Best MTD Software for Sole Traders (2025 Guide)
We've reviewed every major MTD-compatible accounting package to find the best options for sole traders. Whether you're a freelancer, tradesperson, or consultant, here are our top picks — with honest assessments of pricing, features, and who each product suits best.
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Our Approach
Every product in this guide has been assessed against a consistent set of criteria including HMRC MTD recognition, price-to-feature ratio, ease of use for non-accountants, mobile app quality, support options, and specific suitability for UK sole traders. We do not accept payment for editorial rankings. Where we have affiliate relationships, these are clearly disclosed.
Pricing information is accurate as of March 2025. Software pricing changes frequently — always check the provider's website for the current price before subscribing.
Our Recommendations
Xero
Smart, cloud-based accounting for growing businesses
From £16/month (Ignite plan). No free plan. 30-day free trial.
Fully HMRC-recognised. Handles quarterly updates and EOPS automatically.
QuickBooks
Powerful accounting with MTD built in
From £10/month (Sole Trader plan). No free plan. 30-day free trial.
HMRC-recognised for MTD Income Tax. Self-employed plan ideal for straightforward sole traders.
Sage
UK-built accounting with a genuinely free tier for sole traders
Free tier available (Sage Sole Trader). Paid plans from £7/month. No bank account required for free access.
HMRC-recognised. Sage Sole Trader free tier handles MTD quarterly updates. Paid tier adds AI categorisation and more features.
FreeAgent
Accounting built specifically for freelancers and sole traders
From £19/month (sole trader, direct). Free with qualifying NatWest, RBS, Ulster Bank, or Mettle business accounts.
Fully HMRC-recognised for MTD Income Tax. Self-assessment filing is included in all plans — a real differentiator.
How We Chose These Products
Our shortlist started with all software products on HMRC's list of recognised MTD-compatible tools for Income Tax. We then filtered to those offering full accounting features (not just bridging) that are available to UK sole traders without requiring an accountant subscription.
Products were scored on six criteria, each weighted equally:
- MTD feature completeness (quarterly updates, EOPS, Final Declaration)
- Value for money at sole-trader plan level
- Ease of use for non-accountants
- Quality of mobile app and bank feed functionality
- Self-assessment / tax filing support
- Quality and accessibility of customer support
We also take into account user feedback, independent review scores, and any changes in features or pricing since our last review cycle. This guide is updated at least every six months.
What to Look for in MTD Software
When evaluating any MTD software product, the following features matter most for sole traders:
HMRC recognition for MTD Income Tax
Ensure the software is specifically recognised for MTD Income Tax — not just MTD for VAT. Check HMRC's published list.
Bank feeds
Automatic bank transaction imports save hours of manual data entry each quarter. Most major providers support Open Banking connections to UK high-street banks.
Receipt capture
The ability to photograph and categorise receipts via a mobile app makes keeping on top of expenses far easier.
Quarterly update submission
The software should handle the actual submission to HMRC and ideally provide confirmation that the submission was accepted.
Self-assessment / Final Declaration support
Some software (notably FreeAgent) includes self-assessment or Final Declaration filing at no extra charge. Others may require an additional step or accountant involvement.
Price transparency
Check what is included at each plan level. Some features (like payroll or multi-currency) may require a more expensive plan that you don't need as a sole trader.
Free vs. Paid: What's the Difference?
No major full-accounting MTD platform offers a genuinely free ongoing plan — other than FreeAgent via NatWest/RBS. Free trials are common (typically 30 days), but are time-limited.
The question to ask is not just “how much does it cost?” but “how much time will it save me?” A platform costing £20/month that automates bank feeds and receipt capture might save you several hours of admin per month — hours that have real value for a self-employed person.
Also remember that accounting software costs are an allowable business expense for sole traders, so the net cost after tax relief is lower than the headline price.
See our full guide: Best free MTD softwareReady to Choose Your MTD Software?
Compare all four recommended providers side by side — pricing, features, and MTD compatibility in one view.