Best free accounting software for UK small businesses 2026

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As a result of our latest research, involving 57 hours of hands-on testing across seven top platforms, we determined that Zoho Books is the best free accounting software for 2026.

Making Tax Digital (MTD) for Income Tax is now just days away from becoming mandatory for many self-employed individuals. MTD will be phased in from April 2026, and the best way to stay compliant is by using the best accounting software for your small business.

If you’re over the £50,000 qualifying income threshold for 2026, then free accounting software is going to be the most cost-effective route for keeping compliant. These are our top recommendations.

The best free accounting software: comparison table

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		Price from	Best for	Key benefits
FEATURED PROVIDER	OVERALL BEST
Xero	Zoho Books	FreeAgent	Clear Books	QuickFile	GnuCash	VT Cash Book
£7/month (+ VAT) 90% off for 6 months	Free	Free with a NatWest, Royal Bank of Scotland, Ulster Bank or Mettle business account.	Free	Free	Free	Free
Expanding businesses that need a software that can grow alongside them	Best overall free accounting software option	A wide range of features (if you qualify for a free plan)	Sole traders, the self-employed, and landlords needing a reliable software for MTD returns	Those needing to use multiple currencies on a free plan	Those with coding experience	Cash-based businesses wanting a desktop solution
Slick design Insightful reporting 24/7 online support	File MTD VAT returns 1,000 invoices per year Auto-scan receipts	Cash flow alerts Great support for tax preparation Provides FreeAgent mobile app	Free MTD for income tax plan for the self-employed, sole traders and landlords Unlimited transactions Secure data protection	Multi-currency support MTD VAT filing Customer portal	Generates PDF invoices Open-source desktop software	Fast data entry with autocomplete Cash-basis accounting method Produce basic reports

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Why is Zoho Books the best free accounting software?

Zoho Books is the most user-friendly accounting software I’ve tested, and is my top choice for the best self-employed accounting software.

Zoho Books’s free plan has a short learning curve and includes MTD VAT filing, VAT tracking, and you can generate summary reports for Self Assessment (SA103F and SA103S). 

The receipt auto-scan feature is a particularly helpful tool for a free plan, especially for sole traders who need to stay MTD compliant. For example, if you’re at the petrol station, you can use the Zoho app to snap your receipt and instantly update your digital records.

 Zoho Books has a clear, modern interface that makes navigation simple even for a novice user. Source: Startups.co.uk

The free plan includes 1,000 invoices a year, making it a great option for new businesses that need to graduate beyond a simple spreadsheet. It’s less ideal for those in the service industry, however, as you’ll most likely be exceeding the annual number of transactions.

With digital tax data being a target for scammers in 2026, Zoho Books also reassures its users with strong cybersecurity, particularly its four different methods for multi-factor authentication (MFA):

• Zoho OneAuth (its own authenticator app)
• OTP Authenticator
• Security Key
• Passkey

What are the drawbacks?

• You’ll be capped on invoices (for example, 1,000 sales invoices or 1,000 purchases), so while most modest sole traders will be fine, higher earners with many clients might find this to be an issue.
• Zoho Books’ branding will appear on all your invoices on the free tier.
• The free tier is also missing out on some more advanced functionality, like multi-currency support, which FreeAgent provides.

Expert opinion: Dan Heelan on Zoho Books

Whilst some of the terms used in the product may feel a little ‘Americanised’ for a UK business owner, the software is quick and easy to use. If you like the idea of some of the other Zoho apps that can plug into this, it can be a really powerful tool. If you are a service-based freelancer issuing a handful of invoices a year, this is a solid choice. On the other hand, if you are a business issuing lots of invoices you are likely to hit the plans cap quickly and will need to evolve onto a paid plan.

Dan Heelan Accountant and Business Services Director at Heelan Associates Ltd

What are the best alternatives to Zoho Books for free accounting?

Zoho Books might be our top recommendation for free accounting software, but there are other free platforms available that you might find are a better fit for your specific needs.

Clear Books: for sole traders, the self-employed, and landlords needing basic but reliable software for MTD returns

You can customise the Clear Books dashboard, to display the metrics you feel are most important. Source: Startups.co.uk

What features are included in the Clear Books free MTD plan?

