Best Making Tax Digital (MTD) for Income Tax Software UK 2026

Making Tax Digital (MTD) for Income Tax is no longer a distant policy note. From 6 April 2026, qualifying UK sole traders and landlords must keep digital records and use compatible software to send quarterly updates and file Self Assessment through that software — not a spreadsheet emailed once a year. This guide compares HMRC-facing options with GBP figures checked on vendor pages on 5 November 2026, and links every threshold claim back to GOV.UK.

It is not tax advice. Confirm your own qualifying income, exemptions, and software choice with HMRC’s guidance or a qualified adviser. If you still need clean client invoices alongside the tax stack, see best free invoicing software or the free invoice generator. For US payroll tools (a different problem), see best free payroll software.

Who needs MTD for Income Tax — and when?

GOV.UK’s find out if and when page (updated March 2026) sets the phased rules for sole traders and landlords on Self Assessment:

Comparison from vendor pricing pages cited in this guide.

Self Assessment tax return	Qualifying income	Start date
2024 to 2025	more than £50,000	6 April 2026
2025 to 2026	more than £30,000	6 April 2027
2026 to 2027	more than £20,000	6 April 2028

Qualifying income is total turnover from self-employment and property before expenses. HMRC reviews returns each year and writes when you must start; you still have a duty to check yourself. Partnerships are flagged for a later timeline on the same page.

You (or your agent) need software that creates digital records, sends quarterly updates, and can submit the tax return. Use the GOV.UK software finder for a personalised HMRC-compatible list — vendors do not publish a static “all free forever” table on that page.

How do Xero, QuickBooks, FreeAgent, and Sage compare?

Prices below are UK list figures excl. VAT unless a vendor says otherwise, checked 5 November 2026. Introductory discounts expire; budget on the “then” / regular monthly rate.

Comparison from vendor pricing pages cited in this guide.

Tool	From (regular, excl. VAT)	MTD for Income Tax angle	Best for	Watch-outs
Sage Sole Trader Free	£0/month	Sage pricing + Sole Trader pages call out MTD / Self Assessment for non-VAT sole traders	Non-VAT sole traders/landlords who can live with plan limits	Limits (e.g. auto-categorised transactions and monthly invoices) on the free tier; not for VAT-registered shops
Sage Sole Trader (paid)	£7/month	Same product family; paid unlocks more invoices/receipts	Non-VAT traders who outgrow Free	VAT-registered businesses are pointed to Sage Accounting
FreeAgent (sole trader)	£19/month (or £0 with eligible bank)	Sole-trader feature list includes MTD for Income Tax quarterly updates + final declaration	Sole traders who want UK-centric books + Self Assessment tools	Landlord plan is priced separately (£10/month regular); add-ons extra
Xero Simple	£7/month	Plan points include “MTD for Income Tax ready”	Light sole-trader / landlord books	Invoice caps on Simple; confirm finder listing for your income sources
Xero Ignite	£18/month after intro	Also lists MTD for Income Tax ready	Growing sole traders needing fuller books	New customers: 90% off first 6 months, then regular price
QuickBooks Online UK	Live £ on Intuit pricing page	Every listed Online plan marked “MTD for Income Tax ready”	Traders already in the Intuit ecosystem	Sole Trader Plus cannot submit VAT; confirm today’s £ (promos rotate)

Sources: Sage pricing, Sage Sole Trader, FreeAgent pricing, Xero UK pricing, QuickBooks UK pricing, GOV.UK software finder.

Sage Sole Trader — free tier for non-VAT shops

Pros: Sage’s UK pricing FAQ lists Sage Sole Trader Free at £0/month and paid Sole Trader at £7/month, with Making Tax Digital called out for non-VAT-registered sole traders. No credit-card requirement is advertised for the free plan on the Sole Trader product page.

