Free MTD Software Options

Free Making Tax Digital Software: Which Options Actually Work?

Last updated: February 2026

Making Tax Digital for Income Tax Self Assessment starts on 6 April 2026, and one of the most common questions from sole traders and landlords is whether they can stay compliant without paying for software. Under MTD, you must create digital records of your income and expenses and submit quarterly updates — replacing the annual tax return with more frequent reporting. The short answer is yes, genuinely free and near-free options exist. But they come with trade-offs that are worth understanding before you commit to one.

HMRC maintains an official list of compatible software for MTD ITSA. Every product on that list has been tested against HMRC’s API and can submit quarterly updates and your Final Declaration. The list includes free tools alongside paid platforms, and they all meet the same technical requirements. Whether you choose the right software now or switch later, any software that meets HMRC’s standards will let sole traders and landlords report their income digitally. The difference lies in what else the software does for you beyond the bare minimum of filing.

Genuinely free and near-free MTD ITSA software

Not every product marketed as “free” truly is. Some offer a free trial period that converts to a paid subscription, while others are free indefinitely but with restricted features. The following options are either permanently free or so inexpensive that they barely register as a cost.

HMRC’s own free tool

HMRC is developing its own free submission tool for MTD ITSA. It covers basic digital record keeping and quarterly submissions at no cost, allowing sole traders to create digital records and file without a paid subscription. The tool handles straightforward self-employment or property income but lacks features like bank feeds, invoicing, or detailed reporting. If your affairs are simple and you do not mind a no-frills interface, it does the job. The main limitation is that it offers minimal guidance and no integration with other business tools.

Landlord Studio Free

Landlord Studio offers a free tier that supports up to two properties. It handles rental income tracking, expense recording, and MTD quarterly submissions. The app is mobile-first, so you can photograph receipts and log expenses on your phone as they happen. For a landlord with one or two buy-to-lets and no self-employment income, this is a solid option at zero cost. The app creates digital records automatically as you log each transaction.

The free plan does not include bank feeds, automated receipt scanning, or multi-user access. If you want your accountant to log in and review your figures, you need the Pro plan at around £8 per month.

Zoho Books Free

Zoho Books offers a free plan for businesses with annual turnover under £35,000. It includes invoicing, expense tracking, bank feeds for one account, and MTD submissions. For a sole trader whose qualifying income sits between £20,000 and £35,000 (within Phase 3 of MTD ITSA, starting April 2028), this is one of the more generous free offerings available.

The £35,000 turnover cap is the obvious constraint. If your business grows beyond that threshold, you move onto a paid plan. Zoho’s interface can also feel less polished than Xero or FreeAgent, and fewer UK accountants are familiar with it, which can make collaboration harder.

VitalTax (£30 + VAT per year)

VitalTax is not technically free, but at £36 including VAT per year it costs less than a single month of most accounting software subscriptions. It works as an Excel add-in: you keep your records in a spreadsheet, map the relevant cells to HMRC’s submission fields, and VitalTax handles the API connection. For anyone already comfortable tracking income and expenses in Excel, this is the lowest-cost route to compliance.

The £30 + VAT price covers one National Insurance number. If you are an accountant submitting for multiple clients, VitalTax offers an unlimited licence at £90 + VAT per year. The tool does not check your figures or offer accounting guidance. It simply transmits whatever numbers you give it.

123 Sheets (£30 + VAT per year)

123 Sheets takes a slightly different approach to VitalTax. Rather than adding functionality to your existing spreadsheet, it provides a pre-formatted Excel template with built-in submission capability. You enter your income and expenses into the template’s structured layout, and it submits directly to HMRC. This suits people who want a spreadsheet-based approach but prefer a guided template over building their own.

What free MTD-compatible software gives you and what it lacks

Every free or near-free option on the list above meets HMRC’s minimum requirements for MTD ITSA. They can all submit quarterly updates covering your income and expenses, and they can all file your Final Declaration by 31 January following the end of the tax year. That is the compliance box ticked — you will be fully compliant with HMRC’s requirements and no longer need to file a traditional Self Assessment tax return at the end of the year.

What free software typically lacks:

• Automatic bank feeds – pulling transactions directly from your bank account into the software, saving hours of manual data entry each quarter
• Accountant access – letting your accountant log in to review, adjust, and submit on your behalf
• Detailed reporting – profit and loss breakdowns, cash flow forecasts, and tax liability estimates
• Multi-source handling – managing both self-employment and property income in one place with separate quarterly submissions
• Receipt scanning – photographing receipts and having the software extract and categorise the data automatically
• Customer support – free tools often offer community forums or email-only support with slower response times

For a landlord with two properties and straightforward rental income, the absence of these features may not matter. For a sole trader juggling dozens of client invoices, supplier payments, and mixed income sources, the manual record keeping adds up fast. At that point, accounting software for small businesses — even a basic paid tier — can save more in time than it costs in subscription fees.

Comparison: free vs paid software over one year

The jump from free to £84 per year buys you bank feeds and accountant access. The jump from £84 to £180 adds unlimited invoicing, better reporting, and support for more complex business structures. Where you sit on that scale depends on how much of your time you value against the subscription cost.