Clear Books offers a free ‘MTD Income Tax’ plan designed for sole traders and landlords, with no revenue or transaction limits.

You can run the free plan on both a desktop and mobile app, so you can categorise your income and expenses on the move. 

With this free MTD for Income Tax software, you’ll also be able to:

• Submit quarterly updates to HMRC with one click
• Link your bank feeds with automated matching
• Create invoice templates for clients
• Access profit and loss reports

If you decide to move to a paid tear, Clear Books also allows you to export your data at any time. Clear Books is an attractive free option if you just need to fulfil some basic MTD bookkeeping needs for the time being. 

What are the drawbacks?

• Unlike Zoho Books’s free plan, with Clear Books’ free tier, you can’t send estimates or quotes.
• You can’t customise invoices on the free plan (you’ll need to upgrade to at least the £5 tier for this).
• Provided you qualify for its free plan, FreeAgent comes with detailed tax forecasting tools, which are lacking on Clear Books’ free plan.
• Zoho Books’s free plan includes a customer portal for your clients to use, which is missing from Clear Books’s no-cost plan.

FreeAgent: great for a wide range of features… if you qualify for a free plan

Key information such as your cashflow will be displayed on the FreeAgent dashboard. Source: Startups.co.uk

Despite the name, FreeAgent is only free if you have a business account with any of the following banks:

• NatWest
• Royal Bank of Scotland
• Ulster Bank
• Mettle (and make at least one transaction per month)

FreeAgent’s features and tax forecasting capabilities

If you qualify for a free account, FreeAgent is excellent value for money, being one of the few platforms that’s got built-in tools for tax forecasting and planning at no extra cost.

The user-friendly invoice and estimate templates, combined with the detailed end-of-year reports, can streamline your operation. FreeAgent could also be used by limited companies, something Clear Books’ free plan wouldn’t be suitable for.

FreeAgent can help prevent you from submitting incomplete data to HMRC: it will provide an error box detailing exactly where you need to provide more data for your Self Assessment tax return.

What are the drawbacks?

• Our testing found FreeAgent’s layout to be less intuitive than competitors like Zoho Books, with some of our users struggling to locate certain actions like payment reminders.
• Once again, I need to flag that unless you currently have a business account with one of the qualifying banks we listed above, you won’t be able to access FreeAgent for free (pricing starts at £19 per month for sole traders). It’s a big prerequisite that our first choice, Zoho Books, doesn’t have.

Expert opinion: Dan Heelan on FreeAgent

If you bank with NatWest, Ulster Bank, Royal Bank of Scotland or Mettle, and are looking for free accounting software, this is the best deal out there. You get a fully-fledged version of the software for free, whereas the other free plans are capped, and limited in places. Super powerful, feature-packed software – for free.

Dan Heelan Accountant and Business Services Director at Heelan Associates Ltd

QuickFile: for those needing to use multiple currencies on a free plan

QuickFile’s dashboard for invoicing, banking and important notes. Source: Startups.co.uk

QuickFile’s free plan: multi-currency and invoicing features

QuickFile provides multi-currency support and unlimited users on its free plan, making it a standout choice for low-volume international freelancers (due to transaction limits).

QuickFile also provides an impressive range of other features to help out with your bookkeeping and accounting, including:

• Fully customisable and trackable invoices
• Ability to create estimates and quotes
• An online portal where your clients can view and pay invoices
• File VAT Returns directly to HMRC
• Two-factor authentication for added security

Additionally, QuickFile has a mobile app for snapping and uploading receipts on the go. If you don’t have a business account, QuickFile is also great for helping you separate out your personal and work finances.

What are the drawbacks?

• The ledger limit: up to 1,000 entries are covered for free, but if you go over then you’ll be charged £60, plus VAT, per year.
• Automated bank feeds also come at an additional cost of £15, plus VAT, per year.
• If you’re using the free version of QuickFile, you won’t be able to integrate any third party software.
• Bulk invoice entry is also only available on the paid tier, as is cryptocurrency tracking (these features won’t be necessary if you’re just using the software to file tax returns or do basic bookkeeping for your side hustle, though).