Cons: Free-plan caps (Sage’s Sole Trader page lists limits such as auto-categorised transactions and a small monthly sales-invoice allowance). If you are VAT-registered, Sage steers you to Sage Accounting (Start shown at £20/month after a 90%-off intro on the pricing page when checked).

For landlords who are not VAT-registered, Sage’s Sole Trader pages also mention recording landlord income and expenses — still verify in the HMRC finder for your property income type.

FreeAgent — UK-built books, bank-linked free option

Pros: FreeAgent pricing (checked 5 November 2026) lists sole traders at £19/month excl. VAT regularly (£9.50/month for the first six months under the published 50% intro), or £0 while you keep an eligible NatWest / Royal Bank of Scotland / Ulster Bank business current account, or a Mettle account with at least one transaction a month. Sole-trader features explicitly include MTD for Income Tax quarterly updates and final declaration. Landlords list £10/month regular on the same page.

Cons: Limited-company pricing is higher (£33/month regular). Optional Smart Capture Unlimited (£5/month) and Amazon (£6/month) add-ons are extra. “Free with bank” is not the same as free for every sole trader — read the banking eligibility line.

Xero — Simple from £7, Ignite from £18 (excl. VAT)

Pros: On xero.com/uk/pricing-plans (checked 5 November 2026), Simple lists £7 per month excl. VAT with MTD for Income Tax ready in the plan points. Ignite is £18 per month excl. VAT after the intro; Grow £39, Comprehensive £55, Ultimate £70 (all excl. VAT). New customers get 90% off for the first 6 months, then the regular price auto-renews. Strong bank feeds and invoicing if you already like Xero’s ecosystem — useful alongside guides like QuickBooks vs Wave vs FreshBooks when you compare international brands. For JAX chat and connectors into ChatGPT, Claude, Gemini, and Microsoft 365, see Xero vs QuickBooks AI 2026.

Cons: Simple has tighter invoice/quote caps than Ignite. Payroll and some payments are optional extras. Always re-check the GOV.UK finder for your self-employment and property combination.

QuickBooks Online UK — MTD for Income Tax ready across plans

Pros: Intuit’s UK pricing page (checked 5 November 2026) labels Sole Trader Plus, Simple Start, Essentials, Plus, and Advanced as MTD for Income Tax ready and HMRC-recognised in the feature copy. Simple Start and above can manage and submit VAT to HMRC; bank feeds and Self Assessment preparation language sit on the same page. Fits readers who already compared Intuit products in the QuickBooks Free plan guide (US Free is a different product — do not mix regions).

Cons: Sole Trader Plus cannot submit VAT returns (Intuit’s FAQ on that page). Public HTML often hides the live £/month figure behind the interactive pricing widget and rotating discounts — confirm the current monthly price (ex VAT @20%) on the page at checkout rather than relying on a cached promo from a third-party blog. Payroll is an add-on.

Free and low-cost routes via HMRC’s list

There is no single static “free MTD Income Tax apps” table on GOV.UK. HMRC tells you to use the software finder after answering questions about income sources and accounting periods. In practice, desk-checked £0 paths that vendors advertise for this audience include:

1. Sage Sole Trader Free — £0 on Sage’s pricing page for eligible non-VAT sole traders.
2. FreeAgent free-with-bank — £0 while banking eligibility holds, per FreeAgent’s pricing page.
3. Other finder results — bridging apps or agent-led tools may appear for your filters; only trust what the finder returns on the day you search.

If a vendor only says “MTD ready” for VAT, that does not prove Income Tax compatibility.

Need a second opinion on which stack fits how you already invoice? Book a consultation — or keep client billing separate with the invoice generator while you settle tax software.

Which should a UK sole trader or landlord pick?

