The best Making Tax Digital free software in 2026 Just because Making Tax Digital is becoming mandatory, doesn't mean it has to cut into your budget: these are the best MTD-ready options you can get for free. Written by Eddie Harris Published on 6 February 2026 Our experts We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. Startups.co.uk is reader supported – we may earn a commission from our recommendations, at no extra cost to you and without impacting our editorial impartiality. The first April deadline for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA)is fast approaching, but the good news is you can get prepared without spending a penny if you opt to use some of the best accounting software platforms, including FreeAgent, Clear Books, and Zoho Books.If you’re a sole trader or landlord whose qualifying income is over £50,000 for the tax year 2024/2025, then you’ll be due to start MTD for ITSA on April 6th this year. The upcoming MTD deadline might be soon, but don’t worry, as long as you have the right software set up then most of the work will already be done.Making Tax Digital might be mandatory, but that doesn’t mean it needs to expensive. There are plenty of self-employed business owners who were worried that MTD meant having to splash out on expensive software, but thankfully, that’s not the case. We’ll talk you through the top no-cost options for getting MTD-ready. 💡Key takeaways FreeAgent is the best option for a free MTD-ready plan: as long as you hold a qualifying business bank account with NatWest, RBS, Ulster Bank, or Mettle (and make one transaction per month).HMRC-approved software must be capable of digital record keeping, quarterly updates, and tax return submissions. Clear Books offers a free plan for sole traders and landlords with no revenue thresholds or qualifiers required for access.Zoho Books is very easy to use but is only free for businesses with an annual revenue under £35,000. .‘Bridging software’ allows you to continue using Excel for MTD, provided the bridge itself is also HMRC-approved. Free plans are fine for businesses with only basic needs. What is MTD-ready software? In accordance with HMRC’s regulations, for MTD-software to be compliant, it will need to be able to carry out the following actions:Create, store, and correct digital records of your self-employment and property income and expensesSend quarterly updates directly to HMRCSubmit your tax return by 31 January the following yearYour chosen software must be HMRC-approved or you could face serious fines and penalties. All of our recommendations are MTD-ready. Top 3 free Making Tax Digital (MTD) software providersOur top three choices for a free Making Tax Digital solution are FreeAgent, Clear Books, and Zoho Books. All are extremely solid accounting software providers that offer free plans, however, there are some limitations you’ll need to keep in mind before choosing.You can quickly compare our top recommendations, and who they’re best for, in the below table: 0 out of 0 backward forward Best for Key benefits Best overall FreeAgent Clear Books Zoho Books If you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle Sole traders and landlords needing a reliable, no-cost software for MTD returns Lower revenue businesses (Zoho Books free plan has a 35k revenue cap) Comprehensive accounting softwareCash flow alertsReceipt capture Free MTD for income tax plan with no revenue limitAI-powered smart codingSimple ‘pop up’ project creation Easy to use1,000 invoices included in the free planFits seamlessly into the Zoho-ecosystem Get Quotes Get Quotes Get Quotes 1. FreeAgent: best if you qualify for a free plan FreeAgent 4.5 Starting price from: Free with a qualifying business bank account Free trial: 30 days Free plan available with certain qualifying banks The only software we tested that gives you built-in tax forecasting and planning tools at no extra cost Helpful cash flow alerts about potential surpluses and shortfalls Summary Originally launched in 2007, FreeAgent is based in Edinburgh and now helps over 200,000 small businesses. It was acquired by NatWest Group in 2018. Our recommendation is that FreeAgent is best suited to freelancers, sole traders and novice accountants. It’s a good middle ground for those who need a feature-filled system that’s not overly complex. Show moreless Suitable if: You qualify for a free plan (e.g. you have a business bank account with NatWest) You want a comprehensive cloud accounting software platform You want more advanced features like cash flow alerts (warning you of potential surpluses and shortfalls) Not suitable if: You don't have a qualifying business bank account You prefer a simple software with a short learning curve You