Making Tax Digital Software
6 min read
Want a simple overview first?
Download the free guide for UK sole traders and understand the key accounting records, deadlines and Making Tax Digital changes in plain English.
What both options need to achieve
Your overall software setup must let you keep the required digital records and make the HMRC submissions that apply to you. HMRC confirms that both free and paid choices are available.
A concrete free example - September 2026
As of September 2026, Clear Books advertises a £0 sole-trader MTD plan including quarterly updates and the year-end tax return. Zoho Books also advertises an HMRC-recognised free plan for sole traders. These are examples, not recommendations; check HMRC's current software finder and each provider's current limits.
What paying can buy you
Paid software may add stronger bank automation, receipt scanning, invoicing, integrations, multiple users, more income sources, advanced reports or enhanced support. For example, a sole trader with hundreds of monthly transactions may save enough admin time to justify a subscription even though a free product could technically meet the MTD requirement.
Example decision
Imagine Anna has one freelance business, 25 transactions a month and no employees. A suitable free plan may be enough. Ben has two income sources, frequent invoices, foreign-currency payments and wants automated bank reconciliation. A paid plan may be better value because it reduces manual work.
How to compare fairly
Compare the standard price after introductory offers, the features included in the exact plan, cancellation/export options and whether the product can submit the complete tax return - not only quarterly updates.
Common misconception
“Paid software is more compliant than free software.”
Not true.
Compliance depends on whether the software is recognised and suitable for the submissions you need, not on its price.
Free can be enough for simple affairs; paid can be worth it when automation or complexity saves meaningful time. Choose on workflow and total value, not price alone.
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