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Free MTD Software for UK Sole Traders 2026: Every Option Compared

Published 12 March 2026 · 10 min read · All prices verified March 2026

Making Tax Digital starts on 6 April 2026 and the accounting software companies want you to think you need to spend £15-30/month on their products. You don't — at least, not always.

There are genuinely free MTD-compatible options for sole traders. But "free" has nuances. Some are free forever, some are free trials masquerading as free software, and some are free but missing critical features.

This guide covers every free and ultra-low-cost MTD option honestly — no affiliate deals, no sponsorship, just what each tool actually gives you for £0.

Quick Comparison: Free MTD Options at a Glance

Software Truly Free? Bank Feeds Receipt Scan Invoicing MTD ITSA Best For
HMRC Free MTD Software ✅ Yes ❌ ❌ ❌ ✅ Simplest setup
QuickFile ✅ Yes* ✅ (paid add-on) ✅ (limited) ✅ ✅ Feature-rich free option
FreeAgent (via NatWest/RBS) ✅ If you bank there ✅ ✅ ✅ ✅ Best "free" overall
Monzo Tax Tool ✅ For Monzo users ✅ (Monzo only) ✅ Limited ⏳ Coming Already-Monzo users
Coconut Freemium ✅ ✅ ✅ ✅ Mobile-first freelancers
Spreadsheet + Bridging £0-100/yr ❌ (manual) ❌ ❌ ✅ Spreadsheet lovers

*QuickFile is free for businesses with turnover under £150k. Bank feed integration is a paid add-on (£4.50/month).

1. HMRC's Own Free MTD Software

100% FREE

HMRC MTD for Income Tax Service

HMRC offers its own free tool for MTD ITSA submissions. It's basic — very basic — but it does the job for simple sole traders. You can record income and expenses, categorise them by HMRC's required categories, and submit quarterly updates directly.

✅ Pros

  • Completely free, forever
  • Directly from HMRC — guaranteed compatible
  • Simple interface
  • No upselling or feature gates

❌ Cons

  • No bank feed integration
  • No receipt scanning
  • No invoicing
  • No mobile app
  • Manual data entry only
  • Basic reporting

Best for: Sole traders with very few transactions (under 20/month) who are comfortable with manual data entry and don't need invoicing software. Essentially, if you currently track everything in a notebook and only need to submit to HMRC, this works.

2. QuickFile

FREE (under £150k turnover)

QuickFile — Best Free All-Rounder

QuickFile is the most featured free option for UK sole traders. It's genuinely free for businesses with turnover under £150,000 — which covers the vast majority of sole traders. It includes invoicing, expense tracking, basic reporting, and crucially, MTD ITSA submissions.

✅ Pros

  • Genuinely free for most sole traders
  • Full invoicing (create, send, track)
  • Expense tracking with HMRC categories
  • MTD VAT and MTD ITSA support
  • Client portal for invoice payments
  • Multi-currency support
  • Receipt scanning (limited free tier)

❌ Cons

  • Bank feeds cost £4.50/month extra
  • Interface looks dated
  • Mobile app is basic
  • Learning curve for non-accountants
  • Some advanced features need Power User upgrade

Best for: Sole traders who want proper accounting software without paying monthly fees. Ideal if you send invoices, track expenses, and want MTD submissions handled in one place. The bank feed add-on is worth it if you do more than 30 transactions/month — £4.50/month is still far cheaper than Xero or QuickBooks.

3. FreeAgent (Free via NatWest, RBS, Ulster Bank, Mettle)

FREE with qualifying bank account

FreeAgent — Best "Free" MTD Software Overall

FreeAgent is normally £12-36/month, but it's completely free if you have a business account with NatWest, RBS, Ulster Bank, or Mettle. This makes it arguably the best value MTD solution available — you get premium software for £0.

If you don't bank with these providers, opening a Mettle account (NatWest's free digital business account) takes about 10 minutes and gets you FreeAgent for free.

✅ Pros

  • Full-featured premium software for free
  • Automatic bank feeds
  • Receipt capture via mobile app
  • Professional invoicing
  • MTD ITSA ready
  • Tax timeline and forecasting
  • Time tracking
  • Excellent mobile app
  • UK-designed for UK tax system

❌ Cons

  • Only free with qualifying bank accounts
  • Requires opening new bank account if you don't have one
  • Could lose free access if you switch banks
  • Less powerful than Xero for complex businesses

Best for: Any sole trader willing to open a NatWest/RBS/Mettle account. Seriously — even if you keep your main banking elsewhere, opening a Mettle account just for FreeAgent is worth it. You get a £36/month product for free. This is the recommendation for most people reading this article.

Pro tip: Open a free Mettle account, connect it to FreeAgent, and use it as your business transaction account. Keep your personal banking separate. You get free MTD software AND better financial separation.

4. Monzo Business Tax Tools

FREE for Monzo Business users

Monzo — Built-In Tax Tools

Monzo recently launched tax tools built directly into its business banking app. If you already use Monzo Business (free or £7/month Pro), you get transaction categorisation, expense tracking, and tax estimates baked into your banking app.

MTD ITSA submission support is expected but not yet confirmed as fully live. Monzo is working with HMRC to ensure compatibility.