only deal in a low amounts of transactions and need something basic Standout featuresBuilt-in tax forecasting and planning toolsCash flow alertsSmart receipt captureSupported income sources (confirmed by HMRC): sole trader and UK propertyFreeAgent is an MTD-ready, comprehensive cloud accounting software platform that’s incredible value for money, as long as you qualify for a free plan. FreeAgent costs nothing if you have an eligible business bank account from:NatWestRoyal Bank of ScotlandUlster BankMettle (and make at least one transaction per month)If you can get a FreeAgent account through one of the above banks, then you’ll have access to a feature-packed software without the hefty price tag. And we’re not talking about a stripped-down version of a premium plan like you get with other ‘free plans’. If you qualify, you’ll get the full power of FreeAgent’s accounting platform without spending a penny.FreeAgent allows for customisable invoicing templates, tax reminders and end-of-year reports. Source: Startups.co.ukFreeAgent’s design choices make your bookkeeping simpler, such as the user-friendly templates, and clear timeline for invoicing. But the ‘traffic-light’ system for bank transactions stood out as especially helpful: transactions are categorised as “Explained”, “Unexplained”, “Manually added” or “Marked for approval”.FreeAgent is simple enough to use as a novice, but you still get access to some advanced bookkeeping features, like the built-in tax forecasting and planning tools. FreeAgent isn’t just a basic software to make you HMRC-compliant for April, it can also help your business grow with deeper financial insights, and cash flow alerts.What are the disadvantages of FreeAgent?The help guide was slightly tricky to find in our testing and when we did find it, it took us to an external knowledge base, which made the experience feel a bit disjointed.FreeAgent doesn’t provide autofill when manually entering a bill (though it will for receipt capture, or clearing down your bank account).In certain places FreeAgent can use some unclear terminology, which can make some sections hard to locate.An improved onboarding experience would help to get to grips with FreeAgent much quicker. Zoho Books, by comparison, had a shorter learning curve.2. Clear Books: best free MTD plan for sole traders with simple needs Clear Books 4.0 Starting price from: Free Free trial: 30 days Well-designed search function enables easy access to important information Efficient and easy customisation, such as quote creation Easily create new projects with helpful pop-up feature Summary Started in 2008, ClearBooks is a UK based accounting software firm specifically designed with small businesses in mind. Freelancers, as well as small businesses, could benefit from ClearBooks, mainly thanks to its easy-to-use project creation. Show moreless Suitable if: You want a truly free plan (there's no revenue threshold) You're a sole trader or landlord with simple needs You want a simple and convenient platform for submitting MTD updates to HMRC Not suitable if: You want customer support You want to avoid an initially steep learning curve You want built-in receipt scanning (this is only on the paid tiers) Standout features“Pop-up” project creatorBuilt-in AI-powered smart coding toolsNo caveats on the free planSupported income sources (confirmed by HMRC): sole trader and UK propertyUnlike Zoho Books and FreeAgent, there’s no barrier to entry on Clear Books’ free plan. There’s no revenue cap or qualifiers and the free plan is free forever. For sole traders or landlords who just need a basic software that meets HMRC-requirements and want a truly no-cost plan, then Clear Books is a solid choice.The customisability of Clear Books, including the customisable dashboard, can help simplify your accounting. Source: Startups.co.ukClear Books might be on the more basic side of things, but it’s clean, simple, and straightforward. Sole traders will benefit from the easy quote customisation, and the well-designed search functionality makes it quick to find whatever you need.There’s a bit of a learning curve initially, but overall you’ll find Clear Books is handy for bookkeeping convenience. Touches like the easy ‘pop up’ project creation and AI-powered smart coding can help you build an efficient accounting workflow and make getting your quarterly updates out to HMRC all the simpler.What are the disadvantages of Clear Books’ free plan?The free plan doesn’t include email, phone, or user community support.We found there was a steep learning curve with Clear Books. In comparison, Zoho Books and FreeAgent are more beginner friendly.Functions like bank reconciliation and categorisation didn’t feel as slick as some competitors.The