MTD ITSA-compatible software is any HMRC-recognised platform that can keep digital records in a structured format and submit quarterly updates through HMRC's API. Five providers dominate the UK market in 2026: FreeAgent, Xero, QuickBooks, Sage Accounting and FreshBooks. Each ticks the regulatory box; the differences are price, depth and which trade you're in.
How we compared them
Picking accounting software is rarely fun, and the MTD ITSA marketing has muddied the water further. Every provider now slaps an "MTD ready" badge on their home page, which tells you nothing useful. What actually matters in 2026 is whether the platform handles cash-basis accounting properly, whether it splits self-employment from rental income cleanly, and whether the quarterly submission flow actually works without you needing to phone an accountant. We tested each on those three criteria.
Headline comparison table
| Software | Cheapest MTD plan (monthly) | Sole trader fit | Landlord fit | Free trial | Notable strength |
|---|---|---|---|---|---|
| FreeAgent | £0 (free with NatWest/RBS/Mettle business banking) or £19 | Excellent | Good | 30 days | Free for many UK bank customers; designed for sole traders |
| Xero | £16 (Ignite plan) | Good | Good | 30 days | Strong bank-feed network, robust app ecosystem |
| QuickBooks | £10 (Sole Trader plan) | Excellent | Average | 30 days | Cheapest entry tier for true sole traders |
| Sage Accounting | £15 (Start plan) | Good | Average | 1 month | Established UK incumbent, strong support |
| FreshBooks | £15 (Lite plan) | Good for service trades | Weak | 30 days | Best invoicing UX in the market |
Prices are headline rates as of April 2026 and shift constantly with promotions. VAT is not included on most published prices. Always check the current page before signing up.
FreeAgent — the default for most sole traders
FreeAgent's killer angle is that it's bundled free with NatWest, Royal Bank of Scotland, Ulster Bank and Mettle business banking accounts. If you bank with any of those, you've effectively had MTD-compatible software sitting unused in your online banking dashboard for years. That alone makes it the right answer for a large slice of the affected population.
Beyond the price, the product itself is built around UK self-employed workflows. Mileage tracking, simplified expenses, the ability to mark a transaction as personal in one click — all the small frictions that other platforms get slightly wrong. The dashboard shows your tax-due-to-date in real time, which is psychologically useful when you're putting cash aside for January. The weakness: scaling beyond a sole trader with a couple of properties starts to creak. If you run a limited company on the side, you'll outgrow it.
Xero — the safe corporate-grade choice
Xero isn't really aimed at sole traders. It's an SME platform that happens to comply with MTD ITSA. That said, the Ignite plan at £16/month is competitive, and once you're in the Xero ecosystem the app marketplace is unmatched — over 1,000 integrations covering everything from CIS payroll to Airbnb income syncing. Bank feeds are reliable, and chasing late invoices is genuinely well-handled.
If you're already paying an accountant who works in Xero (a lot do), the friction of staying within their preferred platform is worth more than any feature comparison on paper. Pick Xero if your accountant says so. If you don't have an accountant and never will, FreeAgent or QuickBooks Sole Trader is probably a better fit.
QuickBooks — the cheapest serious option
QuickBooks rolled out a dedicated Sole Trader plan in 2025 specifically targeting the MTD ITSA wave. At £10/month it's the cheapest mainstream option that isn't bundled with a bank account. The plan is deliberately stripped back: invoicing, expense tracking, mileage, and quarterly MTD submissions. No payroll, no multi-user, no CIS. For a freelancer or consultant turning over £55,000-£90,000 it's enough.
The catch is the upgrade path. As soon as you need anything beyond the bare minimum — multiple business income streams, a VAT registration, a bookkeeper logging in alongside you — you're pushed to QuickBooks Simple Start (£15/month) or higher. Pricing creeps quickly. For straightforward sole traders, though, it's hard to argue with £10.
Sage Accounting — the incumbent
Sage has been doing UK accounting since 1981 and that lineage shows in good and bad ways. The platform is solid, the support is genuinely UK-based, and HMRC has been working with Sage longer than most other vendors. The Start plan at £15/month covers MTD ITSA without fuss. Where Sage falls short is the modern UI feel — it looks and behaves like software designed in 2018 — and the fact that the cheaper tiers don't include some features (like quotes and recurring invoices) that competitors bundle in. Worth a look if you've been a Sage user historically; less compelling as a fresh choice.
FreshBooks — strong for service trades, weak for landlords
FreshBooks is technically MTD-compatible but the platform is built around service businesses — consultants, designers, agencies — that bill clients on time-tracked invoices. If that's your day, FreshBooks is genuinely a pleasure to use. The proposal-to-invoice-to-payment flow is the cleanest in the market. For landlords specifically, though, it's the wrong tool. The categorisation needed for property income (rents received, finance costs, repairs vs improvements) doesn't sit naturally in a platform built for billable hours.
Decision framework: which one for which trade?
- Sole trader, banks with NatWest/RBS/Mettle — FreeAgent, free. Stop reading.
- Sole trader, doesn't bank with the above, wants cheapest viable option — QuickBooks Sole Trader at £10/month.
- Sole trader plus 1-3 rental properties — FreeAgent or Xero. Both handle the dual income streams cleanly.
- Landlord-only, 1-5 properties — Hammock or Landlord Vision (specialist platforms not in our main table) often beat the generalists. FreeAgent is a strong second choice.
- Service business, invoice-heavy — FreshBooks for the UX, Xero for the ecosystem.
- Already working with an accountant — whatever they tell you. Don't fight it.
Hidden costs to budget for
The headline subscription is rarely the full bill. Most people end up paying for at least one add-on in year one. Bank feed reconnections (when your bank disconnects, which it will), receipt-scanning add-ons, payroll modules if you take on a part-timer, and the inevitable hour with an accountant when something doesn't reconcile. Realistic year-one software-and-service spend for a sole trader new to MTD ITSA: £200-£500. For a landlord with three properties: £300-£700.
What about free or open-source options?
There aren't really any credible free options outside the FreeAgent-NatWest bundle. Some bridging software vendors offer free tiers (123 Sheets, Tax Optimiser, others) for people who want to keep their records in Excel and just pay for the submission step. These work, but they require you to maintain a structured spreadsheet that the bridging tool can read. Cheaper monthly than a full SaaS — typically £20-£50 per year — but more friction and no automated bank feeds. Fine if you're disciplined and your turnover is at the low end. Less fine if your accounts are a shoebox of crumpled receipts.
What changes if your income crosses £30,000 in 2027?
The software you pick now should still be the right one in April 2027 when the threshold drops. None of the major providers change pricing tiers based on whether you're voluntarily or mandatorily enrolled — you pay the same. So a sole trader at £35,000 today, voluntarily signed up early, won't see their bill jump in 2027. The migration is administratively transparent.
Final thought
The platform wars are noisy but the practical answer for most readers is boring: if you bank with NatWest or RBS, use FreeAgent. If not, use QuickBooks Sole Trader. Spend the saved decision-energy on actually getting your Q1 figures ready by 7 August. For more on what those quarterly figures need to contain, see our guide to quarterly submissions or the full MTD ITSA guide. Sole traders specifically should walk through the step-by-step compliance article before picking software, because the right choice depends on whether you're solely self-employed or also taking side hustle income.