How to choose the right MTD software for sole traders

Choosing the right software for Making Tax Digital depends on your circumstances. Consider these factors before committing to a free or paid option:

• Type of software — full accounting software handles invoicing, expenses, bank feeds, and MTD filing in one place. Bridging software lets you keep using spreadsheets for record keeping but adds an HMRC submission layer on top. Both are compliant, but they suit different workflows.
• Income sources — if you earn from both self-employment and UK property (including foreign property income reported to HMRC), you need software that handles multiple income sources with separate quarterly submissions for each.
• Digital record keeping needs — MTD requires you to create digital records from the point of first entry. If you currently track income and expenses on paper, you will need software that makes the transition to digital records straightforward.
• Sole trader account features — some free tools offer a dedicated sole trader account with tax estimates and profit tracking. Others only handle the minimum submission. Think about whether you want a tool that also helps you understand your tax position throughout the year.

Our MTD software comparison tool lets you filter by price, income type, and features to find the right fit. If you need help deciding, see our guide on MTD bridging software for spreadsheet users or our Xero Simple review for the cheapest full accounting option.

Worked example: one year’s cost for a landlord with two properties

Sarah owns two rental flats in Leeds, generating £26,000 in combined gross rent. She has no self-employment income. Her qualifying income of £26,000 means she falls into Phase 3 of MTD ITSA (from April 2028), but she wants to start preparing now.

Sarah receives roughly 24 rental payments per year (monthly rent from each property) and has around 40 expense transactions (insurance, repairs, letting agent fees, mortgage interest). Here is what each option costs her over 12 months:

With free tools, Sarah spends roughly 10 hours per year manually entering transactions and preparing her quarterly submissions. With Xero Simple at £84, bank feeds pull transactions in automatically and she spends closer to 2.5 hours per year reviewing and categorising them. The £84 effectively buys back 7 or 8 hours. Whether that trade-off makes sense depends on how Sarah values her time, but at around £11 per hour saved, most people would consider it worthwhile.

Watch out for “free trials” that convert to paid plans

Several MTD software providers advertise a free trial period, typically 30 days, after which the subscription begins automatically. This is standard practice across the software industry, but it catches people out when they sign up thinking the tool is permanently free.

Before entering your payment details for any free trial, check three things. What happens when the trial ends? Will you be charged automatically or prompted to choose a plan? And can you export your data if you decide not to continue? Some platforms make it difficult to extract your records once the trial expires, which creates pressure to stay and pay.

The tools listed earlier in this article (HMRC’s tool, Landlord Studio Free, Zoho Books Free, VitalTax, and 123 Sheets) are not time-limited trials. They are either permanently free or have transparent annual pricing with no automatic escalation.

When upgrading from free makes sense

Free software works well for people with straightforward affairs: a single income source, a manageable number of transactions, and no need for accountant collaboration. Once any of the following apply, the case for a paid platform strengthens considerably:

• Multiple income sources – if you have both self-employment and property income, you need software that handles separate quarterly submissions for each source. Most free tools are limited to one.
• Accountant collaboration – if your accountant reviews your figures or submits on your behalf, they need login access to your software. Free tiers rarely support this.
• High transaction volume – if you process more than a few dozen transactions per quarter, manual data entry becomes a real burden. Bank feeds eliminate most of this work.
• VAT obligations – if you also need to submit MTD for VAT returns, a single platform that handles both saves duplication.
• Growth plans – if your turnover is approaching the Zoho Books free-tier cap of £35,000, or you expect to acquire more properties, starting on a scalable platform avoids a disruptive migration later.

The hidden cost: your time

The cheapest software is only cheap if you ignore the time it takes to use it. Manual data entry, reconciling figures against bank statements, and troubleshooting submission errors all take hours that automated tools handle in minutes. For someone earning £50,000 or more per year, spending 10 extra hours on admin that £84 of software could eliminate is a poor trade.

This does not mean everyone should pay for premium software. A landlord with one property and 20 transactions per year will spend very little time on manual entry. The calculation shifts when your affairs become more complex. Be honest about how many transactions you process and how comfortable you are with spreadsheets before deciding that free is the right choice.

Frequently asked questions

Is HMRC’s free MTD software good enough for most people?

For sole traders or landlords with a single income source and simple affairs, HMRC’s free tool covers the basics. It submits your quarterly updates and Final Declaration, which is all that MTD requires. It does not offer bank feeds, invoicing, or detailed reporting, so you will need to keep thorough records elsewhere.

Can I switch from free software to paid software mid-year?

Yes. You can change MTD software at any point during the tax year. Your previous quarterly submissions remain on HMRC’s records regardless of which tool sent them. You will need to re-enter or import your year-to-date figures into the new software, but you do not need to resubmit earlier quarters.

Is there genuinely free software for Making Tax Digital?

Yes. HMRC offers its own free tool for Income Tax Self Assessment that handles basic digital record keeping and quarterly submissions. Landlord Studio and Zoho Books also offer permanently free tiers. Additionally, bridging software like VitalTax and 123 Sheets costs under £36 per year — not technically free, but close to it. All of these are HMRC-recognised and fully compliant with Making Tax Digital requirements.

Do I still need an accountant if I use MTD software?

MTD software handles the submission mechanics — replacing your annual Self Assessment tax return with quarterly digital updates — but it does not give tax advice. An accountant can ensure you claim all allowable expenses, advise on capital allowances, and handle your Final Declaration correctly. Many sole traders and landlords find that the combination of software for day-to-day record-keeping and an accountant for year-end review works well. See HMRC’s guidance on using MTD for Income Tax for more on what you need to keep.

Sources

• GOV.UK: Find software compatible with Making Tax Digital for Income Tax
• GOV.UK: Use Making Tax Digital for Income Tax
• GOV.UK: Sign up your business for Making Tax Digital for Income Tax