interface as a whole feels a bit dated.3. Zoho Books: best if your revenue falls under £35k Zoho Books 4.8 Starting price from: Free Free trial: 14 days Easy-to-use platform that's simple to navigate Excellent free plan for solopreneurs and micro-businesses Mobile app for real-time financial management Summary Zoho initially made its name from CRM systems, but has been providing accounting software since 2011. Zoho Books stands out for its clean and modern interface, and seamlessly aligns with the broader Zoho products. While the platform is geared towards small businesses, we would also recommend it to sole traders, as the tools can be used by inexperienced users. Show moreless Suitable if: Your revenue falls under £35,000 for the financial year You want an easy-to-use platform with a short learning curve You plan on using the entire Zoho ecosystem Not suitable if: You need free MTD-ready software for this year (as you will have exceeded the revenue cap) You want to integrate non-Zoho software Standout featuresGenerous transaction caps for a free plan (1,000 invoices, and 1,000 purchases)50 receipt auto-scans included per monthVariety of Zoho apps you can integrateSupported income sources (confirmed by HMRC): sole trader and UK propertyZoho Books comes in as our overall number one rated free accounting software, thanks to how intuitive and easy-to-use it is. For sole traders and landlords who are making the jump from spreadsheets to full software for MTD, then Zoho Books is a great starter option if you want to avoid a steep learning curve (just as long as you don’t exceed the revenue threshold: Zoho Books is free for businesses whose revenue falls under £35k for the financial year).Zoho Books has a simple, clear interface that’s easy to understand if this is your first time using accounting software. Source: Startups.co.ukZoho Books would have been our top recommendation, but the revenue cap makes the free plan unsuitable for those joining the MTD in 2026 (as the qualifying income threshold of £50,000 would exclude them from Zoho Books’s free plan), but it’s a great option for those who will be joining the scheme in 2027 (when the threshold drops to £30,000) and 2028. For 2026, Clear Books is a better free option.It’s also going to be a great choice if you’re already in, or planning to join, the wider Zoho ecosystem. All the Zoho applications connect seamlessly: Zoho CRM or Zoho Mail for example. So if you want to run your business entirely from the Zoho-ecosystem it will be a convenient workflow.What are the disadvantages of Zoho Books’ free plan?While you do get the 50 receipt auto-scans included, the receipt capture technology is a little basic without the paid add-on.Despite the great connectivity to other Zoho apps, Zoho Books does have more limited access to third-party applications.Zoho Books only supports one user, and one accountant.If you’re not planning on using the rest of Zoho’s ecosystem, you won’t be getting the most out of the plan.We would also briefly note: the tax return function is noted as still “in development” on HMRC’s website. This means that Zoho Books has either built this feature, or has committed to build it by the time you need to submit your 2026 to 2027 tax return. Our methodology: how we chose the best free MTD softwareOur dedicated, in-house research team carried out 37 user tests, which amounted to a total of 57 hours of actual testing, in order to determine the best accounting software options.We split this testing across these six crucial categories:Core accounting tools and featuresTools for financial planning and visibilityHow efficiently the software helps you run your businessThe help and support the platform offersThe price of the software: if you need to upgrade to a paid plan, of if there are hidden feesUsability: how easy to use it isWe then gave each of these six categories an individual weighting, relating to how important that category would be for sole traders needing a full cloud accounting software platform.Based on the results of our testing, Zoho Books would have come in as the number one ranked free MTD software, however as the revenue cap makes the free plan unsuitable for MTD in 2026 (qualifying income of over £50,000), it has been placed third. What other free software is available for Making Tax Digital?Our top three recommendations for free MTD-ready accounting software have been tested and reviewed by ourselves at Startups, but there are other options out there to consider, such as Sage Individual Free.We have not had the opportunity to test Sage Individual Free for ourselves, however we have rigorously tested and reviewed the Sage Accounting plans (you can find out more in our Sage pricing guide), which