and landlords under MTD for Income Tax. As with any product, you can check it on HMRC’s software finder.
What QuickBooks does well
- Invoicing. Professional invoices with payment reminders, and you can see when a customer has viewed one.
- Receipts and mileage on the go. Snap receipts and track business journeys in the QuickBooks mobile app.
- VAT and CIS. VAT returns are filed from Simple Start and above, with an error check before you submit. Construction Industry Scheme deductions are supported too; check which plan you need.
- Payroll. Add QuickBooks Payroll (an extra cost, from Simple Start up) to run pay, payslips and RTI submissions in the same place.
- Reporting. A wide range of reports, with more detail and customisation on the higher plans.
- Support by phone and chat. QuickBooks lists phone support on weekdays and live messaging seven days a week.
Which QuickBooks plan?
| Plan | Good for | Worth knowing |
|---|---|---|
| Sole Trader Plus | Sole traders who aren’t VAT registered, with no employees | Can’t file VAT returns; no payroll add‑on |
| Simple Start | VAT‑registered small businesses | VAT returns, CIS, and payroll as an add‑on |
| Essentials and Plus | Growing businesses | More features, and 3 or 5 users |
| Advanced | Larger businesses | The fullest reporting and features, up to 25 users; payroll is an add‑on |
Where QuickBooks may not suit you
- A learning curve. There’s a lot in it, and without some guidance at the start it’s easy to set things up in a way that causes problems later.
- Picking the wrong plan. Starting on Sole Trader Plus and then registering for VAT or taking on staff means changing plan.
- Costs as you grow. More users and features mean moving up a plan, and payroll is an extra.
QuickBooks or Xero?
Both are solid, HMRC‑recognised choices, and the right one depends on how you work. QuickBooks suits people who like detailed reports and want phone support from the provider. Xero suits people who value a clean dashboard, automatic bank reconciliation and a large app marketplace. Read Making Tax Digital: is Xero right for your business? to compare.
How PFC can help
We’re certified in QuickBooks Online Advanced, and we also work with Xero and FreeAgent, so we can recommend the product and plan that fit rather than the one we prefer. We can set it up, move your records across, train you, and handle your bookkeeping, VAT and MTD submissions. Book a free consultation to talk it through.
Common questions
Is QuickBooks recognised by HMRC for Making Tax Digital?
Yes. QuickBooks Online files VAT returns under MTD for VAT and has HMRC‑recognised options for MTD for Income Tax. You can check it on HMRC’s software finder.
Can the QuickBooks Sole Trader Plus plan file VAT returns?
No. QuickBooks says VAT submission isn’t available on its sole trader plan, so VAT‑registered businesses need Simple Start or above.
Does QuickBooks do payroll?
Yes, with QuickBooks Payroll added to Simple Start or a higher plan, at extra cost. It isn’t offered on Sole Trader Plus.
Can I switch from QuickBooks to Xero, or the other way?
Yes. Your balances and records can be moved, ideally at the start of a VAT quarter or financial year. We can do the move for you.
Sources
- QuickBooks UK — plans and pricing
- GOV.UK — Find software that works with Making Tax Digital for Income Tax
- GOV.UK — Choose the right software for Making Tax Digital for Income Tax
This article is general information, correct as at 25 October 2026. It isn’t advice for your circumstances, and tax rules change. Please speak to us before acting on it.
