Best accounting software for UK sole traders under MTD

For UK sole traders the cheapest compliant route is usually free: FreeAgent costs £0 with a NatWest, RBS, Ulster Bank or Mettle business account, and Sage Sole Trader has a free tier. Paid, Sage charges £7 a month and Xero Ignite £18, both excluding VAT on 12 September 2026. Non-VAT-registered traders cannot reclaim that VAT, so Ignite really costs £21.60.

Do you actually need software this tax year?

Making Tax Digital for Income Tax became mandatory on 6 April 2026 for sole traders and landlords whose qualifying income was over £50,000 on their 2024/25 return, per HMRC’s guidance on choosing compatible software retrieved 12 September 2026.

Qualifying income is gross, not profit

Qualifying income is gross self-employment and property income combined, before expenses. That is the single most common misreading of the threshold, and it pushes people into scope who assumed their profit figure kept them out.

If you are not in the first wave yet

The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. More than 864,000 people were in the first wave, whose opening quarterly update was due by 7 August 2026, per HMRC’s own deadline notice.

Software being HMRC-recognised does not make you compliant — the obligation stays with you. Confirm your own position through HMRC’s eligibility check or an accountant; this page records published prices and terms, and is not tax advice.

The four products worth considering

Two of the four have a genuinely free route, and both are worth checking before you compare paid plans.

The £0 routes

FreeAgent is free if you hold a business current account with NatWest, Royal Bank of Scotland or Ulster Bank, for as long as you retain the account — or a Mettle account with at least one transaction a month, per FreeAgent’s pricing page retrieved 12 September 2026. Optional add-ons remain chargeable.

Sage Sole Trader has a permanently free tier for non-VAT-registered sole traders alongside its paid tier, per Sage’s sole trader product page retrieved the same day.

The paid shortlist

Xero, QuickBooks Sole Trader Plus, and the paid tiers of FreeAgent and Sage. All four appear on HMRC’s list of compatible products.

What we left out

Bridging tools and spreadsheet add-ons, because they solve filing without solving record-keeping.

What each one costs a sole trader

Standard monthly prices, the same figures with VAT added, and our twelve-month total. Introductory offers are excluded deliberately — every one of them is withdrawable.

🗓️ Pricing verified 12 September 2026. Software pricing changes frequently — confirm on the vendor’s site before purchasing.

The VAT column and the annual totals are ours, not the vendors’. Each is the published monthly figure multiplied by 1.2, then by twelve. The inputs come from Xero’s UK pricing page, FreeAgent’s pricing page and Sage’s MTD page for sole traders, all retrieved 12 September 2026.

⚠️ This Costs You: Xero’s UK prices rose on 1 September 2026, so any comparison published before then understates them. We cover what moved and by how much in our note on the UK price increase; the full Xero rate card and what leaving costs sit in our Xero pricing and exit guide.

We could not verify QuickBooks’ price. Intuit’s UK sole trader pricing page loads its figures in the browser rather than in the page, so nothing rendered to capture on 12 September 2026. We are not publishing a number we could not see; check it on Intuit’s page directly.

Where the cheap plans stop working

Each cheap option has one ceiling that decides whether it stays cheap for you.

Caps on the free and entry tiers

FreeAgent processes up to ten receipts and bills a month through Smart Capture as standard; unlimited use is a £5 monthly add-on excluding VAT, per its pricing page retrieved 12 September 2026. Xero Ignite’s invoice and bill ceilings are the ones sole traders hit first — we set out where they bite in our breakdown of Xero’s plan limits.

VAT registration changes the answer

QuickBooks states plainly that VAT submission to HMRC is not available on its Sole Trader plan; VAT-registered traders need Simple Start or higher. Sage Sole Trader is built for non-VAT-registered traders, and Xero Simple is too — its page directs anyone sending more than ten invoices to Ignite.

Whether Sage’s free tier submits quarterly updates, or only prepares them, is not settled on Sage’s own page. Confirm it with Sage before relying on the free tier for filing.

Which one fits your situation

You bank with NatWest, RBS, Ulster or Mettle

Claim FreeAgent. You are already entitled to it, and paying for a subscription elsewhere buys you nothing you do not already have.

You invoice rarely and are not VAT-registered

Start with Sage’s free tier, and move to its paid tier if you need the automation.

You are VAT-registered

Rule out the sole-trader-only products. Xero Ignite submits VAT returns; QuickBooks Sole Trader Plus does not.

Your accountant already uses one

Ask them first. Matching their platform usually saves more in their time than any price difference here saves you.

✅ Do This: Check which bank your business account is with before you compare anything else. For a large share of UK sole traders that single check ends the decision.

What switching actually costs you

Notice periods and auto-renewal

Xero subscriptions auto-renew monthly until cancelled, and its Simple plan carries a one-month notice period — cancelling does not stop the next charge, it starts the notice. We cover how that works in our piece on Xero’s cancellation notice. QuickBooks cancellations take effect at the end of the billing period with no pro-rated refund, per Intuit’s published terms retrieved 12 September 2026.

Switching mid tax year

Your digital records have to cover the whole tax year, so moving in month seven means carrying the earlier figures into the new product. That is the real cost of switching, and it is paid in hours rather than pounds.

🧾 Not Tested: No product here was used first-hand. We hold no paid subscription, no UK sole-trader HMRC account and no UTR, so nothing below the surface of each vendor’s public pages has been seen. Two prices could not be captured at all and are marked as gaps rather than estimated.

Frequently asked questions

What to do next

Check your bank first, because that may end the question at £0. If it does not, the shortlist is short: Sage’s free tier, Sage at £7, or Xero Ignite at £18, both excluding VAT on 12 September 2026. Two prices in this article could not be captured and are marked as gaps.