Expert opinion: Dan Heelan on QuickFile

The 1,000 ledger entry cap makes QuickFile a difficult choice. Ledger entries include invoices, bills and bank statement lines so it’s extremely easy to reach the cap. Having to pay for an automated bank feed is also something that’s highly unusual in an accounting app in 2026.

Dan Heelan Accountant and Business Services Director at Heelan Associates Ltd

GnuCash: for those with coding experience

GnuCash is a basic free option for simple data entry, and tracking your income and expenses. Source: gnucash.org

What features are included with GnuCash?

GnuCash is an open-source, non-commercial, software best suited for basic data entry and users with coding expertise.

A micro business can use it to manage a limited amount of transactions, which it does via double-entry accounting: every transaction is recorded as a debit to one account and a credit to another.

You’ll be able to register incoming bills or import your downloaded bank statements, and then:

• Automatically add VAT to sales invoices
• Add tax information to sales invoices (including for clients based abroad)
• Generate a PDF invoice to send to clients
• Build reports to track profits and losses or business overheads

What are the drawbacks?

• GnuCash does not natively support MTD.
• GnuCash works in accrual-mode, meaning it records expenses and sales as they take place, rather than at the point when an invoice is settled.
• While this is actually a smart way of keeping your business numbers, it’s not ideal for sole traders who may want to maintain a ‘cash basis’ set of records for their tax return, based on when things were paid.
• If you’re not a coding aficionado, you’ll struggle with GnuCash – a beginner will have a much easier time with Zoho Books.
• There’s no open banking integration, no mobile app and, crucially, it doesn’t support payroll functionality.

What features are included in the free plan?

VT Cash Book is a free desktop solution for businesses managing finances on a cash basis, rather than invoice dates.

The software exclusively tracks income that’s been received and expenses that have been paid. The software is mainly useful as a way of recording your payments and receipts.

It might be short on advanced features (both Zoho Books and FreeAgent come with a much wider suite of tools), but you’ll be able to perform basic actions like:

• Run limited reports on profit and loss
• Display balance sheets
• Perform ledger activity
• Create transaction lists

What are the drawbacks?

• The free version of VT Cash Book is not MTD-ready: you’ll have to pay extra for a VT Transaction+ license in order to access MTD for VAT features, and create a VAT return.
• Because it’s entirely focused on managing businesses on a cash basis, VT Cash Book’s free plan has no invoicing features for overseeing payments from clients and to suppliers.
• While it’s designed to take manually inputted data and reconcile these statements with your accounts (so you can correct simple mistakes), once you have your final profits, you won’t be able to submit a VAT return.

Expert opinion: Dan Heelan on VT Cash Book

Whilst I am a fan of VT, particularly its bigger brother that accountants often use to prepare accounts, desktop solutions are hard to recommend in 2026. If you must have a desktop solution, VT is a solid choice. But if you can, grab an online (cloud) application.

Dan Heelan Accountant and Business Services Director at Heelan Associates Ltd

How do I choose the right accounting software for my small business?

You don’t want to slow down your operation by picking the wrong platform, just because it’s free. Here are our top nine points to think about before you sign up for free accounting software:

1. Pricing (for the future): think about the scalability of the software as your business grows, and look for plans that align with your financial goals.
2. Accounts payable: look for free or low-cost tiers that give you the ability to add ‘bills’. You will then be able to see a list of people your business owes money to.
3. Accounts receivable: opt for no-cost accounting software that facilitates smooth invoicing, helps track customer payments and provides reminders for overdue invoices.
4. Financial reporting: access to real-time insights leads to informed decision-making and will be needed when it comes to preparing your tax return.
5. Integrations: being able to seamlessly connect your accounting software with third-party applications enhances efficiency as you grow. While this can sometimes be locked away on paid plans, many providers will allow you to plug other applications in at every plan level.
6. Mobile apps: a user-friendly app lets you access key financial information and perform essential tasks anywhere. You can find free options for mobile apps with most online accounting applications.
7. Help and support: unfortunately, support channels can often be limited on free plans, but they can be critical for those with less experience who need extra help.
8. Audit trail security: this provides a clear timeline of all actions performed in your accounting software, for enhanced security and accountability. Our top recommendation, Zoho Books, provides a tamper-proof audit trail and end-to-end encryption.
9. Data portability: you might sign up for a free plan now in the rush before April 6, but then find you grow out of it quite quickly. Look for providers that allow you to seamlessly export your data to a premium plan.

