Last Updated on July 27, 2026
Making Tax Digital for Income Tax is live. If your gross self-employment and property income was over £50,000 in 2024 to 2025, you have been in it since 6 April 2026 and you now file four quarterly updates a year through compatible software.
The good news is that the software does not have to cost anything. HMRC recognises 127 compatible products. Thirty of them have a free version, and 26 of those work for sole traders.
Prices below were checked on 27 July 2026 and taken from each vendor own UK pricing page. Nothing here comes from a comparison blog.
When do you have to use MTD for Income Tax?
| Qualifying income | Tax year tested | MTD starts |
|---|---|---|
| Over £50,000 | 2024 to 2025 | 6 April 2026 |
| Over £30,000 | 2025 to 2026 | 6 April 2027 |
| Over £20,000 | 2026 to 2027 | 6 April 2028 |
Source: GOV.UK, check if you are eligible for Making Tax Digital for Income Tax.
Qualifying income is gross income from self-employment and property before expenses. Not profit. That catches people out, because a sole trader turning over £55,000 with £30,000 of costs is in from April 2026 even though their profit is well under the threshold.
What does a quarterly update actually involve?
Less than most people fear. You send totals of income and expenses by category for each business, and HMRC does not receive individual receipts or invoices.
Updates are cumulative. Each one covers from the start of the tax year to the end of that period, so a mistake can be corrected in the next update without resending anything. No accounting or tax adjustments are needed at the quarterly stage.
Standard deadlines are 7 August, 7 November, 7 February and 7 May.
Which MTD software is genuinely free?
| Product | Free tier covers MTD for Income Tax | What the free tier limits |
|---|---|---|
| Sage Sole Trader and Landlord | Yes | 25 auto-categorised transactions a month, 1 bank account, 5 sales invoices a month |
| Pandle | Yes | Free plan, paid tiers add features |
| Zoho Books UK | Yes | 1 user plus 1 accountant |
| FreeAgent | Yes, conditionally | Free while you bank with NatWest, RBS or Ulster Bank, or hold an active Mettle account |
| Coconut | Yes, conditionally | 24 months free if you open a Zempler Bank account through Coconut |
All five appear on HMRC list of recognised products with a free version, checked 27 July 2026.
If you are a sole trader with a handful of invoices a month, one of these covers you for nothing. That is the honest answer, and it is not the answer the paid vendors are advertising.
What does paid MTD software cost?
| Product | Cheapest plan covering quarterly updates | Price | VAT basis |
|---|---|---|---|
| Sage Sole Trader and Landlord | Sole Trader | £7/mo | ex VAT |
| QuickBooks UK | Sole Trader Plus | £10/mo | plus VAT |
| Crunch | Crunch Plus | £10/mo | plus VAT |
| Xero UK | Ignite | £16/mo | ex VAT |
| FreeAgent | Sole Trader | £19/mo | ex VAT |
| Coconut | MTD filing | £129.99/yr | not stated |
| untied | untied Lite | £64.99/yr | includes VAT |
| TaxCalc | MTD Quarterly Filer Solo | £24/yr | ex VAT |
| 123 Sheets | Single taxpayer, annual | £19.75/yr | ex VAT |
Prices checked 27 July 2026 from each vendor own UK pricing page.
Watch the introductory offers. Xero advertises 80 percent off for six months, which takes Ignite to £3.20 a month before it reverts to £16. QuickBooks advertises 90 percent off for six months without publishing the resulting figure. Sage offers three months free. Compare the standard price, not the first quarter.
What is the difference between bridging software and full software?
Bridging tools take figures from a spreadsheet you already keep and file them. They do no bookkeeping.
123 Sheets, TaxCalc MTD Quarterly Filer and Coconut bridging tier are all in this group. That is why they look so cheap next to Xero. They are not doing the same job.
One thing to check before buying a filing-only tool. TaxCalc £24 covers the quarterly updates but not the year end return, which is a separate purchase from £42. A cheap headline price is not always the whole bill.
Which tools are not actually on the HMRC list?
This matters more than any price. Four products commonly named in MTD articles were not on HMRC recognised list when we checked on 27 July 2026.
- Bokio. Its pricing page mentions MTD only for VAT. Its own blog says Income Tax support will become available.
- Easy MTD. Not listed under that name or domain. Its own site says the quarterly update function will be introduced in a future update.
- Hnry. Operates in the UK but is not on the list. Its wording is that it files through MTD-compliant software, which reads as using someone else product.
- ANNA Money. Advertises free MTD filing for 2026 to 2027, but HMRC list does not flag ANNA as having a free version. That is a conflict between vendor marketing and HMRC data.
Always check the HMRC software finder before you pay for anything. It is at tax.service.gov.uk and it is the only list that counts.
How to choose without overpaying
Four questions, in order
- Do you already bank with NatWest, RBS, Ulster or Mettle? Then FreeAgent is free and the decision is made.
- Do you keep records in a spreadsheet and want to keep doing that? Then a bridging tool at £20 to £25 a year is enough. Check whether the year end return is included.
- Do you want proper bookkeeping, bank feeds and invoicing? Then compare Sage at £7, QuickBooks at £10 and Xero at £16, on standard price rather than the launch offer.
- Are you a landlord only, or a sole trader as well? Several free products are property only and will not cover self-employment.
The bottom line
MTD for Income Tax is a compliance deadline, not a software upgrade. The cheapest compliant answer for a simple sole trader is £0, and for most people the honest range is £0 to £10 a month.
If someone is quoting you more than that to file four sets of totals, ask what the extra buys.
Not sure where your money is going?
Run a free check on your business and get specific recommendations.
Common questions
How much does MTD for Income Tax software cost in the UK?
Between £0 and around £19 a month for a sole trader. HMRC recognises 127 compatible products, 30 of which have a free version and 26 of those work for sole traders. Free options that cover MTD for Income Tax include Sage Sole Trader and Landlord, Pandle, Zoho Books, FreeAgent for NatWest, RBS, Ulster and Mettle customers, and Coconut via Zempler. Paid entry prices checked on 27 July 2026 were Sage £7 a month, QuickBooks £10, Crunch £10, Xero £16 and FreeAgent £19, all excluding VAT.
Is there free MTD for Income Tax software?
Yes. HMRC lists 30 recognised products with a free version, 26 of which support sole traders. Sage Sole Trader and Landlord, Pandle and Zoho Books all have genuinely free tiers that cover quarterly updates, with limits on transaction volume and users. FreeAgent is free for as long as you bank with NatWest, RBS or Ulster Bank, or hold an active Mettle account.
When does Making Tax Digital for Income Tax start?
It started on 6 April 2026 for people with qualifying income over £50,000 in the 2024 to 2025 tax year. The £30,000 threshold follows on 6 April 2027 and the £20,000 threshold on 6 April 2028. Qualifying income is gross income from self-employment and property before expenses, not profit.
What do you have to send in a quarterly update?
Totals of income and expenses by category for each self-employment and each property business. HMRC does not receive individual receipts or invoices. Updates are cumulative, covering from the start of the tax year to the end of the period, so errors can be corrected in the next update. Deadlines are 7 August, 7 November, 7 February and 7 May.
What is the difference between MTD bridging software and full accounting software?
Bridging software takes figures from a spreadsheet you already maintain and submits them to HMRC. It does no bookkeeping, which is why it costs around £20 to £25 a year rather than £7 to £19 a month. Full accounting software adds bank feeds, invoicing and categorisation. Check whether a bridging tool includes the year end return, because several charge for it separately.
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