Finding Affordable MTD Software
With Making Tax Digital for Income Tax now mandatory for sole traders and landlords earning over £50,000 from April 2026, choosing the right software has become a practical necessity rather than an optional upgrade.
The good news is that you do not need expensive accounting software to comply with MTD. Several providers offer MTD-compatible tools at reasonable prices — and some are specifically designed for straightforward compliance without the overhead of a full accounting suite.
If you are not yet familiar with the requirements, our guide on what Making Tax Digital is covers everything you need to know about the programme and who it affects.
This article compares the most affordable MTD for ITSA software options available in the UK in 2026, so you can make an informed decision based on your actual needs.
What to Look for in MTD Software
Before comparing prices, it is worth understanding what you actually need. At a minimum, MTD-compatible software must:
- Keep digital records of your income and expenses
- Submit quarterly updates to HMRC through their API
- Submit your Final Declaration at the end of the tax year
- Connect securely to HMRC via OAuth authentication
Beyond these basics, some software offers additional features like bank feeds, receipt scanning, invoicing, and multi-currency support. Whether those extras are worth paying for depends on the complexity of your business.
For many sole traders with a single income source and straightforward expenses, a simple tool that handles submissions is all that is needed. If you are not sure whether you even need software, check our guide on whether you need MTD software.
Price Comparison: MTD for ITSA Software (2026)
Here is a breakdown of the main options available, ranked by annual cost from cheapest to most expensive.
ClearMTD availability
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.
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.
3. FreeAgent — check current pricing
FreeAgent is a popular cloud accounting package in the UK, particularly with NatWest and Royal Bank of Scotland customers who get it free with their business account.
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.
Key features: - Full double-entry accounting - Invoicing and estimates - Bank feeds and automatic reconciliation - MTD for VAT and ITSA submission - Tax timeline and corporation tax support - Mobile app
Best for: Small businesses that need a full accounting package and are willing to pay for it, or NatWest/RBS customers who get it free.
Drawbacks: Overkill for sole traders who just need quarterly submissions. The learning curve is steeper than simpler tools.
4. QuickBooks Self-Employed — check current pricing
QuickBooks is one of the biggest names in accounting software globally. Their Self-Employed tier is aimed at sole traders and freelancers.
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.
Key features: - Income and expense tracking - Mileage tracking - Receipt capture via mobile app - Tax estimates - MTD for ITSA submission - Bank feeds
Best for: Sole traders who want mobile receipt scanning and mileage tracking alongside MTD compliance.
Drawbacks: Price can increase after promotional periods. Some features are locked behind higher tiers. The interface can feel cluttered for users who only need submission functionality.
5. Xero Starter — check current pricing
Xero is another major accounting platform, widely used by accountants in the UK.
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.
Key features: - Full accounting suite - Bank feeds and reconciliation - Invoicing - MTD for VAT and ITSA - Extensive integrations and app marketplace - Multi-user access
Best for: Businesses that work with an accountant who prefers Xero, or those who need a robust accounting system.
Drawbacks: The Starter tier has a 20-invoice limit per month. The full feature set requires the higher-priced tiers. Significantly more expensive for simple compliance needs.
6. Sage Accounting — check current pricing
Sage is a long-established name in UK accounting software. Their cloud accounting product competes directly with Xero and QuickBooks.
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.
Key features: - Invoicing and quotes - Cash flow forecasting - Bank feeds - MTD for VAT and ITSA - Receipt capture - Reporting
Best for: Businesses that want a mid-range accounting package from a well-known UK brand.
Drawbacks: Feature-heavy for sole traders who just need MTD submission. The pricing is competitive with Xero but still significantly more than purpose-built MTD tools.
Cost Comparison Summary
ClearMTD is not yet available for live filing. Check currently recognised products in the official HMRC software finder.
Do You Need Full Accounting Software?
This is the key question. If you are a sole trader with one business, straightforward income and expenses, and no need for invoicing or bank feeds, paying for a full accounting suite is like buying a lorry to do the weekly shop.
Full accounting software makes sense if you:
- Run a limited company (you need more than MTD for ITSA)
- Have complex financial needs (multi-currency, stock management, payroll)
- Work with an accountant who requires a specific platform
- Need invoicing, purchase orders, or project tracking
- Manage a team and need multi-user access
For everyone else — particularly sole traders and landlords whose main obligation is to submit quarterly updates — a focused MTD tool saves money and avoids unnecessary complexity. If you are wondering whether you need an accountant alongside your software, see our guide on whether you need an accountant for MTD.
What About Free Options?
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.
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.
How to Choose the Right Software
Here is a practical decision framework:
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List what you actually need. For most sole traders, the answer is: enter income, enter expenses, submit to HMRC. If that is you, a simple tool is the right choice.
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Check if your accountant has preferences. Some accountants prefer specific platforms because they can access your data directly. If you work with an accountant, ask them first.
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Consider the switching cost. Once you have a year of data in a platform, moving is inconvenient. Choose something you are happy to stick with.
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Try before you buy. Most tools offer free trials. Use them. Pay attention to how long it takes to complete a quarterly submission — that is the task you will repeat every three months.
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Ignore features you will not use. A long feature list is not inherently valuable. Paying for invoicing, payroll, and project management when you only need MTD submission is a waste of money.
Frequently Asked Questions
Do I have to pay for MTD software?
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 MTD software mid-year?
Yes. Your quarterly update data is stored with HMRC, so switching software mid-year is possible. You would need to re-authorise the new software to connect to your HMRC account, but your previously submitted data remains on record with HMRC.
Is the cheapest option good enough?
Price does not determine quality for MTD compliance. A cheaper tool that does exactly what you need — submit quarterly updates — is objectively better for you than an expensive accounting suite whose extra features go unused. The key is whether the software reliably connects to HMRC and submits your data correctly.
Do I need MTD software if I have an accountant?
If your accountant is filing on your behalf using their own MTD-compatible software, you may not need your own. However, you still need to keep digital records — and many sole traders prefer to submit their own quarterly updates and save accountancy fees for the year-end Final Declaration. Check with your accountant about how they want to handle the process.
What if my income drops below the threshold?
If your gross income falls below the MTD threshold after you have signed up, you may still be required to continue using MTD for that tax year. HMRC's guidance suggests that once you are in scope, you remain in scope for the duration of the tax year. Check HMRC's latest guidance for your specific situation.
The Bottom Line
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.
For a step-by-step guide on actually submitting your quarterly update, read our guide on how to submit a quarterly update to HMRC.