How we test and review free accounting software

At Startups, it’s important to us that the software recommendations we make to small UK businesses are useful, accurate and based on thorough product testing.

Zoho Books, Clear Books and FreeAgent were part of our latest round of exhaustive testing. This involved data-led analysis, in conjunction with 57 hours of user testing across 1,512 total areas of investigation.

Our other recommended free platforms – QuickFile, GnuCash and VT Cash Book – fell under a previous, separate round of testing. All in all, we covered four main categories of investigation and 24 subcategories during this testing process. I then fact-checked this information to ensure it is still relevant and up-to-date.

I combined the results of both of these rigorous testing sessions in order to bring you the most helpful and comprehensive list of the best free accounting software for your small business in 2026.

Are there free options for Making Tax Digital for Income Tax 2026?

There are several free options for Making Tax Digital for Income Self Assessment (MTD for ITSA). If your qualifying income for the tax year 2024 to 2025 was over £50,000 then you’ll need to be MTD-ready by April 6th. This includes having HMRC-approved software.

The threshold will then lower to £30,000 in 2027, and then again to £20,000 in 2028. With many sole traders and landlords only requiring approved software for very basic needs, it’s understandable they’d want a free option.

To be MTD-ready, software must store digital records of income and expenses, submit quarterly updates, and file final declarations to HMRC.

If you’d like to know more about what you need to do to be MTD-ready, you can consult our full guide to Making Tax Digital. Regardless of which software option you choose, we would heavily recommend checking with HMRC directly that it is MTD-approved. You can do this with the MTD finder tool at gov.uk.

Free options for MTD-ready software

These are some free, HMRC-approved options you can use for Making Tax Digital for Income Tax:

Zoho Books

Zoho Books is an incredibly easy-to-use accounting software option, and is a great choice if you need an intuitive platform that’s quick to learn.

The usability, along with features like the 50 receipt auto-scans included per month, are why we ranked Zoho Books as our number one recommendation for the best free MTD software.

FreeAgent 

FreeAgent is a comprehensive accounting software platform that has a range of features to help with your bookkeeping, and help you get MTD-ready…as long as you qualify for the free plan.

FreeAgent is only free with a qualifying business bank account with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle (with Mettle you also need to make one transaction per month).

With many small business owners concerned about the extra cost MTD compliance will bring, if you do qualify a for a free FreeAgent account with your bank, this is the most effective way to stay MTD-compliant at no cost.

Sage

Alongside its main range of Sage Accounting software plans (which are the products we tested and reviewed), Sage also provides Sage Individual Free. This is Sage’s completely free software for non-VAT registered sole traders, which is MTD-ready, and allows you to create and send five invoices per month.

Clear Books

In 2025, Clear Books introduced a free MTD for income tax software for the self-employed, sole traders and landlords. This means you can get all the basics done that you need to be MTD-compliant at no-cost, which includes AI-powered smart coding. You can find out more in our guide to the best accounting software for the self-employed.

Just remember that free plans can be a good no-cost solution, but you might find them limiting in the long run. They can often have restrictive usage caps (such as on invoices) and lack features like extra customer support, or receipt capture.

If you’re feeling unprepared for Making Tax Digital for Income Tax you can use our Startups readiness checklist to ensure you’ll meet the deadline.

Which free plans are not suitable for MTD for ITSA?

GnuCash and VT Cash Book (the free version) do not support MTD, and they cannot be used for MTD for ITSA without upgrades and coding, like bridging software.

In summary: what’s the best free accounting software?

Provided you don’t qualify for a free account with FreeAgent, Zoho Books is the best free accounting software thanks to its modern design, easy navigation, and impressive range of functionality for a free tier.

Just keep in mind that you’re limited to 1,000 invoices per year with Zoho Books ‘s free plan, so if you’re likely to exceed that, you’ll need to consider a paid tier.

If you are able to get a free plan with FreeAgent (by opening a qualifying business bank account) then this is incredible value for money. You get a fully-fledged accounting software for free, so you won’t be held back by the caps and limitations normally associated with a free plan.