Key takeaways
- Sole traders with qualifying income over £50,000 had to use MTD for Income Tax software from 6 April 2026; the threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
- Clear Books Sole Trader Free, Pandle and Zoho Books Free all cost £0 and Clear Books and Zoho say their free plans handle MTD for Income Tax quarterly updates and the final return.
- Free plans usually leave out automated bank feeds: Clear Books adds them from £5 a month and Zoho Books from its £12 Standard plan.
- FreeAgent costs £19 a month plus VAT for sole traders, and is free while you keep a NatWest, RBS, Ulster Bank or qualifying Mettle business account.
- Xero's cheapest plan, Ignite, is £18 a month plus VAT with a cap of 20 invoices and 10 bills, and Xero lists every plan as MTD for Income Tax ready.
- QuickBooks Sole Trader Plus includes MTD for Income Tax and bank feeds but not VAT submission; its price did not display when checked on 6 November 2026.
- If you are VAT-registered, check the plan files VAT returns: Clear Books only includes MTD VAT on Sole Trader Plus at £15 a month.
The right accounting software for a sole trader is the cheapest plan that keeps your records, connects to your bank and files Making Tax Digital (MTD) for Income Tax updates if you need them. In November 2026 that ranges from free plans at Clear Books, Pandle and Zoho Books to £19 a month at FreeAgent. Prices here come from each provider’s own pricing page, checked on 6 November 2026, exclude VAT, and are listed by monthly price, not ranked.
Do sole traders need accounting software?
You need MTD-compatible software if your qualifying income from self-employment and property is over the threshold for the year. HMRC’s eligibility guidance, updated 26 March 2026, sets these dates.
| Qualifying income in | Over | Use MTD from |
|---|---|---|
| 2024 to 2025 | £50,000 | 6 April 2026 |
| 2025 to 2026 | £30,000 | 6 April 2027 |
| 2026 to 2027 | £20,000 | 6 April 2028 |
Below the threshold, software is optional. Many sole traders still use it to send invoices, match bank transactions and prepare the Self Assessment return. See MTD for Income Tax for sole traders for the full rules.
What does sole trader software cost?
Monthly list prices run from £0 to £19 for the plans aimed at sole traders. This table lists them by price, then alphabetically.
| Plan | Monthly price | MTD for Income Tax |
|---|---|---|
| Clear Books Sole Trader Free | £0 | Yes |
| Pandle (free) | £0 | Not stated for free plan |
| Zoho Books Free | £0 | Yes |
| Clear Books Sole Trader | £5 | Yes |
| Pandle Pro | £5 | Yes |
| Zoho Books Standard | £12 (£10 yearly) | Yes |
| Clear Books Sole Trader Plus | £15 | Yes |
| Xero Ignite | £18 | Yes |
| FreeAgent sole trader | £19 | Yes |
QuickBooks and Sage are not in the table. QuickBooks’ UK pricing page showed “Loading live prices” instead of figures, and Sage’s pricing page blocked our check. For more plans, see accounting software prices compared.
What each provider offers sole traders
Each plan below is described from the provider’s own site, in alphabetical order.
Clear Books. Clear Books has three sole trader plans. Sole Trader Free covers MTD quarterly updates and year-end filing but has no bank feeds or invoicing. Sole Trader (£5) adds bank feeds, invoicing and receipt scanning. Sole Trader Plus (£15) adds MTD VAT, the Flat Rate Scheme and the VAT domestic reverse charge, plus phone support.
FreeAgent. FreeAgent charges sole traders £19 a month or £190 a year. Bank feeds, MTD for Income Tax, Self Assessment filing and MTD VAT returns are included. It is free while you hold a NatWest, Royal Bank of Scotland or Ulster Bank business current account, or a Mettle account with at least one transaction a month. New customers get 50% off for six months on monthly billing.
Pandle. Pandle says its free plan “will be free forever”, but the pricing page does not list what it includes. Pandle Pro costs £5 a month with no contract and lists bank feeds, MTD IT submissions, VAT returns, a mileage tracker and unlimited users.
QuickBooks. QuickBooks UK lists a Sole Trader Plus plan for one user with automated bank feeds, MTD for Income Tax, Self Assessment preparation and mileage tracking. It does not include VAT submission to HMRC; that starts on Simple Start.
Xero. Xero has no separate sole trader plan on its pricing page. Ignite costs £18 a month and is capped at 20 invoices and 10 bills; Grow (£39) removes the caps. Every plan is listed as MTD for Income Tax ready. New customers get 90% off the base plan for six months.
Zoho Books. Zoho Books Free includes MTD for Income Tax for sole traders and landlords, with up to 1,000 invoices a year. Bank feeds need the Standard plan at £12 a month.
Which applies to you?
Use your income, VAT status and banking to narrow the list.
- If your income is below the MTD threshold and you have few transactions, a free plan or a spreadsheet may be enough.
- If you must use MTD and want bank feeds, compare the £5 plans at Clear Books and Pandle with Zoho Books Standard.
- If you bank with NatWest, RBS, Ulster Bank or Mettle, check whether FreeAgent is free for you before paying for anything else. See free business bank accounts.
- If you are VAT-registered, rule out plans without VAT filing, such as Clear Books Sole Trader and QuickBooks Sole Trader Plus.
- If you send more than 20 invoices a month, Xero Ignite’s cap will bite; look at higher tiers or other providers.
How to choose in five steps
- Check your MTD start date using HMRC’s eligibility tool.
- Search HMRC’s list. The GOV.UK software page, updated 13 July 2026, links to a software finder. It says free products exist for simple tax affairs but may limit transactions.
- Count your monthly invoices, bills and bank transactions and compare them with each plan’s limits.
- Price the full cost after any offer ends, plus VAT if you are not VAT-registered.
- Use the free trial and connect your bank before committing. Our sole trader bookkeeping guide covers what records to keep.
Frequently asked questions
Is there free MTD software for sole traders?
Yes. Clear Books Sole Trader Free and Zoho Books Free both say they handle MTD for Income Tax quarterly updates and the final return. Neither includes automated bank feeds.
How much is FreeAgent for a sole trader?
FreeAgent costs £19 a month or £190 a year excluding VAT for a sole trader, checked on 6 November 2026. It is free with a NatWest, RBS, Ulster Bank or qualifying Mettle account.
Does Xero have a sole trader plan?
Xero’s UK pricing page lists four plans, from Ignite at £18 a month, with no separate sole trader plan. Ignite is limited to 20 invoices and 10 bills.
When do sole traders need MTD for Income Tax software?
From 6 April 2026 if qualifying income was over £50,000 in 2024 to 2025, from April 2027 if over £30,000, and from April 2028 if over £20,000.
Do I need software if I am below the MTD threshold?
No. You can keep records any way you like and file Self Assessment online, though software can save time on invoicing and bank matching.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.