Best Accounting Software for UK Sole Traders

Last checked: 5 November 2026. Prices are per month and exclude VAT unless we say otherwise. Software prices and offers change often, so confirm on the provider’s site before you sign up.

If you’re a sole trader in the UK, choosing accounting software used to be a nice-to-have. Making Tax Digital for Income Tax changes that. From April 2026, sole traders and landlords with qualifying income over £50,000 have to keep digital records and send HMRC quarterly updates through compatible software. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.

This guide compares six HMRC-compatible options on what actually matters to a one-person business: price, free options, VAT, Making Tax Digital (MTD) and how much admin each one takes off your plate.

Disclosure: we don’t currently earn commission from any product in this guide. If that changes, we’ll say so here. How we review.

The quick answer

• Best overall for sole traders: FreeAgent. Built for freelancers and the self-employed, it files MTD quarterly updates, VAT and your Self Assessment. It’s free if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle.
• Best free option: Sage Sole Trader Free or Zoho Books Free. Sage’s free plan is for sole traders who aren’t VAT registered. Zoho’s free plan also covers VAT returns, with a cap of 1,000 invoices a year.
• Cheapest paid option: Pandle Pro at £5 a month. Bank feeds, MTD for Income Tax and VAT submissions on a rolling monthly plan.
• Best if you want room to grow: Xero or QuickBooks. Most UK accountants know them well, and both scale if you later take on staff or move to a limited company.

Side-by-side comparison

Software	Best for	Sole trader price	Free option?	VAT returns on that plan
FreeAgent	Freelancers who want tax handled end to end	£19 (50% off for the first 6 months)	Yes, with a NatWest, RBS, Ulster Bank or Mettle business account	Yes
Xero	Growing businesses that work with an accountant	Simple £7 (not VAT registered); Ignite £18	No (free trial)	Not on Simple
QuickBooks	Mileage, receipts and app-based admin	Sole Trader Plus £10; Simple Start £16 for VAT	No (free trial)	Not on Sole Trader Plus
Sage	Simple, low-cost record keeping and CIS	Free, or Sole Trader £7 after 3 months free	Yes, if not VAT registered	No (VAT-registered users need Sage Accounting)
Zoho Books	A capable free plan that includes VAT	Free; paid from £10 billed annually	Yes (1,000 invoices a year)	Yes
Pandle	The lowest paid price	Pro £5, rolling monthly	Yes (basic bookkeeping)	Yes, on Pro

First, does Making Tax Digital apply to you?

Making Tax Digital for Income Tax replaces the once-a-year scramble with digital records and short quarterly summaries sent to HMRC. Whether you’re in depends on your qualifying income: your gross turnover from self-employment and property, before expenses. It’s not your profit.

From	You’re in if qualifying income is over
6 April 2026	£50,000
6 April 2027	£30,000
April 2028	£20,000

Once you’re in, you send four quarterly updates a year, due by 7 August, 7 November, 7 February and 7 May, then a final tax return by 31 January. In the first year (2026 to 2027), HMRC isn’t giving penalty points for late quarterly updates, but they still have to be sent before you submit your return.

Even if you’re under the threshold today, picking MTD-compatible software now saves a rushed switch later. If you’re happy with spreadsheets, HMRC also allows bridging software that sends your spreadsheet figures to HMRC.

1. FreeAgent: best overall for sole traders

Price: £19 a month, or £190 a year. New customers get 50% off for the first six months (monthly) or first year (annual), plus a 30-day free trial. Free for as long as you keep a NatWest, Royal Bank of Scotland or Ulster Bank business current account, or a Mettle account with at least one transaction a month.

FreeAgent was built for freelancers and contractors, and it shows. The Sole Trader plan files MTD quarterly updates and your final declaration, submits MTD VAT returns, and files your Self Assessment straight to HMRC. A Tax Timeline shows what you owe and when, in real time, which is the feature most sole traders end up relying on. Payroll is included if you take on an employee.

• Good: covers MTD, VAT and Self Assessment in one plan; tax is clear in real time; free with four UK business accounts.
• Watch out: £19 a month is at the top of this list if you don’t qualify for the free licence; some add-ons, like unlimited receipt capture, cost extra.
• Choose it if: you want one tool that handles your tax from day to day through to filing, especially if you already bank with NatWest, RBS, Ulster Bank or Mettle.

2. Xero: best if you plan to grow

Price: Simple is £7 a month and is designed for sole traders and landlords who aren’t VAT registered. If you’re VAT registered or need more, Ignite is £18 a month and Grow £39 (prices rose on 1 September 2026). Ignite caps you at 20 invoices and 10 bills a month.

Xero is one of the most widely used accounting platforms among UK accountants and bookkeepers, so it’s an easy choice if you have (or plan to get) an accountant. Simple is labelled MTD for Income Tax ready and includes bank reconciliation, online invoice payments, Hubdoc bill capture and CIS subcontractor calculations. Its biggest strength is its app marketplace: if you later add stock, ecommerce, payroll or a limited company, Xero grows with you.

• Good: £7 entry price; accountant-friendly; huge range of integrations.
• Watch out: Simple isn’t for VAT-registered businesses; Ignite’s invoice and bill caps are tight for busy traders; payroll and extra users cost more.
• Choose it if: you expect to grow, work closely with an accountant, or want to connect lots of other apps.

3. QuickBooks: best for admin on the go

Price: Sole Trader Plus is £10 a month. Intuit often runs large introductory discounts (recently 90% off for six months for new customers). If you’re VAT registered, you’ll need Simple Start at £16 a month, because Sole Trader Plus can’t submit VAT returns.

