Yes, there is free MTD software for sole traders.
Depending on your circumstances, you may be able to use a permanently free accounting package, get software included with a qualifying business bank account, access software through your accountant, or continue using a spreadsheet alongside suitable bridging software.
The important thing is choosing software that does what you actually need.
Making Tax Digital for Income Tax now applies to some sole traders, so your software needs to do more than simply record income and expenses. It needs to support the relevant HMRC requirements and fit the way you run your business.
Yorkshire Accountancy can help you compare the options, get set up and make sure your records are suitable for Making Tax Digital.
Need help choosing MTD software? Get in touch with Yorkshire Accountancy for practical advice.
Yes. There are several ways a sole trader can access Making Tax Digital software without paying a standard monthly software subscription.
These include:
However, free does not necessarily mean suitable.
Some free accounts limit features such as invoicing, bank feeds, automated transaction processing or support. Others are aimed specifically at non-VAT-registered sole traders or people with relatively straightforward tax affairs.
Before choosing free software, check that it supports everything you need now as well as anything you are likely to need as your business grows.
Here are some of the main options worth considering.
| Software | How it can be free | Best suited to | Things to check |
|---|---|---|---|
| Sage Sole Trader Free | Permanently free plan | Non-VAT-registered sole traders with straightforward records | Limits on some automation and additional features |
| Clear Books Sole Trader Free | Permanently free plan | Sole traders wanting dedicated MTD for Income Tax software | Whether you need additional VAT, automation or support features |
| FreeAgent | Included with qualifying NatWest, Royal Bank of Scotland, Ulster Bank and Mettle business accounts | Sole traders who already use an eligible business bank account | Bank eligibility and any optional paid features |
| QuickBooks | Yorkshire Accountancy can currently offer eligible clients a free 12-month licence | Sole traders wanting a more comprehensive bookkeeping system | What happens when the free period ends |
| Spreadsheet + bridging software | Spreadsheet software may already be available to you | Sole traders who prefer maintaining simple spreadsheet records | The bridging/submission service may still have a cost |
Software products and offers can change, so always check the current terms and functionality before making a final decision.
If you would rather talk through the options, Yorkshire Accountancy can help you choose software based on the size and complexity of your business rather than simply recommending the most expensive package.
Making Tax Digital for Income Tax is being introduced according to your qualifying income.
The current timetable is:
Qualifying income is broadly your gross income from self-employment and property before expenses are deducted.
If you are both a sole trader and a landlord, your qualifying self-employment and property income will generally be considered together when deciding whether you exceed the relevant threshold.
Under MTD for Income Tax, affected sole traders need to use compatible software to maintain digital records and provide the required information to HMRC.
If you are unsure whether Making Tax Digital applies to you, Yorkshire Accountancy can check your position and explain what you need to do.
The right software should make it possible to meet your Making Tax Digital obligations without creating unnecessary additional administration.
For MTD for Income Tax, compatible software needs to support functions including:
You should also consider the practical bookkeeping features you need.
For example:
A very basic free product can be ideal for one sole trader and completely unsuitable for another.
There is no single best option for every sole trader.
If you have relatively straightforward income and expenses and are not VAT registered, a permanently free product such as Sage Sole Trader Free or Clear Books Sole Trader Free may be a sensible place to start.
If you already have an eligible business bank account, FreeAgent may provide a more comprehensive package without an additional software subscription.
If you want more extensive bookkeeping functionality or would prefer your accountant to help you get set up, QuickBooks may be more appropriate. Yorkshire Accountancy can currently provide eligible clients with a free 12-month QuickBooks licence.
Alternatively, if you are comfortable using spreadsheets and your bookkeeping is simple, you may not need to move everything into a traditional cloud accounting package.
The best option depends on factors including your:
The aim should not simply be to find the cheapest software. It should be to find the simplest MTD-compatible system that reliably meets your requirements.
Sage offers free MTD software aimed specifically at sole traders.
Its free product is primarily designed for non-VAT-registered sole traders who want to maintain digital records and prepare for their Making Tax Digital requirements without paying a monthly subscription.
Depending on the current package, it can help with areas such as:
The free version is likely to be most attractive to sole traders with relatively straightforward bookkeeping requirements.
If your business has a high volume of transactions, is VAT registered, operates CIS or requires greater automation, you should check whether the free version provides everything you need.
Best for: straightforward non-VAT-registered sole traders.
Watch out for: feature and automation limits.
Clear Books offers a free package specifically designed around MTD for Income Tax.
Its Sole Trader Free plan includes functionality for recording income and expenses, maintaining digital records and making MTD for Income Tax submissions.
This makes it worth considering if your main priority is finding a straightforward, permanently free MTD solution rather than a wider business management package.
Best for: sole traders looking for dedicated free MTD for Income Tax software.
Watch out for: whether you also need functionality such as VAT, more advanced automation or additional support.