we ranked as one the best accounting software for small businesses, as well as one the best self-employed accounting software platforms.As we know Sage is a trusted brand in the accounting software space, we wanted to highlight that it has a free MTD-ready plan:Sage Individual Free Suitable if: You want a free plan with no revenue threshold or qualifiers You want MTD-ready software from a trusted brand name You just need a simple software to provide MTD-updates to HMRC Not suitable if: You want customer support included You need to send more than five sales invoices a month You want automated receipt capture included Supported income (confirmed by HMRC): sole traderSage Individual Free, similar to Clear Books ‘sole trader’ plan, doesn’t have a currency threshold (or a barrier to entry like FreeAgent) so it’s suitable for non-VAT registered sole traders on a tight budget that need to be MTD-ready. You can sign up to Sage Individual Free to access an HMRC-approved software that will allow you to manage your income and expenses as well as send off your quarterly updates and tax summary to HMRC.So if you just need MTD-ready software that does the basics with no hidden charges, and no billing, Sage Individual Free is a solid choice.What are the disadvantages of Sage Individual Free?It’s a basic piece of software, missing the advanced planning tools of FreeAgent or an added bonus like Clear Books’s smart coding.No support is included, you need to upgrade to the paid Sage Individual plan to access webchat and community support.Sage Individual Free isn’t the best for scalability, if you outgrow Sage Individual (the paid tier) you can’t seamlessly upgrade to the main Sage Accounting plans (they require a new license, so not the smoothest transition).In addition to Sage Individual Free, there are some other choices that might suit basic needs (though these have not been tested and reviewed by ourselves at Startups):!Coconut Free!Coconut Free is basic, and has been designed predominantly for mobile-use, tailored to users who need something free and simple. HMRC confirms !Coconut Free supports sole trader, UK property, and foreign property income sources. TaxNavOne of the benefits of TaxNav is that it’s a browser based software that doesn’t require you to install anything on your computer. Its focus is on simplicity, however, it doesn’t have a mobile app which can limit its suitability for some users. As confirmed by HMRC, TaxNav supports sole trader, UK property and foreign property income sources.MonzoIf you use Monzo for your business bank account, it’s worth knowing that you already get built-in MTD-ready software for your account. As confirmed by HMRC, Monzo supports sole trader income sources. Can I use Excel for Making Tax Digital for Income Tax?Excel on its own is not approved by HMRC for Making Tax Digital for Income Tax, because it’s not capable of submitting updates directly to HMRC, making it non-compliant. However, you can technically keep on using it if you combine it with ‘bridging software’.‘Bridging software’ connects your spreadsheets to HMRC (this acts as the bridge between your non-compliant record keeping software and HMRC). Just keep in mind, the bridging software you choose to use needs to also be HMRC-approved, so don’t get caught out by this, or you could face penalties and fines.Still, just because you can continue to use Excel in this way, doesn’t mean that you should. In our opinion, using bridging software isn’t the best long term solution. Using full cloud accounting software will overall make your bookkeeping more efficient, allow you deeper insights into your finances, and give you an end-to-end MTD-ready platform at your fingertips.You’ll be able to find HMRC-approved, free MTD bridging software through the finder tool at gov.uk.Understanding the digital links ruleThis is an important rule for staying Making Tax Digital compliant, so it’s crucial to understand it: from the moment you record a transaction in your software, any further transfer or amendment of that data must be done digitally.That includes making any corrections, submitting the quarterly updates, or filing your tax return. HMRC must be able to see a clear, digital audit trail for any movement of data since it first entered the system.This means actions like cut and paste, or copy and paste, are not allowed under HMRC’s regulations. However, HMRC does consider the following to be acceptable digital links:Linked cells in a spreadsheetUsing a flash drive or memory stick, which is then handed to another person to upload to HMRC-approved softwareXML, CSV import and export, and downloading or uploading filesAPL transferYou can find out more detailed information about the rules and