Best MTD Software for Sole Traders in 2026

Making Tax Digital is now mandatory for sole traders earning over £50,000, and the software you choose will determine whether quarterly filing is a five-minute task or an afternoon of frustration.

The good news: you have options. The challenge: there are dozens of MTD-compatible tools, and most were built for businesses with employees, invoicing needs, and complex accounts, not for a plumber who just needs to file and get back to work.

This guide compares the five most relevant options for UK sole traders, with honest assessments of what each one does well and where it falls short.

What Makes Software "MTD Compatible"?

Before comparing specific tools, it is worth understanding the baseline. To be MTD-compatible, software must:

• Connect to HMRC's Making Tax Digital API
• Allow you to keep digital records of income and expenses
• Submit quarterly updates directly to HMRC
• File your Final Declaration (the End of Period Statement was scrapped before MTD ITSA went live)

Every tool on this list meets these requirements. The differences are in everything else: price, ease of use, features, mobile experience, and how much setup is needed. For a deeper look at what MTD software is and how to evaluate options, see our Making Tax Digital software guide.

The Comparison

TapTax

Price: Free tier available | Starter £4.99/mo | Pro £9.99/mo

Best for: Sole traders who want the simplest possible MTD experience

TapTax is purpose-built for sole traders affected by Making Tax Digital. It strips away everything a sole trader does not need and focuses on the core workflow: track income and expenses, categorise them, and file to HMRC.

Strengths:

• One-tap quarterly filing: review and submit in seconds
• AI expense categorisation: swipe-based sorting into HMRC categories
• Receipt scanning: snap a photo and the app extracts the details via OCR
• Mobile-first design: built for people who work on the go, not at a desk
• Affordable pricing: the cheapest paid option on this list, with a usable free tier
• Minimal setup: import your bank statement by CSV, start tracking, file when due (direct bank connection is coming soon)

Limitations:

• No invoicing features (by design; sole traders who need invoicing should look elsewhere)
• No payroll (not needed for sole traders without employees)
• Not yet on HMRC's published software-choices list (HMRC-recognised, built on HMRC's MTD API; directory listing pending)

Setup time: Under 5 minutes

File your MTD quarterly updates in minutes

TapTax imports your bank statements, categorises expenses automatically, and submits to HMRC with a tap. Free plan, no card required.

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Xero

Price: Simple £7/mo + VAT | Ignite £16/mo + VAT | Grow £37/mo + VAT (Starter, Standard and Premium were retired for new customers in September 2024)

Best for: Sole traders who also need invoicing, quotes, and multi-currency support

Xero is a full cloud accounting platform used by millions of businesses worldwide. It is powerful, well-established, and has a strong ecosystem of integrations. See our detailed TapTax vs Xero comparison for a head-to-head breakdown.

Strengths:

• Comprehensive accounting features (invoicing, bank reconciliation, reporting)
• Large ecosystem of add-ons and integrations
• Well-established with strong reputation
• Good mobile app
• Excellent accountant collaboration features

Limitations:

• Expensive for sole traders: the entry plan is reported to limit invoices and bills, pushing regular invoicers to Grow at £37/mo + VAT
• Steep learning curve: designed for businesses, not individuals. Expect to spend time learning the interface
• Feature overload: many features a sole trader will never use (payroll, project tracking, purchase orders)
• MTD ITSA is an add-on: check that your plan includes MTD for Income Tax, not just MTD for VAT

Setup time: 30-60 minutes for a sole trader

QuickBooks

Price: Sole Trader £10/mo + VAT (£1 + VAT promo for the first 6 months). Higher tiers cost more and their current prices are not verified here.

Best for: Sole traders who want a middle ground between simplicity and features

QuickBooks is another major accounting platform with a dedicated "Self-Employed" tier. This tier is specifically designed for freelancers and sole traders, making it more relevant than the full business plans.

