With Making Tax Digital for Income Tax now live for sole traders earning over £50,000, choosing the right software is no longer optional — it is a legal requirement. But with dozens of options on the market, how do you decide which one is right for you?
ClearMTD is in development and has not received HMRC production approval. Public registration and live submissions are unavailable. Its current scope is owner-operated digital records and in-year quarterly updates for self-employment, UK property and foreign property. Final Declaration and agent filing are not supported.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
What to Look for in MTD Software
Before diving into the comparisons, here is what matters most for sole traders:
Compare the provider’s current subscription price, VAT, introductory discounts and renewal cost against the features you need. A lower price is useful only if the product supports your income sources and required filing tasks.
ClearMTD availability
ClearMTD is awaiting HMRC production approval and is not available for live filing. Its current scope excludes Final Declaration and agent filing.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
Xero
Overview
Xero is one of the UK's most popular cloud accounting platforms. It offers comprehensive accounting features including invoicing, bank reconciliation, payroll, VAT, and MTD for Income Tax submissions.
Pros
- Feature-rich with full double-entry accounting
- Large ecosystem of integrations and add-ons
- Well-established with extensive support resources
- Handles multiple income sources and complex finances
Compare the provider’s current subscription price, VAT, introductory discounts and renewal cost against the features you need. A lower price is useful only if the product supports your income sources and required filing tasks.
Best For
Sole traders with complex finances, multiple clients, or who already use Xero for VAT.
QuickBooks
Overview
QuickBooks Self-Employed and QuickBooks Simple Start are Intuit's offerings for sole traders and small businesses. QuickBooks supports MTD for Income Tax and offers features similar to Xero.
Pros
- Established brand with a long track record
- Good mobile app for recording expenses on the go
- Bank feed integration for automatic transaction matching
- Solid reporting features
Cons
- Pricing has increased — the self-employed plan has crept up in price over the years
- Interface can be cluttered — lots of features means lots of menus
- Customer support varies in quality based on user reports
- Some MTD-specific features require higher-tier plans
Best For
Sole traders who want a recognised brand with a good mobile app and do not mind paying a premium. If you are considering alternatives, see our article on QuickBooks MTD alternatives.
FreeAgent
Overview
FreeAgent is a UK-focused accounting platform popular with freelancers and sole traders. It was designed specifically for the UK market, which gives it an edge in understanding UK tax requirements. It is owned by NatWest Group, and NatWest business banking customers can access it for free.
Pros
- Strong UK focus — built around UK tax rules and Self Assessment
- Free for NatWest/RBS business account holders — a genuine differentiator
- Good tax timeline — shows estimated tax liability throughout the year
- MTD for Income Tax support
Compare the provider’s current subscription price, VAT, introductory discounts and renewal cost against the features you need. A lower price is useful only if the product supports your income sources and required filing tasks.
Best For
Sole traders who bank with NatWest or RBS (free access), or those who want a UK-focused accounting tool. For alternative options, see our FreeAgent alternative guide.
Free commercial software
HMRC does not provide its own MTD for Income Tax software. Free products are available from commercial providers; check their eligibility, limits and supported income sources in the official software finder.
Overview
HMRC offers a basic free tool for MTD for Income Tax, aimed at taxpayers with very simple affairs. It allows you to record income and expenses and submit quarterly updates at no cost.
Pros
- Completely free — no subscription, no hidden charges
- Official HMRC product — guaranteed compatibility
- Suitable for very straightforward self-employment
Cons
- Extremely basic — limited functionality, minimal reporting
- No bank feeds — you must manually enter every transaction
- Limited support — do not expect the same level of help as paid software
- May not handle complex situations — multiple income sources, property income, or anything beyond basic self-employment
Best For
Sole traders with very simple finances (one income source, few expenses) who want to spend nothing on software. Most people will outgrow it quickly.
Comparison Table
ClearMTD is not yet available for live filing. Check currently recognised products in the official HMRC software finder.
Which One Should You Choose?
The answer depends on your situation:
ClearMTD is awaiting HMRC production approval and is not available for live filing. Its current scope excludes Final Declaration and agent filing.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
Frequently Asked Questions
Do I have to use the software HMRC provides?
ClearMTD is awaiting HMRC production approval and is not available for live filing. Its current scope excludes Final Declaration and agent filing.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
Can I switch software mid-year?
Yes, though you will need to migrate your records to the new software. Some providers offer import tools to make this easier. It is generally simpler to switch between tax years if possible.
Do I need different software for MTD for VAT and MTD for Income Tax?
ClearMTD is awaiting HMRC production approval and is not available for live filing. Its current scope excludes Final Declaration and agent filing.
Join the free ClearMTD waitlist for launch updates. No launch date is confirmed.
Is it worth paying for software when there is a free option?
HMRC does not provide its own MTD for Income Tax software. Free products are available from commercial providers; check their eligibility, limits and supported income sources in the official software finder.
What if I already use accounting software?
Check whether your existing software supports MTD for Income Tax (not just MTD for VAT — they are different). If it does, you may not need to switch. If it does not, you will need to add or change your software before your first quarterly deadline.
