UK comparison · 2026

Cheapest MTD-compatible accounting software (UK)

"Cheapest" depends on what you need. If you only need MTD for Income Tax record-keeping and filing, a free tier can be enough; if you need invoicing, bank feeds, and multi-user access, the real cost is a low monthly plan. This page ranks mainstream options by entry price and shows which are genuinely ready for Making Tax Digital.

Prices and MTD status reflect the providers' UK sites as of July 2026 and exclude VAT unless stated. Always confirm current pricing on the provider's website and check HMRC's list of MTD-compatible software before you buy.

Which should you use to file your MTD update? Start here

• Choose a free tier (e.g. Zoho Books free plan) if you invoice a handful of clients, want the lowest cost, and only need MTD record-keeping and filing. Confirm the free-tier limits suit your volume. See Zoho Books (affiliate link)
• Choose a low paid plan built for sole traders (e.g. Xero Simple or QuickBooks Sole Trader) if you want bank feeds, tidy invoicing, and a workflow designed around the quarterly update, and a few pounds a month is worth the time saved.
• Choose invoicing-led software (e.g. FreshBooks) if sending and chasing invoices is the bulk of your admin. Confirm its current MTD for Income Tax status on HMRC's list first.
• Stick with a spreadsheet plus bridging software if your records already live in a spreadsheet you trust and you are willing to add bridging software to file. A spreadsheet on its own cannot submit an MTD update. One HMRC-recognised bridging option is Coconut, whose MTD Bridging plan is £49.99/year (verified on getcoconut.com on 30 July 2026; always confirm the current figure and its MTD for Income Tax status on HMRC's recognised-software list before buying). We earn nothing from naming it: there is no affiliate link here and no commission, we name it only because it fits this route.

The full price and MTD-status table is below. Prices reflect the providers' UK sites as of July 2026; always verify the current figure on the provider's own pricing page, as pricing changes. Affiliate links are clearly labelled.

Entry prices and MTD status, ranked by cost

How the options rank on cost

1. #1

   Cheapest MTD-for-Income-Tax route from a provider

   Zoho Books' free plan is marketed as MTD for Income Tax ready, £0/month from a mainstream provider. Confirm the free-tier limits (transactions, users) suit your volume before relying on it.

2. #2

   Cheapest paid plan

   Xero's Simple plan (around £7/month ex VAT) is the lowest-priced paid entry point built for sole traders and landlords on MTD for Income Tax. New customers signing up through our link currently get 80% off for 6 months (time-limited offer, eligible plans only; check the current terms on Xero's site).

3. #3

   Purpose-built sole trader plan

   QuickBooks Sole Trader (around £10/month ex VAT) is designed specifically around the MTD for Income Tax workflow.

4. #4

   Invoice-first option

   FreshBooks Lite (around £15/month) leads on invoicing; confirm its current MTD for Income Tax status on HMRC's compatible-software list before choosing it for that purpose.

5. #5

   Spreadsheet + bridging software

   A spreadsheet is cheap (free to about £8/month) but is not MTD-compatible on its own, you must add bridging software to file, which adds cost and steps.

Cheapest is not automatically best, a slightly pricier plan that removes hours of manual work each quarter can cost less in real terms. Compare on your actual workflow, not the sticker price alone.

A note on MTD for Income Tax dates

Making Tax Digital for Income Tax is being phased in: from 6 April 2026 for sole traders and landlords with qualifying income over £50,000, from April 2027 over £30,000, and from April 2028 over £20,000. MTD for VAT already applies to VAT-registered businesses. Check your own obligation on GOV.UK, being on the cheapest plan does not change your filing deadlines.