Strengths:

• Dedicated Self-Employed plan at a reasonable price point
• Mileage tracking feature useful for drivers and tradespeople
• Tax estimation throughout the year
• Good mobile app with receipt capture
• Established brand with strong support resources

Limitations:

• The Self-Employed plan is limited: it lacks some features available on higher tiers, and upgrading doubles the price
• Interface can be confusing: switching between different views and menus is not always intuitive
• American roots: while the UK version is good, some workflows feel designed for the US market first
• Price increases after promotional period: advertised prices often reflect a discount that expires after 3-6 months

Setup time: 15-30 minutes

FreeAgent

Price: £0 with a qualifying NatWest, RBS, Ulster or Mettle business account | £19/mo list otherwise (£9.50 promo)

Best for: Sole traders who bank with NatWest or RBS and want a full accounting solution

FreeAgent is a UK-built accounting platform with a strong reputation among freelancers. Its partnership with NatWest and RBS banks offers a significant discount that makes it one of the most competitive options. See our detailed TapTax vs FreeAgent comparison for a deeper look.

Strengths:

• UK-focused: built specifically for the UK tax system
• NatWest/RBS offer: free or heavily discounted for customers of these banks
• Good Self Assessment integration: well-established for annual filing, now expanding to MTD ITSA
• Time tracking: useful for freelancers who bill by the hour
• Clean interface: more intuitive than Xero for non-accountants

Limitations:

• Expensive without the bank partnership: £19/mo list is steep for a sole trader who only needs MTD
• Slower to adopt new features: smaller team than Xero or QuickBooks
• Limited integrations: fewer third-party add-ons than larger competitors
• Desktop-oriented: mobile app exists but is not as strong as the web version

Setup time: 20-30 minutes

GoSimpleTax

Price: £69.99 per tax year for Individual (Self Assessment) | MTD for Income Tax sold separately at £12.99/mo. No free tier.

Best for: Sole traders who want affordable annual filing with MTD compliance added on

GoSimpleTax focuses specifically on tax filing rather than full accounting. It is popular for Self Assessment returns and has added MTD ITSA support.

Strengths:

• Low cost: annual pricing rather than monthly, making it one of the cheapest options
• Simple interface: focused on tax filing, not accounting
• HMRC-integrated: direct submission to HMRC for both Self Assessment and MTD
• Good guidance: in-app help explains what each field means

Limitations:

• Not a full accounting tool: no bank feeds, invoicing, or expense tracking beyond basic entry
• Manual data entry: you need to enter figures yourself rather than pulling from bank transactions
• No receipt scanning or AI features: everything is manual
• Limited mobile experience: primarily a web application

Setup time: 10-15 minutes

Side-by-Side Comparison

File your MTD quarterly updates in minutes

TapTax imports your bank statements, categorises expenses automatically, and submits to HMRC with a tap. Free plan, no card required.

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Which Software Should You Choose?

The right choice depends on what you actually need:

Choose TapTax if:

• You are a sole trader who just needs MTD compliance
• You want the fastest, simplest filing experience
• You prefer managing everything from your phone
• You do not need invoicing or payroll features
• You want to keep costs as low as possible

Choose Xero if:

• You need full accounting with invoicing, multi-currency, and reporting
• You already work with an accountant who uses Xero
• You are comfortable learning a more complex tool
• Budget is not a primary concern

Choose QuickBooks if:

• You want a balance of features and simplicity
• The Self-Employed plan fits your needs
• You value mileage tracking for work-related driving
• You want a recognised brand with extensive support resources

Choose FreeAgent if:

• You bank with NatWest or RBS (the discount makes it very competitive)
• You want a UK-built product with good Self Assessment integration
• You need time tracking for client billing
• You prefer a web-based experience over mobile

Choose GoSimpleTax if:

• You want the absolute lowest annual cost
• You are comfortable entering data manually
• You do not need bank feeds or automation
• You primarily value straightforward tax filing

The Bottom Line

For most sole traders (the electrician, the tutor, the freelance designer, the delivery driver) the expensive, feature-rich accounting platforms are overkill. You do not need invoicing suites, project management, or multi-currency support. You need to track what comes in, track what goes out, and file to HMRC without hassle.

That is exactly what TapTax is built to do. It is the simplest, most affordable way for sole traders to meet their MTD obligations and get back to doing the work that actually earns them money.

File your MTD quarterly updates in minutes

TapTax imports your bank statements, categorises expenses automatically, and submits to HMRC with a tap. Free plan, no card required.

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