As with any package, check the current specification before moving your bookkeeping records.
FreeAgent is another option that can effectively be free for some sole traders.
Customers with qualifying business accounts from NatWest, Royal Bank of Scotland, Ulster Bank or Mettle can access FreeAgent without paying a standard FreeAgent subscription, subject to the relevant terms.
FreeAgent includes broader bookkeeping functionality such as:
For sole traders who already bank with one of the qualifying providers, this can make FreeAgent a particularly attractive option.
Changing business bank accounts purely to obtain accounting software, however, deserves more thought. Consider the banking service as well as the software before deciding.
Best for: sole traders who already hold a qualifying business bank account.
Watch out for: bank eligibility conditions and optional paid features.
Not every good option has to be permanently free.
Our Quickbooks Accountants at Yorkshire Accountancy can currently provide eligible new and existing clients with a free 12-month QuickBooks licence.
QuickBooks provides more comprehensive bookkeeping features than many basic free packages, which can include:
We can also help you set the software up correctly, connect your accounts and establish a bookkeeping process that works for your business.
This can be particularly useful if you want more functionality than a basic free package provides or would prefer support from an accountant while moving to Making Tax Digital.
Once the free period ends, a subscription or alternative arrangement may apply, so this should be factored into your decision from the outset.
Best for: sole traders wanting more comprehensive accounting software with professional support.
Watch out for: the cost or arrangements after the introductory period.
You may be able to continue using a spreadsheet as part of your MTD record-keeping process, but the spreadsheet alone cannot communicate with HMRC.
You need compatible software to complete the required MTD submissions.
This is usually achieved by connecting your spreadsheet records to suitable bridging software or using a service that manages the submission for you.
Yorkshire Accountancy offers an MTD spreadsheet and bridging option for clients who would rather continue using spreadsheets than move to a full cloud accounting package.
This may be particularly suitable if:
Before relying on a spreadsheet solution, make sure the complete process meets the relevant MTD requirements.
No. HMRC does not provide its own Making Tax Digital for Income Tax software.
Instead, you need to choose compatible software from a software provider.
HMRC maintains a software finder containing products that have been through its recognition process. Some products offer free options for people with straightforward tax affairs, although restrictions may apply.
It is important to understand the distinction between HMRC-recognised software and software produced by HMRC.
HMRC does not recommend one software provider over another.
If you are comparing packages, check HMRC’s current software finder as well as the provider’s own product information.
Sometimes. But always check the terms.
“Free MTD software” can mean several different things.
Some providers offer a genuine ongoing free account.
This can be ideal for straightforward sole traders, although free plans may restrict certain features.
Some banks include accounting software with qualifying business accounts.
The software itself may not cost extra, but you need to meet the bank’s eligibility requirements.
Some accountants provide software as part of a wider accountancy package.
You may not receive a separate software bill, although the accountancy and submission service itself will normally still be chargeable.
Some providers offer a free initial period before normal subscription charges begin.
These can be useful, but check the ongoing cost before committing your bookkeeping records to the system.
Excel, Google Sheets and similar tools can provide a low-cost way of keeping records, but you may still need to pay for compatible bridging software or an accountant to make the relevant submissions.
Free software can be perfectly adequate if you run a straightforward sole trader business.
Paying for software may make sense where it saves enough time or improves your bookkeeping.
Consider a more comprehensive package if you:
Spending £10 or £20 a month to remove several hours of manual bookkeeping can be better value than choosing free software purely because there is no subscription.
Equally, there is little point paying for an expensive accounting package if you only have a small number of straightforward transactions.
Choose according to what your business needs.
If you have both self-employment and property income, take particular care when choosing your MTD software.
Your qualifying income can include both sources, and the software arrangement needs to be capable of dealing appropriately with the income you are required to report.
Some products handle different income sources differently, and you may require separate accounts or additional functionality.
This page is primarily about free MTD software for sole traders.
If your main income is from property, see our dedicated guide to Making Tax Digital for landlords.
MTD software can automate administration, but it does not necessarily tell you whether your accounting or tax treatment is correct.
Good software can help you record transactions and submit information. An accountant can help you determine what those transactions mean for your accounts and tax position.
Our Sole Traders Accountants at Yorkshire Accountancy can help with:
We work with sole traders across Hull, Yorkshire and throughout the UK.
There are now several good MTD software options for sole traders, and paying a large monthly subscription is not always necessary.
The right choice will depend on your business rather than which provider advertises most heavily.
Yorkshire Accountancy can review how you currently keep your records and recommend a practical approach.
That might be:
We can also help you set everything up correctly and manage your ongoing Making Tax Digital requirements.
Speak to Yorkshire Accountancy about Making Tax Digital and find a software option that works for your business.
Please call or email to arrange your FREE consultation for any of our services.
We’re a modern, friendly and proactive accountancy service.
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