QuickBooks shines in its mobile app: GPS mileage tracking, receipt capture with your phone’s camera, AI-suggested categories for bank transactions and invoicing. Sole Trader Plus supports MTD quarterly updates and the final declaration, and gives you income tax estimates as you go.

• Good: strong mobile app; mileage and receipt capture built in; well known by accountants.
• Watch out: no VAT returns, multi-currency or bill tracking on Sole Trader Plus; no free plan; check the price after any introductory offer ends.
• Choose it if: you drive for work or collect lots of receipts, and you’re not VAT registered.

4. Sage: best free option if you’re not VAT registered

Price: Sole Trader Free costs nothing, with no billing. The paid Sole Trader plan is £7 a month after three months free, with no contract. Both are for sole traders who aren’t VAT registered; if you are, Sage points you to its Sage Accounting plans instead.

Sage’s sole trader software is built around MTD: connect your bank, snap receipts, categorise transactions and send quarterly updates, with tax estimates along the way. The paid plan adds Self Assessment and cash flow tools, and since April 2026 it includes CIS features for construction subcontractors at no extra cost.

• Good: a genuinely free MTD option from a big UK name; low-cost upgrade; CIS included on the paid plan.
• Watch out: not for VAT-registered sole traders; simpler than FreeAgent or Xero.
• Choose it if: you’re not VAT registered, your affairs are straightforward and you want to pay as little as possible.

5. Zoho Books: best free plan that includes VAT

Price: the Free plan costs nothing and covers one user plus your accountant, with a limit of 1,000 invoices a year. Paid plans start at £10 a month billed annually (£12 monthly).

Zoho’s free plan is unusually generous. Zoho lists MTD for Income Tax, Self Assessment (SA100) filing and MTD VAT filing on it, so it’s one of the few free options that suits a VAT-registered sole trader. It’s part of the wider Zoho suite, which is handy if you already use Zoho for email, CRM or invoicing.

• Good: free plan includes VAT and Self Assessment filing; works well with other Zoho apps.
• Watch out: if you use an accountant, check they’re happy to work in Zoho; the interface has more options than a simple sole trader needs.
• Choose it if: you’re VAT registered and want a free tool, or you already use Zoho.

6. Pandle: cheapest paid option

Price: Pandle has a free plan, and Pandle Pro is £5 a month on a rolling monthly basis, with a 14-day free trial (no card needed). If you cancel Pro, you drop back to the free plan and keep your data.

Pro includes bank feeds (plus PayPal and Stripe), MTD for Income Tax submissions, VAT returns, invoicing with payment reminders, receipt uploads, a mileage tracker, cash flow forecasting and unlimited users. Pandle’s free plan is fine for basic bookkeeping, but the MTD submissions, bank feeds and VAT returns are listed as Pro features.

• Good: the lowest paid price here; lots of features for £5; no annual commitment.
• Watch out: a smaller company than the big names; fewer integrations.
• Choose it if: you want bank feeds, MTD and VAT for the lowest monthly cost.

How to choose in two minutes

• Do you bank with NatWest, RBS, Ulster Bank or Mettle? Start with FreeAgent. It’s free for you, and it’s the most complete tool for a sole trader.
• Not VAT registered and want to pay nothing? Try Sage Sole Trader Free first, then Zoho Books Free.
• VAT registered on a tight budget? Compare Zoho Books Free and Pandle Pro (£5).
• Drive a lot or have lots of receipts? QuickBooks Sole Trader Plus (if not VAT registered).
• Planning to grow, hire or go limited? Xero or QuickBooks, and ask your accountant which they prefer.
• Work in construction? Look at the CIS features in Sage Sole Trader and Xero Simple.

Before you sign up: a quick checklist

1. Check the price after the offer. Most providers discount the first few months. Budget for the full price.
2. Check it handles every income source you have. For example, self-employment plus a rental property.
3. Check VAT. Several entry plans can’t file VAT returns.
4. Check your bank connects. A live bank feed is what saves the time.
5. Ask your accountant. If you use one, picking the software they already know saves you both time and fees.
6. Use HMRC’s own checker. GOV.UK has a software finder that lists compatible products for your situation.
7. Use the free trial with real transactions. Connect your bank and categorise a month’s spending before you commit.

Frequently asked questions

Do sole traders legally need accounting software?

Only if Making Tax Digital for Income Tax applies to you (qualifying income over £50,000 from April 2026, £30,000 from April 2027, £20,000 from April 2028). Then you need software HMRC recognises, or bridging software if you keep spreadsheets. If you’re VAT registered, MTD for VAT already applies.

Is there free MTD software for sole traders?

Yes. Sage Sole Trader Free (if you’re not VAT registered) and Zoho Books Free both support MTD for Income Tax, and FreeAgent is free with certain business bank accounts. HMRC notes that free products may come with limits, such as a cap on transactions.

Can I keep using spreadsheets?

Yes, as long as you use bridging software to send your quarterly updates and tax return to HMRC. Many sole traders find full accounting software quicker once bank feeds are set up.

Is qualifying income my profit or my turnover?

Turnover. HMRC uses your gross income from self-employment and property, before expenses and allowances.

Can I switch software later?

Yes, but it’s easiest at the start of a tax year or quarter. Export your data before you cancel, and check whether your new provider offers a migration tool.

Next steps

New to bookkeeping? Read how to set up business accounting and how to track business expenses, or browse all our finance and operations guides.

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This guide is general information, not tax or financial advice. Check GOV.UK or speak to an accountant about your situation. Sources: HMRC and GOV.UK guidance on Making Tax Digital for Income Tax (updated July and October 2026), and the pricing pages of FreeAgent, Xero, QuickBooks, Sage, Zoho Books and Pandle, checked 5 November 2026.