Best MTD software for sole traders
Making Tax Digital for Income Tax is now live for sole traders earning over £50,000. Here's a plain-English guide to the best MTD software options in 2025/26, from free tools to full accounting packages.
9/16/20263 min read
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Best MTD software for sole traders
Making Tax Digital for Income Tax (MTD for IT) is now live. From April 2026, sole traders with gross income over £50,000 need to keep digital records and submit quarterly updates to HMRC using recognised software. The threshold drops to £30,000 from April 2027, and £20,000 from April 2028.
If you're above the current threshold, you need to be using MTD-compatible software now. If you're below it, it's still worth getting set up - switching software mid-year is more disruptive than getting the right tool in place early.
Our post on Making Tax Digital for Income Tax covers the full picture of who needs to act and when.
What does MTD software actually need to do?
To be MTD-compatible for Income Tax, software needs to:
• Keep digital records of your income and expenses
• Submit quarterly updates to HMRC
• Submit an End of Period Statement (EOPS) at the end of the year
• Submit a Final Declaration (replacing the old Self Assessment return)
All of the tools below are on HMRC's recognised list and can handle these requirements. The differences are in price, ease of use, and what else they include alongside the MTD functionality.
Free options
Pie Tax is a free app-based option that handles MTD quarterly updates and Self Assessment in one place. It's mobile-first and designed for sole traders with straightforward affairs. HMRC recognised.
TaxNav is a free browser-based tool - no download or installation required. Developed by the team that created the original MTD for VAT system, so the submission process is solid. HMRC recognised.
Untied has a free tier for simple cases, covering quarterly updates and Self Assessment filing. Paid tiers from around £4.99/month unlock more features. HMRC recognised.
VitalTax is a low-cost bridging tool (around £30/year including VAT) for sole traders who want to keep using a spreadsheet. It sits between your spreadsheet and HMRC, submitting your quarterly figures via the MTD API. A good option if you're comfortable with spreadsheets and don't want to move to accounting software.
We cover the spreadsheet option in more detail in our post on Can I use a spreadsheet for Making Tax Digital?
Mid-range options
Sage Sole Trader is free for non-VAT registered sole traders, with a paid plan at £7/month that adds receipt capture and multiple bank feeds. It's HMRC recognised, MTD-ready, and built specifically for this audience. The free plan is a strong starting point if you want proper accounting software without paying a subscription.
You can read our full Sage Sole Trader review for a detailed breakdown of what each plan includes.
Zoho Books has a free tier capped at 1,000 invoices and 1,000 expenses per year and paid plans from around £10/month. It's MTD compatible, includes bank feeds and invoicing, and offers good value at the lower price points. A solid choice if you're approaching the £35,000 threshold and want room to grow.
QuickBooks is one of the most widely used accounting tools for sole traders. It's MTD compatible, has a strong mobile app, and guides you through Self Assessment as well as quarterly updates. Plans start from around £10/month. No permanent free tier, but a 30-day free trial is available.
Full accounting packages
FreeAgent is particularly well suited to sole traders and freelancers. It's HMRC recognised, handles MTD quarterly updates and Self Assessment filing directly, and is free if you bank with NatWest, Mettle, RBS or Ulster Bank. If you do qualify for the free version, it's one of the best options available at any price.
Xero is a strong choice if you work with an accountant who already uses it, or if you expect your business to grow significantly. Plans start from around £16/month and include MTD compliance, bank feeds and invoicing. It's more than most sole traders need, but the quality is high.
You can compare all of these tools in our MTD Software directory, including pricing and key features for each.
How to choose
If your income is under £35,000 and you want something free: Zoho Books free tier or Pie Tax are both worth a look.
If you bank with NatWest, Mettle, RBS or Ulster Bank: FreeAgent is free and excellent - start there.
If you prefer spreadsheets and don't want to change your workflow: VitalTax gives you MTD compliance for around £30/year.
If you want something purpose-built for sole traders at low cost: Sage Sole Trader's free plan is a strong option.
If you want a full accounting package with a solid reputation: QuickBooks or Xero, depending on whether you're working with an accountant.
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