Cheapest MTD Software for Sole Traders (2025)
If keeping costs low is your priority, here's a clear comparison of the cheapest MTD-compatible accounting software options for sole traders — including what you get at each entry-level price point and the hidden costs to watch out for.
Last updated:
What is the Cheapest MTD Software Option?
The cheapest ongoing option for a sole trader who qualifies is FreeAgent — free with qualifying NatWest and RBS business accounts. If you don't bank with NatWest or RBS, the next most affordable entry-level plan is from QuickBooks Self-Employed at around £8/month, followed by Sage at £15/month, Xero at £16/month, and FreeAgent at £19/month when paying directly.
Bear in mind that the cheapest plan is not always the best value. Consider the features included at each price point and how much time you'll spend on manual data entry if key automation features (like bank feeds) are absent or limited.
Comparing Entry-Level Plans by Price
| Provider | Entry price/month | Free trial | Free option? |
|---|---|---|---|
| Sage | £0/mo | 30 days | Yes |
| QuickBooks | £10/mo | 30 days | No |
| Xero | £16/mo | 30 days | No |
| FreeAgent | £19/mo | 30 days | Free via NatWest/RBS |
#1 by price — from £0/month
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
#2 by price — from £10/month
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
#3 by price — from £16/month
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)
#4 by price — from £19/month
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
Hidden Costs to Watch
The advertised monthly price is rarely the whole story. Here are the most common additional costs sole traders encounter:
Payroll add-ons
If you employ even one person (including paying yourself a salary from a limited company setup), you may need a payroll add-on. Xero charges extra for payroll; QuickBooks includes basic payroll at some tiers.
Annual price increases
Most software providers increase their prices by 5–15% annually. Your starting price is unlikely to be permanent. Factor in future increases when comparing costs over a 2–3 year horizon.
VAT filing
If you're VAT-registered, check whether MTD for VAT submissions are included in your chosen plan. Some entry-level plans require you to upgrade to submit VAT returns.
Accountant access
Some providers charge for additional user seats if you want your accountant to have direct access to your account. Most do not charge extra for accountant access, but it's worth confirming.
Transaction limits on starter plans
Xero's Starter plan limits you to 20 invoices and 5 bills per month. If you exceed these limits, you'll need to upgrade. Check the transaction limits on any plan you're considering.
When “Cheap Enough” is Enough
For sole traders with simple finances — a single income stream, a handful of regular expenses, and no payroll — the cheapest plan from any HMRC-recognised MTD provider is likely to be entirely sufficient. You don't need advanced features if you don't have complex reporting needs.
The most important factors at the budget end are:
- HMRC recognition for MTD Income Tax (not just VAT)
- Bank feeds included (saves significant manual entry time)
- Quarterly MTD submission capability
- A mobile app for receipt capture
If you can tick all four boxes at the entry price, that's likely to be all you need as a basic sole trader.
Full guide: Best MTD software for sole tradersFind the Right MTD Software for Your Budget
Compare all four recommended providers across pricing, features, and MTD compliance in our full guide.