Yes, free Making Tax Digital software exists. Several HMRC-recognised products let UK sole traders and landlords keep digital records and submit quarterly updates at no cost, though most free tiers come with limits on income sources, transaction volume, or which bank you use. This guide covers the genuinely free options, what each one actually includes, and how to check any product against HMRC’s official list before you commit.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD ITSA) is HMRC’s system that replaces the annual Self Assessment tax return with digital record-keeping and quarterly updates. Instead of filing one return a year, you record income and expenses digitally and send HMRC a summary four times a year, followed by a Final Declaration.
This is different from Making Tax Digital for VAT, which has applied to all VAT-registered businesses since April 2022. MTD for Income Tax is newer and applies specifically to sole traders and landlords based on how much they earn, not on VAT registration. If you’re setting up record-keeping for the first time, it’s worth reading our guide on sole trader record keeping requirements UK alongside this one, since MTD builds directly on those basics.
Do You Need to Comply — and From When?
You need MTD-compatible software if you’re a sole trader or landlord with qualifying income above the current threshold. HMRC measures qualifying income as turnover before expenses, based on your 2024 to 2025 tax return, not your profit.
The rules are phasing in over three years:
| Tax Year | Qualifying Income Threshold | Applies From |
|---|---|---|
| 2026/27 | Above £50,000 | 6 April 2026 |
| 2027/28 | Above £30,000 | 6 April 2027 |
| 2028/29 | Above £20,000 | 6 April 2028 |
HMRC estimates around 864,000 sole traders and landlords fall into the first phase. By mid-August 2026, more than 570,000 had signed up and over 436,000 had submitted a first quarterly update. HMRC is now signing up remaining eligible taxpayers in stages from September 2026.
If you’re below the threshold, you can carry on filing Self Assessment as normal for now, though it’s worth checking your position each tax year as the limits fall. If you haven’t registered for Self Assessment yet, our walkthrough on how to register for Self Assessment UK covers that first step.
Is There Genuinely Free MTD Software?
Yes, but “free” almost always comes with a condition attached. HMRC doesn’t build or provide its own software — every submission has to go through a commercial product on HMRC’s recognised list. Providers offer free versions to attract customers who may later need paid features, so the free tier is usually capped in one of these ways:
- Income source limits — free for sole trader or landlord income, but not both together
- Transaction or invoice caps — a fixed number of invoices or receipts per month
- Bank account tie-ins — free only if you bank with a specific provider
- Feature restrictions — quarterly updates included, but the Final Declaration or payroll costs extra
None of this means free software is a compromise. For a sole trader with one income source and modest transaction volume, a free plan is often genuinely sufficient for years.
Best Free MTD-Compatible Software
Clear Books
Clear Books offers a free plan for sole traders and landlords with no income threshold or qualifying condition to unlock it. It includes invoicing, bank feeds, receipt capture, profit and loss reporting, and one-click quarterly updates to HMRC. It’s on HMRC’s official list for both MTD VAT and Income Tax Self Assessment. The main trade-off is that the end-of-year tax return submission has, at points, been listed as a feature still being rolled out, so check current status before relying on it for your Final Declaration.
Sage Accounting
Sage provides a free account aimed specifically at sole traders. It’s designed for straightforward, single-income businesses and isn’t built for limited companies or landlords with multiple properties. It’s a solid pick if your affairs are simple and you want a well-known, long-established brand behind the software.
My Tax Digital
My Tax Digital markets itself as free MTD software for both Income Tax and VAT, aimed at sole traders and landlords who want a no-frills route to compliance rather than a full accounting suite. It’s worth comparing directly against Clear Books and Sage if you don’t need invoicing or bookkeeping features beyond what MTD requires.
FreeAgent
FreeAgent is free for clients who bank with Mettle, NatWest, RBS, or Ulster Bank, provided you make at least one transaction a month through that account. If you already bank with one of these, it’s a comprehensive package covering invoicing, cash flow alerts, and receipt capture, not just bare-bones MTD filing. Outside those banks, FreeAgent is a paid product.
Zoho Books
Zoho Books’ free plan supports sole trader and UK property income, with generous limits: 1,000 invoices, 1,000 purchases, and 50 receipt auto-scans per month. It remains free indefinitely rather than converting to a trial, and it supports one user plus one accountant, which suits people who work with a bookkeeper. It sits well alongside other Zoho apps if you already use that ecosystem.
Starling Bank and NatWest
Both banks offer free Making Tax Digital tools built into or connected with their business banking apps, aimed at customers who already hold an account with them. These are worth checking if you already bank there, since the setup can be simpler than linking a separate third-party product. If you’re comparing broader bookkeeping tools alongside your banking app, our Dext vs Hubdoc UK comparison covers two popular receipt-capture options that pair with several MTD products.
Bridging Software for Spreadsheet Users
If you already track income and expenses in Excel or Google Sheets, you don’t have to switch to full accounting software. Bridging tools like VitalTax and 123 Sheets sit on top of your existing spreadsheet and submit the totals to HMRC through the MTD API. These typically aren’t free but cost under £36 a year, making them one of the cheapest routes to compliance if you’re not ready to change how you keep records.
