The Cheapest Making Tax Digital Software for UK Sole Traders and Landlords

Making Tax Digital is now law. From April 2026, sole traders and landlords earning over £50,000 must use MTD-compatible software to keep digital records and submit quarterly updates to HMRC. From April 2027, the threshold drops to £30,000. If you fall into either bracket, you need software. But you don’t need to overpay for it.

The big accounting platforms — Xero, QuickBooks, Sage, FreeAgent — all support MTD. But they also charge £12–25+ per month for invoicing, payroll, bank feeds, and reporting tools that most sole traders and landlords will never touch. The question isn’t whether you need MTD software. It’s whether you need everything else that comes with it.

This guide compares the cheapest MTD software options in the UK and explains what you actually need to stay compliant.

What Making Tax Digital Requires

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) changes how you report your income to HMRC. Instead of filing one Self Assessment tax return each year, you now need to do three things:

• Keep digital records — All business income and expenses must be recorded digitally. Paper records and standalone spreadsheets that aren’t linked to HMRC-recognised software no longer satisfy the requirements.
• Submit quarterly updates — Four times a year, you submit a summary of your income and expenses to HMRC through your MTD software. The quarters follow your accounting period, and each submission is due one month after the quarter ends.
• File a Final Declaration — At the end of the tax year, you confirm that your records are complete and accurate. This replaces the traditional Self Assessment tax return.

All of this must be done through HMRC-recognised software. You cannot submit quarterly updates manually through the HMRC website, and spreadsheets alone won’t cut it unless they’re digitally linked to compatible filing software.

Who Needs MTD Software

MTD for Income Tax applies to three groups of people:

• Self-employed sole traders with gross income (turnover, not profit) over £50,000 from April 2026, or over £30,000 from April 2027.
• Landlords with property income over the same thresholds. This includes buy-to-let landlords, holiday let owners, and anyone receiving rental income.
• People with both self-employment and property income where the combined gross total exceeds the threshold. HMRC adds these together — so if you earn £30,000 from self-employment and £25,000 from rental income, your combined £55,000 puts you above the £50,000 line.

If you’re below the current threshold, you don’t need to act yet. But with the £30,000 threshold coming in April 2027 and possible further reductions on the horizon, it’s worth understanding your options now rather than scrambling later.

MTD Software Comparison: Prices and Features

Here’s how the main MTD-compatible software options compare on price and what you actually get for your money:

All five options are HMRC-recognised and support MTD quarterly submissions. The difference is what else you’re paying for. ClearMTD costs £65 per year. FreeAgent costs £228. That’s £163 per year in features that a typical sole trader or landlord will never open.

Why Most MTD Software Is Overkill

If you’re a sole trader or landlord, think about what you actually do with your accounts. You record what you earned. You record what you spent. Once a year (now four times a year), you report those numbers to HMRC. That’s it.

You don’t need invoicing software — most sole traders send invoices from Word, email, or a simple template. You don’t need payroll — if you have employees, you’re likely using a dedicated payroll provider already. You don’t need bank feeds pulling transactions automatically — you know your income and expenses because you’re running the business yourself.

You certainly don’t need multi-currency support, project management tools, purchase order systems, or inventory tracking. These are features built for businesses with finance teams, not for a plumber, a freelance consultant, or someone renting out a flat.

Every one of those features adds complexity to the interface, increases the learning curve, and pushes the price up. You’re paying for software designed for a business ten times your size, and using roughly 10% of what it offers. The cheapest MTD software isn’t always the most basic — it’s the one that matches what you actually need.

ClearMTD’s Approach

ClearMTD was built specifically for sole traders and landlords who need MTD compliance and nothing more. It was designed by Steven Hallissey FCA — a Fellow of the Institute of Chartered Accountants in England and Wales with 26 years of experience as a CFO and Finance Director. That background means the software was built by someone who understands exactly what HMRC requires, not by a startup guessing at compliance requirements.

Here’s what ClearMTD does:

• Connect to HMRC — Securely link your HMRC account via OAuth (the same authentication standard used by banks). One click, no manual credentials. ClearMTD pulls your obligation periods directly from HMRC, so you always know what’s due and when.
• Enter your income and expenses — Simple forms, plain English. No accounting jargon, no chart of accounts, no double-entry bookkeeping. Enter what you earned and what you spent.
• Submit to HMRC — One-click submission. ClearMTD formats the data, sends it to HMRC via their official MTD API, and confirms the submission. After filing, you see your calculated tax liability — income tax, National Insurance, and total due.
• Free MTD Checker — Not sure if MTD applies to you? The MTD Checker on the homepage asks a few simple questions and tells you whether you need to comply, which threshold applies, and when your first submission is due. No signup required.
• Agent portal for accountants — Accountants managing multiple clients can use the agent portal to handle submissions on their behalf. One login, multiple client businesses, centralised filing.

ClearMTD costs £7.50 per month or £65 per year (saving 28%). You can sign up for free — no payment is required until you actually submit to HMRC. There are no setup fees, no contracts, and you can cancel anytime.

What to Look For in MTD Software

Regardless of which software you choose, make sure it ticks these boxes:

• HMRC recognition — The software must be on HMRC’s list of recognised MTD-compatible products. If it isn’t listed, your submissions may not be accepted.
• Quarterly submission support — It must handle the four quarterly updates and the Final Declaration, not just annual Self Assessment.
• Digital record keeping — Your income and expense records must be stored digitally within the software (or digitally linked to it). This is a legal requirement, not a nice-to-have.
• Tax calculation — Good MTD software will show you your estimated tax liability after each submission, so you can plan ahead rather than getting a surprise bill in January.
• Price transparency — Watch out for introductory offers that double after three months, or essential features locked behind higher-tier plans. Know what you’re paying before you commit.
• Easy cancellation — You should be able to cancel online without phoning a retention team. If cancelling is harder than signing up, that tells you something about the company’s priorities.

You don’t necessarily need the absolute cheapest option — you need the right option for your situation. If you genuinely use invoicing, bank feeds, and expense categorisation, then Xero or QuickBooks may be worth the extra cost. But if all you need is to record your numbers and submit to HMRC four times a year, paying for a full accounting suite is like hiring a removal van to deliver a letter.