If you are a UK sole trader searching for free MTD software, you will quickly find that the word "free" is used loosely.
Some tools are free at sign-up but require a paid plan for the features you actually need. Others are genuinely free but only cover the submission layer, not the bookkeeping workflow. A few are free for now but have limited long-term pricing clarity.
This guide explains what the main options actually offer for free, what each leaves out, and how to decide which is right for your situation.
What Does MTD Software Need to Do?
Making Tax Digital for Income Tax (MTD ITSA) has three core requirements:
- Keep digital records of your income and expenses
- Submit quarterly updates to HMRC using HMRC-recognised software
- File a final declaration at the end of each tax year
Any free MTD software needs to cover all three to be genuinely useful for compliance. Some tools only handle submissions (point 2 and 3) and expect you to maintain records elsewhere.
Reference: HMRC MTD for Income Tax guidance.
The Main Free MTD Options in 2026
Cuppa (Free Plan)
What is actually free:
- Unlimited income and expense tracking
- Tax estimate dashboard (updates in real time)
- CSV export of your records
- Mileage and home office tracking
- Multi-currency support
- Bank imports
- Document attachments
What requires the paid Pro plan (£4.50/month):
- HMRC quarterly submissions and final declaration
- Invoice customisation
- Priority support
- AI assistant integration
- Amendment support
Best for: Sole traders who want a free bookkeeping workflow to keep digital records, with an affordable upgrade path when it is time to submit to HMRC.
Clear Books (Sole Trader Free Plan)
What is actually free:
- Basic MTD Income Tax quarterly updates
- Year-end filing
- Basic expense recording
- Community forum support
What requires the paid Sole Trader plan (£5/month + VAT):
- Invoicing
- Automated bank feeds (transaction recording from connected bank account)
- Receipt scanning
- Business reporting
Best for: Sole traders who only need the bare minimum for MTD compliance and are comfortable with manual income and expense entry.
QuickFile (Free for Small Accounts)
What is actually free:
- Full bookkeeping features including invoicing, bank feeds, and receipt capture
- VAT return filing
- MTD ITSA support
- Free as long as your 12-month nominal ledger count stays under 1,000 entries
What happens after the limit:
- Account upgrades to a paid tier once you exceed 1,000 ledger entries per year
Best for: Sole traders or small businesses who want full bookkeeping features for free and expect low transaction volumes. The ledger limit means it may not stay free as your business grows.
My Tax Digital (Free)
What is actually free:
- Full MTD compliance for VAT and Income Tax
- Digital record-keeping in accounting mode
- Spreadsheet bridging mode (upload spreadsheet to HMRC)
- HMRC-recognised
- No paid tier, completely free
What to be aware of:
- Interface is more functional than polished
- Designed for compliance, not workflow
- Less guidance for users new to MTD
Best for: Users who are comfortable with a basic interface and want a zero-cost HMRC submission tool. Also suitable for accountants managing client submissions.
Otis Tax (Free)
What is actually free:
- MTD quarterly return filing
- Annual tax return submission
- Digital record-keeping
- HMRC integration
- Free, no paid tier listed
Best for: Sole traders, freelancers, and landlords wanting a no-cost compliance tool. Less well-known but HMRC-recognised.
Free Plan Comparison
| Tool | Record-keeping | MTD submissions | Automated bank feeds | Invoicing | Always free |
|---|---|---|---|---|---|
| Cuppa | Yes | No (Pro) | Yes | No (Pro) | Yes (bookkeeping) |
| Clear Books | Yes (manual entry) | Yes | No (paid only) | No (paid) | Yes |
| QuickFile | Yes | Yes | Yes | Yes | Until 1,000 ledger entries |
| My Tax Digital | Yes | Yes | No | No | Yes |
| Otis Tax | Yes | Yes | No | No | Yes |
What "Free" Usually Leaves Out
Most free MTD plans omit at least one of the following:
- Bank feeds (automated import of bank transactions)
- Receipt scanning (capture and attach expense receipts)
- Invoicing (create and send client invoices)
- Priority support (faster help when things go wrong)
- Amendment support (resubmit a corrected quarterly update)
For basic MTD compliance, bank feeds and invoicing are optional. For a consistent weekly workflow, they make a meaningful difference.
What to Actually Look For in a Free Plan
The free plan should cover all three MTD requirements
Record-keeping, quarterly submissions, and final declaration. If the free plan only covers submissions and expects you to keep records in a separate spreadsheet, you have re-introduced manual data transfer, which defeats the purpose of MTD software.
The workflow should be maintainable every week
A free tool you actually use every week is worth more than a paid tool you use once a quarter. Simple is better than feature-rich-but-confusing.
Understand what happens at the upgrade point
Some tools give you a genuinely complete free experience. Others limit the free plan specifically to make the paid plan feel necessary. Before committing to a free tool, understand what triggers the upgrade and whether you are likely to hit it.
Check that the tool is HMRC-recognised
Only software listed by HMRC as compatible with MTD for Income Tax can be used for compliant quarterly submissions. All the tools listed in this guide are HMRC-recognised as of the date of writing.
Check: HMRC MTD software choices.
Which Free MTD Tool Should You Choose?
Choose Cuppa if you want a complete free bookkeeping workflow (record-keeping, bank imports, mileage tracking) and an affordable Pro plan (£4.50/month) when you are ready to submit to HMRC. The free plan has no ledger limits or expiry.
Choose Clear Books if you want a free plan from a broader accounting platform and are comfortable without bank feeds. Useful if you may later need landlord or payroll features.
Choose QuickFile if you want a full-featured free bookkeeping tool and expect to stay under 1,000 nominal ledger entries per year.
Choose My Tax Digital or Otis Tax if you want the absolute simplest zero-cost HMRC submission tool and are comfortable setting up your own record-keeping workflow.
A Note on Tools That Are "Free to Try"
Some tools use "free" to mean "free trial" rather than a genuinely free ongoing plan. Examples:
- Untied (£129.99/year): 30-day free trial, then paid
- TaxNav (£5/month): free signup to explore, then paid
- Coconut (+MTD plan, £21.99/month): 14-day free trial, then paid
- Kletta (from £19/month for the Solo plan): free trial, then paid
These are not free tools. They are tools with a trial period. Worth testing, but not an alternative to a genuinely free plan.
Summary
The genuinely free MTD software options for UK sole traders in 2026 are: Cuppa, Clear Books Sole Trader Free, QuickFile (within its ledger limit), My Tax Digital, and Otis Tax.
Of these, Cuppa's free plan gives the most complete bookkeeping workflow for a sole trader: record-keeping, bank imports, and mileage tracking, all included at £0. When you are ready to submit to HMRC, the Pro plan is £4.50/month.
Sources and last reviewed: See page footer. Pricing and feature sets can change. Always verify with the tool's own pricing page before making a decision.
Related guides:
- Making Tax Digital for Income Tax: complete guide for sole traders
- How to record income and expenses for HMRC
- HMRC-recognised MTD software explained: what it means and why it matters
- Can I use spreadsheets for MTD Income Tax?
Last reviewed: 6 March 2026. Pricing and features verified against published information at that date.