Which accounting software for UK marketplace sellers handles MTD?

What to take away

HMRC recognises software for Making Tax Digital, not marketplaces, so no product carries an official Amazon FBA badge.
Every VAT-registered seller, including a voluntary registration, must keep digital records and file from compatible software.
Fee and settlement reconciliation separates a usable tool from a tidy ledger.
Making Tax Digital for Income Tax starts in April 2026 and uses a different software list.
Named options include Xero, QuickBooks Online, FreeAgent and Sage. Marketplace reconcilers include A2X and Link My Books. Self Assessment tools include GoSimpleTax and Untied.

What MTD for VAT asks of a marketplace seller

Making Tax Digital for VAT has applied to every VAT-registered business since April 2022. There is no smaller-business exemption. An eBay seller who registered voluntarily carries the same digital record duties as a limited company turning over millions.

MTD VAT digital record flow

Records in functional compatible software
Return sent from that software
Or via bridging product that reads it
Applies to every VAT-registered business
No smaller-business exemption

Records must sit in functional compatible software. The return must be sent from that software or through a bridging product that reads it. GOV.UK sets out what charging, reclaiming and recording VAT involves (Charge, reclaim and record VAT).

VAT returns are due one month and seven days after the end of the VAT period. A bridging product reads your digital records and sends the return data to HMRC without rekeying.

Registration comes before software choice

VAT registration is triggered by taxable turnover above £90,000 in any rolling 12 months, counted across all channels rather than per marketplace (GOV.UK, Register for VAT). HMRC raised that figure on 1 April 2024, so tests built on the old £85,000 number need redoing.

VAT registration and rate thresholds

£90,000rolling 12-month taxable turnover trigger
£85,000old threshold, tests need redoing
20%standard rate on most Amazon and eBay goods
5%a few categories

Most goods sold on Amazon and eBay carry the 20% standard rate. Books, children's clothing and most food are zero-rated, and a few categories sit at 5%. Marketplace fees are charged with VAT added, which a registered seller can reclaim where the underlying sale is taxable.

Named software options to compare

The table names real products. It separates ledgers that file VAT from apps that reconcile marketplace settlements. It also flags income tax tools, because MTD for Income Tax uses a different HMRC list.

Software by job to be done

Ledger that files VAT

Products: Xero, QuickBooks, FreeAgent, Sage
MTD VAT: Yes
Fee reconciliation: Via apps or CSV
Income tax: Check HMRC list
Pricing basis: Monthly by volume

Reconciliation app

Products: A2X, Link My Books
MTD VAT: No
Fee reconciliation: Amazon, eBay, Etsy
Income tax: No
Pricing basis: Monthly by order volume

Income tax tool

Products: GoSimpleTax, Untied
MTD VAT: No
Fee reconciliation: No
Income tax: Sole trader, property, dividend
Pricing basis: Per return or subscription

Type

Xero: Cloud ledger
QuickBooks Online: Cloud ledger
FreeAgent: Cloud ledger
Sage Business Cloud Accounting: Cloud ledger
A2X: Reconciliation app
Link My Books: Reconciliation app
GoSimpleTax: Self Assessment
Untied: Self Assessment

MTD VAT

Xero: Yes
QuickBooks Online: Yes
FreeAgent: Yes
Sage Business Cloud Accounting: Yes
A2X: No
Link My Books: No
GoSimpleTax: No
Untied: No

Fee reconciliation

Xero: Via A2X or Link My Books
QuickBooks Online: Via apps or CSV
FreeAgent: CSV or Link My Books
Sage Business Cloud Accounting: Via marketplace apps
A2X: Amazon, Shopify and eBay settlements
Link My Books: Amazon, eBay and Etsy to Xero, QuickBooks or FreeAgent
GoSimpleTax: No
Untied: No

Income tax

Xero: Check HMRC MTD IT list; Xero Tax is for accountants
QuickBooks Online: QuickBooks Self-Employed for some sole traders
FreeAgent: Self Assessment support
Sage Business Cloud Accounting: Separate Sage personal tax products
A2X: No
Link My Books: No
GoSimpleTax: Sole trader, property and dividend returns
Untied: Bank feeds and HMRC filing

Pricing note

Xero: Monthly plans by transaction volume. Typical entry tier around £15 to £30 ex VAT; higher tiers rise with invoice and bill counts
QuickBooks Online: Monthly plans, often discounted. Typical entry tier around £10 to £30 ex VAT; higher tiers by features and users
FreeAgent: Free with eligible NatWest, RBS or Ulster Bank account; otherwise typical monthly plan around £20 to £35 ex VAT
Sage Business Cloud Accounting: Monthly plans. Typical entry tier around £15 to £35 ex VAT; higher tiers by users and features
A2X: Subscription by monthly order volume. Typical entry tier around £25 to £50 ex VAT; higher tiers above a few hundred orders
Link My Books: Monthly plans by order volume. Typical entry tier around £20 to £40 ex VAT; higher tiers above a few hundred orders
GoSimpleTax: Pay per return or annual subscription. Typical return price around £15 to £50; annual plans cost more
Untied: Monthly or annual subscription. Typical monthly plan around £10 to £30; annual plans reduce the monthly equivalent

Which one for whom

Sole trader on eBay, low volumeQuickBooks Online or FreeAgent if you have an eligible bank account. Add Link My Books when eBay fees and payouts need reconciling.
Sole trader on eBay, higher volumeXero plus A2X or Link My Books. The extra reconciliation layer handles eBay invoices and refunds.
Limited company on Amazon FBA: Xero or Sage Business Cloud Accounting plus A2X or Link My Books. The company needs a ledger that files VAT and an app that reads Amazon settlement batches.
Mixed channelsXero plus A2X or Link My Books. Check each channel's fee treatment separately.
Income Tax only, no VATGoSimpleTax or Untied. Keep the VAT-capable ledgers for when registration arrives.

Shortlist checks

Match the software to the tax you file. HMRC publishes separate lists for VAT and Income Tax. Check Find software compatible with Making Tax Digital for VAT against the return you submit.
Reconcile one closed month by hand before buying. Export the settlement, bank receipt and fee invoice. See whether the trial account reproduces the net figure.
Write the disqualifying condition down first. Try selecting marketplace seller software through gates a candidate can fail before arguing about a demo you liked.

What to check before you pay

Fee treatment differs by channel. Amazon settles in batches and nets fees inside the payout. eBay invoices fees separately, so a tool that assumes one model creates a permanent reconciling item. Ask the vendor to show a closed month from a UK seller account, with refunds included.

Fixed monthly pricing on a seasonal account looks cheap in January and expensive in November. Check whether the tier is set by orders, listings or revenue. Sellers comparing net contribution rather than turnover spot this early.

Common questions

Can I file VAT from a spreadsheet?

Not on its own. A spreadsheet can hold digital records, but the return has to go through compatible software or a bridging product that links the sheet to HMRC.

Do I need marketplace-specific software, and do marketplace reports count as records?

No. Marketplace reports are the source data, not the record. The ledger still needs sales, fees, refunds and VAT treatment entered. The report rarely matches the bank account without adjustment.

A general bookkeeping product with a working marketplace app can pass the tests above. What decides it is whether the reconciliation survives a refund, a fee change and a month-end close. Profit analytics for UK marketplace sellers starts from that reconciled position.

Does MTD for Income Tax change which product I should buy?

It can. HMRC keeps a separate list for Income Tax software. The programme starts in April 2026 for the largest sole traders and landlords, with the threshold dropping in April 2027 (GOV.UK).