Free MTD-Compatible Software: The Options HMRC Does Not Make Easy to Find

HMRC is not telling you about the free options

When you read HMRC's MTD guidance, you are directed to a list of commercial software providers. Xero. QuickBooks. Sage. These are perfectly good products, but they are not cheap — and the list can feel like you have no choice but to spend £200+ a year to comply with a legal requirement.

You do have a choice. There are free and low-cost routes that most people miss.

Option 1: HMRC Basic Tools (genuinely free)

HMRC publishes its own free MTD-compatible tool. It is basic — there is no invoicing, no bank feeds, no dashboards — but it is HMRC-compliant for making quarterly updates and the final declaration.

Who it suits: Sole traders with simple income, no staff, and no need for business banking features. If you currently manage your accounts in a spreadsheet and just need something to submit to HMRC, this is the lowest-cost route.

The catch: It is functional but not polished. Customer support is limited. You will not get the hand-holding that commercial software provides.

[Find HMRC's free MTD software via the GOV.UK software list]

Option 2: FreeAgent via Mettle (free business current account)

This is the hidden gem most sole traders miss.

Mettle is a free business current account from NatWest Group. When you open a Mettle account, you get free access to FreeAgent — full cloud accounting software that normally costs around £19/month.

FreeAgent is a proper accounting platform with:

• MTD quarterly submissions built in
• Bank feed integration
• Expense tracking
• Invoice creation
• Real-time tax estimates

Who it suits: Sole traders and landlords who want a genuine MTD-compliant accounting workflow at zero cost. You need to be comfortable banking with Mettle for your business transactions (NatWest also offers FreeAgent free to business banking customers if you prefer a more traditional bank).

The catch: You need to open and use a Mettle/NatWest business account. If you already have a business account elsewhere and do not want to change, this may not be attractive.

Option 3: Bridging software (for spreadsheet users)

If you already track your income and expenses in a spreadsheet — Google Sheets or Excel — bridging software lets you keep doing that and just handles the MTD submission part.

Bridging software reads your spreadsheet data and submits it to HMRC in the required format. Several providers offer this with low-cost or free-tier plans.

Who it suits: People who are comfortable with spreadsheets and do not want to change their workflow. Landlords with a small number of properties often find this the simplest route.

The catch: You still need your spreadsheet to be set up correctly. Bridging software does not help you organise your records — it just submits them. If your spreadsheet is a mess, you will need to clean it up first.

Paid options: what you get and what it costs

For reference, here are the main paid options:

| Software | Starting price/month | MTD included | Best for | |----------|---------------------|--------------|----------| | QuickBooks Self-Employed | ~£8 | Yes | Freelancers, simple self-employment | | QuickBooks Simple Start | ~£14 | Yes | Small businesses needing invoicing | | FreeAgent (standalone) | ~£19 | Yes | Sole traders, freelancers | | Xero Starter | ~£16 | Yes | Growing businesses | | Sage Accounting Start | ~£15 | Yes | Traditional businesses | | TaxCalc | ~£10–20/year | Yes | Simple one-person businesses |

Note: prices change frequently. Check the provider's current pricing before signing up.

Software comparison: which is right for you?

| Your situation | Recommended route | |----------------|-------------------| | Simple self-employment, happy with basic tools | HMRC Basic Tools (free) | | Want proper accounting software for free | Mettle + FreeAgent (free) | | Already use spreadsheets, want to keep them | Bridging software (low cost) | | Want a polished, full-featured platform | QuickBooks or Xero (paid) | | Landlord with multiple properties | FreeAgent or Xero (better property features) | | Have an accountant managing things | Ask your accountant — they likely have a preferred tool |

What to look for in any MTD software

Before choosing, check these four things:

1. Is it on HMRC's approved list? Search "HMRC MTD compatible software" and verify your chosen product appears.
2. Does it support your income type? Some tools are better for self-employment; others handle property income. Make sure yours covers what you need.
3. Can your accountant access it? If you have an accountant, they should be able to connect to your software as an agent.
4. What is the real ongoing cost? Many products offer free trials. Check what you will pay after the trial ends.

The MTD Ready software guide

The MTD Ready kit includes a full side-by-side comparison of all major MTD-compatible software options, including who each product is best suited for based on your specific situation. One-time £29, instant download.

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Frequently Asked Questions

Is HMRC's free software actually good enough?

For simple situations — a sole trader with one income stream, straightforward expenses, and no employees — yes. It is not pretty, but it does the job. If you need invoicing, bank feeds, or payroll, you will need a commercial product.

Can I use a spreadsheet for MTD?

You can keep your records in a spreadsheet, but you cannot submit directly to HMRC from Excel or Google Sheets. You need either MTD-compatible accounting software or bridging software to make the actual submission. Some bridging tools have integrations that pull data from a properly structured spreadsheet.

Does my existing software work for MTD?

If you already use QuickBooks, Xero, FreeAgent, Sage, or another major accounting platform, it almost certainly has MTD support — but you need to connect it to your HMRC account separately. Log in and look for an MTD or Making Tax Digital section. If you are not sure, search "[your software name] MTD setup" for their specific instructions.

What is the difference between MTD for VAT and MTD for Income Tax?

MTD for VAT has been in place since 2019. MTD for Income Tax is the newer extension of the same concept, applying to sole traders and landlords for income tax reporting. If you already use MTD for VAT, your software likely already supports MTD for Income Tax too — but you may need to register separately.

Can I switch software once I have started MTD?

Yes. You can switch MTD-compatible software at any time. You will need to register the new software with HMRC and re-connect your account. Any historical submissions will remain on HMRC's records regardless of which software you use.

Do I need separate software for property income and self-employment?

Not necessarily. Most MTD-compatible platforms allow you to manage both income sources within the same account and file the quarterly updates for each separately (as required by HMRC). Check that your chosen software explicitly supports multiple income sources if you have both.