• Non-VAT, want £0 first: try Sage Sole Trader Free, then upgrade to paid Sole Trader (£7/month excl. VAT) if you hit limits — and confirm in the HMRC finder.
• Already bank with NatWest / RBS / Ulster / Mettle: price FreeAgent’s free-with-bank path before you pay £19/month.
• Want mainstream cloud books with a published low paid floor: shortlist Xero Simple (£7) or Ignite (£18) after the intro ends.
• VAT-registered or deep Intuit user: open QuickBooks Simple Start+ or Sage Accounting / Xero Ignite+, and verify both VAT and Income Tax MTD on the vendor page plus GOV.UK.
• Landlord-only income: compare FreeAgent’s landlord £10/month tier and Sage Sole Trader landlord features; still run the finder for UK property.

When quarterly tax updates are under control, keep receivables honest with best free invoicing software. If you also want live books in ChatGPT, Claude, or Gemini, read Xero vs QuickBooks AI 2026. Seasonal software discounts are a separate hunt — see Black Friday small business software deals 2026.

GBP prices and GOV.UK rules checked 5 November 2026. Promotions expire. Confirm thresholds, exemptions, and HMRC software recognition on GOV.UK before you subscribe.

How we score

Desk scores are editorial. They summarize how useful the vendor’s own pricing and help pages were for a solo small business (US, UK, AU, or CA) on the date in this guide. They are not customer star ratings, lab benchmarks, or paid placements. Read the full process on our methodology / how we check prices page.

See a price or feature that has changed? Send a correction. Guides are updated from the vendor’s page, not from memory. How we check prices.

FAQ

Who must use Making Tax Digital for Income Tax from April 2026?

Per GOV.UK, sole traders and landlords registered for Self Assessment with qualifying income over £50,000 for the 2024 to 2025 tax year should use MTD for Income Tax from 6 April 2026. Qualifying income is total turnover from self-employment and property before expenses. Lower thresholds follow in 2027 and 2028.

What are the £30,000 and £20,000 thresholds?

GOV.UK states that if qualifying income is over £30,000 for the 2025 to 2026 tax year you need MTD for Income Tax from 6 April 2027, and if it is over £20,000 for the 2026 to 2027 tax year you need it from 6 April 2028.

Is there free HMRC-recognised MTD for Income Tax software?

Sage’s UK pricing page lists Sage Sole Trader Free at £0/month for non-VAT-registered sole traders, with Making Tax Digital ready called out. FreeAgent can be £0 if you have an eligible NatWest, Royal Bank of Scotland, Ulster Bank, or qualifying Mettle business account. Always confirm the product still appears in HMRC’s software finder for your income sources.

Does MTD for VAT software automatically cover Income Tax?

No. MTD for VAT and MTD for Income Tax are separate obligations. Choose software that the GOV.UK finder lists for Income Tax (digital records, quarterly updates, and tax return submission), even if you already file VAT digitally.

Should landlords and sole traders pick the same plan?

Often yes within one vendor, but prices can differ. FreeAgent, for example, lists a lower landlord monthly rate than its sole-trader rate on the same pricing page. Match the plan to how you are registered and whether you are VAT-registered.

Sources

Official vendor pages used for prices and plan limits (checked November 5, 2026).

1. GOV.UK — find out if and when you need MTD for Income Tax
2. GOV.UK — choose software for MTD for Income Tax
3. GOV.UK — find software that works with MTD for Income Tax
4. GOV.UK — overview of Making Tax Digital
5. Xero UK pricing plans
6. QuickBooks Online UK pricing
7. FreeAgent pricing
8. Sage UK pricing
9. Sage Sole Trader

About the editorial team

BizHacks Daily is written by Faizan Nawaz, a marketing manager and freelance marketer. Guides are desk-checked against each vendor’s own pricing or help page on the date stated in the article — not against other review sites.

There is no invented newsroom roster and no made-up survey results. Desk scores summarise how clear a vendor’s public pages were for a solo shop on check day. They are not customer star ratings, lab tests, or paid placements. Corrections come from the vendor page when a figure changes — send one if you spot a stale number. Full process: methodology / how we check prices.