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Part of Which accounting software for UK marketplace sellers handles MTD?
Which accounting software for UK marketplace sellers handles MTD?
Compare Xero, QuickBooks, FreeAgent, Sage, A2X, Link My Books and tax filing tools for MTD VAT, Amazon and eBay fee reconciliation, and income tax.
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.
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).
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.
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.
| Product | Type | MTD VAT | Fee reconciliation | Income tax | Pricing note |
|---|---|---|---|---|---|
| Xero | Cloud ledger | Yes | Via A2X or Link My Books | Check HMRC MTD IT list; Xero Tax is for accountants | Monthly plans by transaction volume |
| QuickBooks Online | Cloud ledger | Yes | Via apps or CSV | QuickBooks Self-Employed for some sole traders | Monthly plans, often discounted |
| FreeAgent | Cloud ledger | Yes | CSV or Link My Books | Self Assessment support | Free with eligible NatWest, RBS or Ulster Bank account; otherwise monthly |
| Sage Business Cloud Accounting | Cloud ledger | Yes | Via marketplace apps | Separate Sage personal tax products | Monthly plans |
| A2X | Reconciliation app | No | Amazon, Shopify and eBay settlements | No | Subscription by monthly order volume |
| Link My Books | Reconciliation app | No | Amazon, eBay and Etsy to Xero, QuickBooks or FreeAgent | No | Monthly plans by order volume |
| GoSimpleTax | Self Assessment | No | No | Sole trader, property and dividend returns | Pay per return or annual subscription |
| Untied | Self Assessment | No | No | Bank feeds and HMRC filing | Monthly or annual subscription |
A product can appear on the HMRC list and still be wrong. The list records tax capability, not inventory, fee or payout handling. Test the shortlist against your own settlement files. The list also changes, so repeat the check at renewal.
The shortlist test, in three steps
- 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. selecting marketplace seller software through gates a candidate can fail is easier than 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 the marketplaces' own reports count as accounting records?
They are the source data, not the record. The ledger still needs sales, fees, refunds and VAT treatment entered. The marketplace report rarely matches the bank account without adjustment. 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).
Is marketplace-specific software necessary?
No. 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.