Best Making Tax Digital software for side hustles and sole traders (2026)
Free and low-cost Making Tax Digital for Income Tax software for sole traders and landlords, compared: Zoho Books, Clear Books, Sage, FreeAgent and bridging software for spreadsheets. Ready for April 2027.
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Do you need MTD software yet?
You need Making Tax Digital software if your self-employed income plus rental income, before expenses, was:
- Over £50,000 in 2024/25: you started on 6 April 2026
- Over £30,000 in 2025/26: you start on 6 April 2027
- Over £20,000 in 2026/27: you start on 6 April 2028
What the software has to do
Under MTD you must:
- Keep digital records of your income and expenses.
- Send HMRC a summary every quarter.
- Submit a final declaration after the tax year ends, instead of a normal tax return.
Only software on HMRC's recognised list can do this. Check any product against the GOV.UK software finder before you sign up.
Free options
| Software | Free for | Worth knowing |
|---|---|---|
| Zoho Books | Sole traders and UK landlords | Limits on invoices and receipt scans each month |
| Clear Books | Sole traders and landlords | No revenue limit; support is limited on the free plan |
| Sage Sole Trader Free | Freelancers not registered for VAT | Covers income, expenses and quarterly updates |
| FreeAgent | Customers of NatWest, RBS, Ulster Bank or Mettle | Free while you bank with them and make a transaction a month |
| !Coconut Free | Sole traders and landlords | Mobile-first, basic features |
| Monzo business | Monzo business account holders | Self-employment income only |
Summarised from Startups in July 2026. Free plans change, so check the current terms.
Paid options
Xero, QuickBooks, FreeAgent and Sage all have paid plans with bank feeds, invoicing and receipt scanning. They suit you if your side hustle is growing, you have several income sources, or you work with an accountant.
Prefer spreadsheets?
You can keep using a spreadsheet if you add bridging software, which reads your figures and sends them to HMRC. It is the cheapest route if your records are already in good shape.
How to choose
- Pick something you will actually use. A phone app that snaps receipts beats a powerful tool you avoid.
- Check it covers all your income, such as self-employment and UK property, if you have both.
- Look for bank feeds to save typing.
- Start early. Try it for a few months before your MTD start date.
Penalties in your first year
HMRC has said it will not give late submission penalty points for quarterly updates in 2027/28 for people joining MTD in April 2027. You still have to send them before you can submit your final return, so do not leave them all to the end.
Common questions
Is there free Making Tax Digital software from HMRC?
HMRC does not make its own software, but several recognised providers offer free versions for sole traders and landlords.
Can I use Excel for Making Tax Digital?
Yes, with HMRC-recognised bridging software that connects your spreadsheet to HMRC.
Do I need MTD software if my side hustle earns under £20,000?
Not under the current timetable. You keep filing a normal Self Assessment return.
This is general information, not personal tax or financial advice. Tax rules change and depend on your circumstances, so check GOV.UK or speak to an accountant before acting.