Free vs Paid MTD Software: Is There a Genuinely Free Option?

Is Free MTD Software Really Possible?

One of the most common questions we hear from sole traders preparing for Making Tax Digital is whether free software actually exists. The short answer is: yes, in some circumstances. But for most sole traders, genuinely free MTD software is either not available or too limited to be practical. Understanding the landscape will help you make the right choice for your situation.

There is a meaningful difference between "free" software and software that is free to try. In this article, we focus only on options that are sustainably free — not just for a trial period.

FreeAgent: Free with NatWest or RBS

FreeAgent is the most compelling genuinely free option for MTD. If you hold a business bank account with NatWest or Royal Bank of Scotland — including the free Mettle account — you are entitled to FreeAgent at no monthly charge. This is a full-featured accounting package specifically designed for freelancers and sole traders.

FreeAgent includes bank feeds, invoicing, expense tracking, MTD quarterly update submission, and Self Assessment filing support. It is HMRC-recognised and handles all your MTD obligations. If you already bank with NatWest or RBS, or are willing to switch, this is the strongest free option available.

Read our full FreeAgent review

HMRC's Basic Tools

HMRC does not build its own full accounting software, but it maintains a list of approved third-party products — some of which offer free or very low-cost tiers. These are primarily aimed at sole traders with the simplest finances: one income stream, minimal expenses, and no need for invoicing or detailed reporting.

The functionality of these free HMRC-approved tools is deliberately basic. They allow you to record income and expenses in prescribed categories and submit quarterly updates to HMRC. If that is genuinely all you need and you are comfortable with a minimal interface, they are worth exploring. For anyone who needs invoicing, bank feeds, or financial reports, they fall short.

Free Trials: Not the Same as Free

Every major paid MTD software provider offers a free trial, typically lasting 30 days. Xero, QuickBooks, Sage, and FreeAgent all have trial periods, and some promotional offers extend these. However, once the trial ends, you must subscribe or your access is suspended.

Trials are excellent for evaluating software before committing — we strongly recommend using them. But they should not be confused with a free ongoing solution. If you start using a trial and decide not to subscribe, export your data before access ends.

What Paid Software Gives You

Paid MTD software typically starts from around £8 to £15 per month for a basic sole trader plan. For this, you usually get bank feeds (automatic transaction import from your bank), invoicing, expense categorisation, MTD quarterly updates, and Self Assessment support. Mid-range plans add features like multi-currency support, more detailed reporting, and accountant collaboration tools.

The time saved by a bank feed alone — which can automatically categorise dozens of transactions per month — often outweighs the cost of a subscription for most sole traders. When you factor in reduced errors and faster year-end processes, the value proposition of paid software is strong.

Provider	Starting price	Free option?
FreeAgent	£19/month	Yes — free with NatWest/RBS
QuickBooks	£8/month (Self-Employed)	Trial only
Sage	£14/month	Trial only
Xero	£16/month	Trial only

Prices as of January 2025. Always check provider websites for current pricing and promotions.

Our Verdict: When Free is Enough

Free MTD software is genuinely enough in a few specific circumstances: if you bank with NatWest or RBS and can use FreeAgent, or if your finances are extremely simple and you are comfortable with a basic HMRC-approved tool. For everyone else, a paid subscription is likely a better investment.

The good news is that paid MTD software does not have to be expensive. At £8 to £15 per month, a quality sole trader accounting package costs less than a business lunch and will save you significantly more time than that each month. Use our free Software Chooser to find the best match for your budget and situation.