Disclosure
Educational comparison for UK sole traders and small businesses — not financial or tax advice. This page contains affiliate links, which are clearly labelled. We may earn a commission at no extra cost to you if you sign up through them. We do not guarantee tax outcomes, savings, or HMRC acceptance — always verify current pricing and MTD status on the provider's site and on GOV.UK.
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.
Entry prices and MTD status, ranked by cost
| Zoho Books£0 (Free) / £12/mo Standard | Xero£7/mo (Simple, ex VAT) | QuickBooks UK£10/mo (Sole Trader, ex VAT) | FreshBooks£15/mo (Lite) | SpreadsheetFree–£8/mo | |
|---|---|---|---|---|---|
| Lowest entry price (ex VAT) | £0 free plan; £12/mo Standard (£10 annually) | £7/mo (Simple) | £10/mo (Sole Trader) | £15/mo (Lite; £13.50 annually) | £0–£8/mo |
| Free plan | Yes — marketed MTD-IT ready | — | — | — | Google Sheets free |
| MTD for Income Tax | ✓ | ✓ | ✓ | VAT now; verify IT on HMRC list | Only via bridging software |
| MTD for VAT | ✓ | ✓ | ✓ | ✓ | Only via bridging software |
| Free trial | 14 days | 30 days | Trial or promo (verify) | 30 days | — |
| HMRC-recognised for MTD | ✓ | ✓ | ✓ | MTD VAT; verify IT | — |
| Get started | Visit Zoho Books (affiliate) | Xero site | QuickBooks UK site | FreshBooks site | Spreadsheet site |
Links marked (affiliate) are affiliate links — we may earn a commission if you sign up through them, at no extra cost to you. Other links go to the provider's official site. Always verify current pricing and terms on the provider's own website. Educational comparison only — not financial advice.
How the options rank on cost
#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
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.
#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
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
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.