regulations of MTD in our full guide to Making Tax Digital. Pros and cons of free MTD softwareThe main pro of free MTD software might be obvious (you don’t have to pay anything!) but there are quite a few limitations to these plans that you might not have considered. For example, the limited customer support, or missing out on helpful features like AI-powered receipt capture.While it’s always tempting to go for a free option to save on overheads, have a look at our list of pros and cons below to see what the trade-offs to free plans can be: Pros Save on costs Get used to trying out accounting software before upgrading Reassurance of HMRC compliance Simplicity Cons Restrictive transaction caps Limited support Often only free under specific circumstances Limited tools and features (no receipt capture for example) Free plans are really only suitable for very basic needs. Before choosing a free plan, consider the extra features of a premium plan that can help make your bookkeeping more efficient like AI-powered automations or unlimited document capture tools that can automatically upload receipts for you. Is free MTD software right for my business?Free software is perfectly fine for your business if you only have simple and basic needs. If you were already comfortable doing your accounts on spreadsheets, then free software will most likely do the trick. However, free plans can become restrictive quickly. You might find that the transaction caps, limited support, and lack of extra features like advanced cash flow reporting will hold your business back. Remember also that free plans won’t include payroll, so they won’t suit you if you have other employees, and most won’t support more complex tax needs. Free plans might suit you if: You have low transaction volumes You're on a very tight budget You're a sole trader who just needs to be MTD-compliant for a basic business You shouldn't use a free plan if: You need deep insights into your finances You need to manage employees You have complex tax requirements (for example the Construction Industry Scheme) You have large amounts of receipts to upload You have high amounts of transactions and need a smooth workflow Next steps: how to choose the best MTD softwareIt’s vital to keep in mind that the ‘best’ MTD software will depend on your specific scenario and needs. If you have a smaller turnover then Zoho Books will be a top option, but if you’re banking with NatWest then FreeAgent will be the most logical choice.Remember that free accounting software options can be a great option for the self-employed who need to be MTD-ready quickly. They can also be a good learning experience if you’re new to cloud accounting software. However, they do have a number of limitations you might find restrictive as your business grows. If you’re feeling confident about your software, but still concerned about the upcoming MTD for ITSA deadlines, don’t panic. Take a look at our Startups MTD readiness checklist, and you can be MTD-ready before the April 6th deadline. Jump back into any of our reviews: Top 3 free Making Tax Digital (MTD) software providers Our methodology What other free software is available for Making Tax Digital? Can I use Excel for Making Tax Digital? Pros and cons of free MTD software Is free MTD software right for my business? Next steps Sage: get MTD-ready for FREE Sole traders and landlords can be HMRC-compliant for £0 with Sage Individual Free Visit Sage Start for free Startups.co.uk is reader-supported. If you make a purchase through the links on our site, we may earn a commission from the retailers of the products we have reviewed. This helps Startups.co.uk to provide free reviews for our readers. It has no additional cost to you, and never affects the editorial independence of our reviews. Share this post facebook twitter linkedin Written by: Eddie Harris Senior Reviews Writer Eddie is resident Senior Reviews Writer for Startups, focusing on merchant accounts, point of sales systems and business phone systems. He works closely with our in-house team of research experts, carrying out hours of hands-on user testing and market analysis to ensure that our recommendations and reviews are as helpful and accurate as possible. Eddie is also Startups video presenter. He helps create informative, helpful visual content alongside our written reviews, to better aid customers with their decision making. Eddie joined Startups from its sister site Expert Reviews, where he wrote in-depth informational articles and covered the biggest consumer deals events of the year. And, having previously worked as a freelancer providing screenplay and book coverage in the film and television industry, Eddie is no stranger to the demands of the sole trader.