✅ Pros

  • Built into your banking app — no separate software
  • Automatic transaction categorisation
  • Real-time tax estimates
  • Receipt capture via camera
  • Excellent mobile experience

❌ Cons

  • MTD ITSA submission not fully confirmed yet
  • Only works with Monzo transactions
  • Limited reporting and export options
  • Can't handle multi-bank income
  • New product — still maturing

Best for: Sole traders who already use Monzo Business and have simple finances (one income source, most transactions through Monzo). Wait for confirmed MTD ITSA support before relying on this as your only solution.

5. Coconut

FREEMIUM — Free plan available

Coconut — Mobile-First for Freelancers

Coconut offers a free tier that includes basic bookkeeping and expense tracking. It was designed specifically for self-employed people and freelancers, so the interface is simpler than traditional accounting software.

✅ Pros

  • Designed specifically for self-employed
  • Simple, jargon-free interface
  • MTD ITSA compatible
  • Open banking connections
  • Good mobile app

❌ Cons

  • Free tier is limited
  • Full features require paid plan (from £6.50/month)
  • Invoicing only on paid plans
  • Less established than Xero/QuickBooks

Best for: Freelancers who want something simpler than QuickBooks/Xero and don't mind the freemium model. Good stepping stone if you're not sure whether you need paid software yet.

6. Spreadsheet + Bridging Software

£0–100/YEAR

The DIY Option — Keep Your Spreadsheet

If you love your spreadsheet and don't want to learn new software, you can keep using it. You just need bridging software to submit your quarterly updates to HMRC's API.

How it works:

  1. Keep records in Google Sheets, Excel, or LibreOffice Calc
  2. Structure your spreadsheet with HMRC-required categories
  3. Use bridging software to read your data and submit to HMRC
  4. The "digital link" rule means data must flow digitally — no manual retyping

Bridging software options:

✅ Pros

  • Keep your existing workflow
  • Full control over your data
  • No monthly subscriptions
  • Works offline
  • Customisable to your needs

❌ Cons

  • Bridging software adds cost
  • No automated bank feeds
  • No receipt scanning
  • Manual data entry
  • Risk of spreadsheet errors
  • Need to structure spreadsheet correctly

Best for: Sole traders who are comfortable with spreadsheets, have relatively few transactions, and want to avoid monthly software costs. Works well combined with our Tax Tracker Spreadsheet which is pre-structured for HMRC categories.

📊 Tax Tracker Spreadsheet — £7

Pre-built for MTD compliance. HMRC-standard expense categories, automatic tax estimates, quarterly summary view. Works with bridging software for digital submissions. One-time purchase — no monthly fees.

Get the Tax Tracker →

The Verdict: Which Free Option Should You Choose?

🏆 Our Recommendation by Situation

If you bank with NatWest, RBS, or don't mind opening a Mettle account:
→ FreeAgent is the clear winner. Premium software for £0. No contest.

If you want genuinely free software without changing banks:
→ QuickFile is the best free all-rounder. Add bank feeds for £4.50/month if you need them.

If you have very simple finances and just need to submit:
→ HMRC's free tool does the minimum required. No frills, but it works.

If you love spreadsheets:
→ Keep your spreadsheet, use bridging software (£50-100/year), and you're sorted.

If you're not sure what you need:
→ Start with QuickFile (free, full-featured enough to grow with). If you outgrow it, switch to a paid option later. MTD software migration is possible — you're not locked in.

What About the Cheapest Paid Options?

If free options aren't quite enough, here are the cheapest paid alternatives:

Software Cheapest Plan After Intro Offer Key Extra
QuickBooks Sole Trader £10/month £10/month Strong bank feeds
Sage Accounting Start £12/month £12/month Sage ecosystem
FreeAgent £12/month £24-36/month UK tax focus
Xero Starter £15/month £15/month Most integrations
Coconut Pro £6.50/month £6.50/month Simplest interface

For a deeper dive into what these cost after introductory discounts expire, read our MTD software real costs guide.

Common Mistakes When Choosing Free MTD Software

  1. Choosing "free" then hitting a paywall at submission time. Some tools are free for record-keeping but charge for MTD submissions. Always check that quarterly updates and Final Declaration are included in the free tier.
  2. Ignoring the bank feed question. Manual data entry is free but time-consuming. If you do 50+ transactions per month, paying £4.50/month for bank feeds saves hours. Factor in your time cost.
  3. Starting with complex software you don't need. If you're a simple sole trader with one income source, you don't need Xero. Start simple, upgrade later if needed.
  4. Not considering your accountant's preferences. If you use an accountant, ask which software they prefer. Many accountants offer discounted rates if you use their preferred platform because it makes their job easier.

For all 10 common MTD mistakes, see our complete MTD mistakes guide.

🛡️ MTD Readiness Toolkit — £14

Not sure which software to pick? Our toolkit includes a software comparison decision matrix, setup checklist, quarterly submission templates, and HMRC category reference. Get MTD-ready in one afternoon.

Get the MTD Toolkit →

Final Thought

Don't overpay for MTD software. For most sole traders, a free or near-free solution is perfectly adequate. The accounting software companies are using the MTD deadline to drive signups — understandably — but you have options.

The best time to set up your MTD software was last month. The second best time is today. Pick one, set it up, log some transactions, and you're ready for April.

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Disclaimer: This comparison is based on publicly available pricing and features as of March 2026. We have no affiliate relationships with any software mentioned. Pricing and features may change — always verify directly with the provider before purchasing.