MTD Software for Sole Traders: All Options Compared
From April 2026, sole traders in scope for MTD must use HMRC-recognised software to keep digital records and submit quarterly updates. Here's a complete overview of your options — and how to choose the right one for your business.
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What is MTD Software and Why Do You Need It?
MTD-compatible software is any application that HMRC has recognised as capable of maintaining digital records in the required format and submitting quarterly updates directly to HMRC's Making Tax Digital API. Broadly, there are two categories:
- Full accounting software — platforms like Xero, QuickBooks, Sage, and FreeAgent that handle all aspects of your bookkeeping, invoicing, bank feeds, and tax submissions in one place.
- Bridging software— lighter tools that connect your existing spreadsheet or other records to HMRC's MTD API, handling the submission without replacing your current record-keeping method.
For most sole traders, a full accounting package is the most practical option — the automation features (bank feeds, receipt scanning, quarterly reminders) save time and reduce errors compared to managing a spreadsheet manually.
Our Top Picks
All four of these providers are HMRC-recognised MTD-compatible software for Income Tax. We've selected them based on their suitability for sole traders, MTD feature completeness, price, and ease of use.
Xero
From £16/month (Ignite plan). No free plan. 30-day free trial.
Smart, cloud-based accounting for growing businesses
Best for: Growing sole traders
- HMRC-recognised MTD software
- Strong mobile app
- Extensive integrations (800+ apps)
QuickBooks
From £10/month (Sole Trader plan). No free plan. 30-day free trial.
Powerful accounting with MTD built in
Best for: Sole traders wanting comprehensive features
- HMRC-recognised
- Feature-rich platform
- Good reporting and dashboards
Sage
Free tier available (Sage Sole Trader). Paid plans from £7/month. No bank account required for free access.
UK-built accounting with a genuinely free tier for sole traders
Best for: Sole traders wanting a free HMRC-recognised option
- Genuinely free HMRC-recognised tier for sole traders
- UK company with UK-based phone and chat support
- No bank account required to access free plan
FreeAgent
From £19/month (sole trader, direct). Free with qualifying NatWest, RBS, Ulster Bank, or Mettle business accounts.
Accounting built specifically for freelancers and sole traders
Best for: Freelancers and sole traders who want all-in-one MTD + Self Assessment
- Purpose-built for freelancers and sole traders
- Free with NatWest, RBS, Ulster Bank, or Mettle business accounts
- Self-assessment filing included in all plans
Browse by Need
Best MTD Software for Sole Traders
Our top-rated MTD software picks for sole traders in 2025 — ranked, reviewed, and compared by price, features, and ease of use.
Best Free MTD Software
Is there genuinely free MTD software for sole traders? We look at FreeAgent via NatWest/RBS, HMRC's own tools, and what 'free' usually means in practice.
Cheapest MTD Software
Entry-level plans from Xero, QuickBooks, Sage, and FreeAgent compared by price — and which hidden costs to watch out for.
Best MTD Software for Spreadsheet Users
Already using Excel or Google Sheets? Here's how to add MTD compliance without giving up your spreadsheet workflow.
Free vs. Paid MTD Software: A Quick Summary
The only truly free full-accounting MTD software for sole traders is FreeAgent, available at no charge to NatWest and RBS business account holders. All other major providers charge a monthly subscription starting from £14–£19/month.
Most providers offer free trials of 30 days. These can be a valuable way to test software before committing — particularly to check that the user interface suits you and that the software handles your specific income type correctly.
Bridging software (for those using spreadsheets) is generally cheaper than full accounting packages — often £3–£10 per month — but offers far fewer features. The total cost-benefit equation depends on how much time you spend on your books each month.
Full guide: Best free MTD softwareNot Sure Which Software to Choose?
Use our MTD eligibility checker to confirm whether you're affected — then compare software based on your needs.