Free MTD Software Comparison Table
| Software | Free For | Income Sources Supported | Key Condition |
|---|---|---|---|
| Clear Books | Sole traders and landlords | Self-employment, property | No threshold, but check Final Declaration status |
| Sage Accounting | Sole traders | Self-employment | Not for landlords or limited companies |
| My Tax Digital | Sole traders and landlords | Self-employment, property | Focused on filing, fewer bookkeeping extras |
| FreeAgent | Mettle/NatWest/RBS/Ulster customers | Self-employment, property | Requires monthly transaction on linked account |
| Zoho Books | Sole traders and landlords | Self-employment, property | Capped at 1,000 invoices/purchases per month |
| Starling/NatWest | Existing bank customers | Self-employment, property | Must bank with that provider |
| Bridging software | N/A (low-cost, not free) | Depends on spreadsheet setup | Requires existing digital spreadsheet records |
How to Check If Software Is HMRC-Recognised
Don’t take a provider’s word for it. Confirm recognition status yourself in three steps:
- Go to GOV.UK’s Software Choices page, which lists every product HMRC has tested against its MTD API.
- Search for the exact product name, and check whether it’s marked “Ready now” for the income sources you have — self-employment, property, or both.
- Check the Final Declaration column separately, since some products handle quarterly updates but not the year-end submission, meaning you’d need a second tool to finish the job.
HMRC doesn’t rate or endorse quality through this list — it only confirms the software meets the technical filing requirements. You still need to judge usability and features yourself.
Choosing the Right Free Option for Your Situation
Sole trader with one income source: Sage Accounting or Clear Books cover the basics without extra complexity.
Landlord with property income only: Clear Books, My Tax Digital, or Zoho Books all list property income as a supported source; Sage’s free tier does not.
You have both self-employment and property income: Look specifically for products that list both as “Ready now” on HMRC’s list — not all free tiers cover combined income sources, even when they support each individually.
You already bank with Mettle, NatWest, RBS, or Ulster Bank: FreeAgent is worth checking first, since it removes the cost barrier entirely if you meet the transaction condition.
You already use a spreadsheet and don’t want to change habits: Bridging software is the lowest-effort route, even though it’s not strictly free.
If you’re still working out your wider business setup, our guide on first steps after registering a company UK covers related admin tasks worth tackling around the same time.
Limitations of Free MTD Software
Free tiers are rarely designed to scale with you. Common limitations include:
- No payroll or multi-user access beyond one accountant
- Caps on invoice or transaction volume that a growing business will outgrow
- Missing features like multi-currency support, stock tracking, or advanced reporting
- Customer support that’s slower or email-only compared with paid plans
For a business with straightforward, single-income affairs, these limits rarely matter. If your income sources are more complex, or you’re managing several properties, a paid plan may save more time than it costs. If invoicing volume is your main pain point, see our guide on how to automate invoicing for UK small businesses for ways to reduce manual admin regardless of which software you choose.
What Happens If You Don’t Use Recognised Software
Submissions from software not on HMRC’s recognised list may be rejected outright. If your quarterly update or Final Declaration doesn’t go through because of unrecognised software, you’re still responsible for meeting the deadline — HMRC doesn’t treat a technical mismatch as an excuse. Always confirm recognition status before your first submission, not after a missed deadline. Since accounting software also handles personal and financial data, it’s worth reviewing your obligations under our UK GDPR compliance checklist for small business when choosing a provider.
Key Deadlines and Penalties
Quarterly updates are due four times a year, covering each three-month period:
| Update | Deadline |
|---|---|
| Quarter 1 | 7 August |
| Quarter 2 | 7 November |
| Quarter 3 | 7 February |
| Quarter 4 | 7 May |
| Final Declaration | 31 January (following the tax year end) |
For the 2026/27 tax year, HMRC has confirmed a soft landing: no penalty points will be issued for late quarterly updates in this first year. Late payment penalties still apply, so this leniency covers the process of reporting, not the tax itself. You must also keep digital records for at least five years after the relevant 31 January filing date.
FAQs
Is there free software for Making Tax Digital?
Yes. Clear Books, Sage Accounting, My Tax Digital, Zoho Books, and FreeAgent (with certain banks) all offer HMRC-recognised free tiers, though each has its own limits on income sources or transaction volume.
Do I have to pay for Making Tax Digital software?
Not necessarily. If your income sources and transaction volume are modest, a free HMRC-recognised product can fully cover your quarterly updates and Final Declaration.
Can I still use a spreadsheet for Making Tax Digital?
Yes, as long as it connects to HMRC through recognised bridging software like VitalTax or 123 Sheets. A spreadsheet alone, without bridging software, doesn’t meet the digital records requirement.
Who needs to comply with Making Tax Digital for Income Tax?
Sole traders and landlords with qualifying income above £50,000 must comply from 6 April 2026. The threshold falls to £30,000 in 2027/28 and £20,000 in 2028/29.
Does HMRC provide its own free MTD software?
No. HMRC has confirmed it will not build its own software. All submissions must go through a commercial product from HMRC’s recognised list.
Can I switch MTD software during the tax year?
Yes. Previous submissions stay on HMRC’s records regardless of which software sent them. You’ll need to re-enter your year-to-date figures in the new software, but you won’t need to resubmit earlier quarters.
