Best Free HMRC MTD Software with Bridging and Accounting for Sole Traders

The short answer is no. Several HMRC-recognised tools are genuinely free to use, though what "free" means varies widely between products. This guide cuts through the noise, explains who needs MTD software, what to look for, and which free options are worth considering.

What "free MTD software" actually means

HMRC does not make its own MTD software. It publishes lists of commercial products that have passed its technical checks – and some of those products offer free plans. When people search for "HMRC free MTD software," they are really looking for third-party tools on HMRC's compatibility list that happen to have a zero-cost tier.

"Free" in this market typically means one of three things:

• Permanently free plan – a genuine no-cost tier with usage limits (transaction caps, fewer features, or restricted support). Clear Books Free and QuickFile are examples.
• Free via a banking relationship – the full product is included at no charge with a qualifying bank account. FreeAgent through NatWest, RBS, Ulster Bank, or Mettle is the best-known example.
• Free trial or promotional period – full access for a limited time (often 14–30 days), after which you pay. This is not truly free; it is a sales funnel.

Knowing which model you are signing up for matters. A free trial that expires mid-quarter could leave you unable to submit an update without upgrading.

Who must use MTD – and by when

MTD for Income Tax (ITSA)

MTD for ITSA is being rolled out in phases based on gross qualifying income – that is, combined self-employment turnover and property income before expenses.

HMRC assesses the threshold using the most recent tax return filed before the mandation date. For the April 2026 wave, it checks your 2024/25 return. If your combined gross self-employment and property income exceeds £50,000, you are in scope – even if net profit is much lower.

Once mandated, you must use MTD-compatible software to maintain digital records, submit four quarterly updates (by the 7th of the second month after each quarter ends), and file a Final Declaration by 31 January following the tax year.

⚠️ Important: HMRC will not sign you up automatically. You must register for MTD ITSA yourself (or have your agent do it). The sign-up facility is already open.

MTD for VAT

MTD for VAT has been mandatory for all VAT-registered businesses since April 2022, regardless of turnover. If you are already VAT-registered, you should already be filing digitally. Free bridging tools remain a practical option for VAT-only filers who keep records in spreadsheets.

Exemptions and voluntary adoption

Exemptions exist for those who cannot use digital tools – for instance, due to age, disability, religious beliefs, or location with poor internet connectivity. Taxpayers subject to a power of attorney are permanently exempt. If you believe you qualify, apply to HMRC in writing; do not assume you are excluded.

Conversely, you can join MTD voluntarily even if your income is below the threshold. HMRC's pilot is open, and during the voluntary phase, late-submission penalty points do not apply – making it a low-risk way to get comfortable with the new rhythm before mandation catches you.

Types of free MTD software

There are two broad categories, and which one suits you depends on how you currently keep records.

Full accounting apps

These are cloud-based platforms that handle end-to-end bookkeeping: recording income and expenses, bank feeds, invoicing, and filing directly with HMRC. Products like Clear Books, FreeAgent, and QuickFile fall into this group. On a free plan, you typically get core record-keeping and quarterly submissions, but may lose bank feed automation, advanced reports, or multi-user access.

Full accounting apps are the better long-term choice for most people. They keep your digital records and submissions in one place, reducing the risk of broken digital links.

Bridging tools

Bridging software sits between your existing spreadsheet and HMRC's systems. You continue recording income and expenses in Excel or Google Sheets, then use the bridging tool to submit the data. My Tax Digital is a well-known free option for this approach.

Bridging works well if you are comfortable with spreadsheets and have a reliable process already in place. However, HMRC requires a "digital link" from your records to the submission – meaning no manual re-keying of figures. The bridging tool must pull data directly from your spreadsheet file, not from numbers you type into a web form.

💡 Tip: You can use more than one product to meet MTD obligations – for example, a bookkeeping app for daily record-keeping combined with bridging software for submissions. Just make sure the digital link chain is unbroken from original record to HMRC.

Essential features checklist

Before settling on any free tool, check it against these requirements.

Non-negotiable for compliance:

• HMRC recognition for the specific MTD regime you need (VAT, ITSA, or both) – verify on GOV.UK
• Digital record-keeping with compliant digital links (no copy-paste gaps)
• Quarterly update submission to HMRC
• Final Declaration support (for ITSA) – some free plans exclude this
• End of Period Statement (EOPS) per income source

Practically essential:

• Bank feed integration (even basic Open Banking connections save hours)
• Invoicing and receipt capture
• Expense categorisation mapped to Self Assessment boxes
• Multi-income support if you have both a trade and rental properties – the software should handle separate business identifiers

Nice to have on a free plan:

• Accountant access (so your adviser can review or submit)
• Mobile app for on-the-go receipt scanning
• Profit-and-loss and tax-estimate reporting

If a free plan covers the non-negotiable items but lacks year-end submission, you may need to upgrade or use a second tool for the Final Declaration. Factor this into your decision.

How to choose the right free tool

Verify HMRC recognition first

This is step one – and non-negotiable. HMRC maintains separate compatibility lists for MTD for VAT and MTD for ITSA. A product recognised for VAT is not automatically recognised for ITSA. Use the official software finder on GOV.UK and filter for "free to use" where the option exists.

Understand the real cost of "free"

The table below summarises what to watch for:

Limits that actually bite

The most common restrictions on free tiers include monthly or annual transaction caps (often 1,000 entries), no automated bank feeds (manual CSV uploads instead), no VAT return filing (if you need both VAT and ITSA), email-only support with slow response times, and single-user access with no accountant login. If you are a landlord with multiple properties or a sole trader with both trade and rental income, check whether the free plan can handle separate income sources – not all do.

Free MTD software by user type

Sole traders

If you run a straightforward trade – say, a freelance consultant or a self-employed plumber – your needs are relatively simple: record income and expenses under a single trade, categorise them to match Self Assessment boxes, and submit quarterly updates plus a Final Declaration. Clear Books Free or QuickFile's free tier will handle this. If you bank with NatWest Group or Mettle, FreeAgent is the obvious choice because you get the full product.

Look for cash basis support (most sole traders with turnover under £150,000 use it), mileage tracking, and simple invoicing.

Landlords

Property income adds complexity. You may need per-property tracking, mortgage interest recording, joint ownership percentage splits, and separation of UK and foreign property income. PaTMa is built specifically for landlords. FreeAgent for Landlords is another strong option if you qualify for the free bank-bundled deal. Clear Books also handles property income on its free plan.

VAT filers using spreadsheets

If you only need to submit VAT returns and are happy keeping records in a spreadsheet, a free bridging tool like My Tax Digital is sufficient. It imports your figures from a CSV or Excel file and submits them to HMRC. No invoicing, no bank feeds – just the bridge.

Mixed income (trade plus property)

If you earn both self-employment and property income, your software must support multiple business identifiers within a single MTD ITSA registration. Not every free product handles this well. FreeAgent (bank-bundled) and Clear Books Free are currently among the better options for mixed-income filers.

Shortlist of notable free MTD tools

The products below are HMRC-recognised at the time of writing. Software capabilities and pricing change frequently – always verify on GOV.UK and the vendor's own website before committing.

Clear Books Free

Best for: Sole traders and landlords with basic needs who want a genuine free plan with no time limit.

Clear Books was the first software fully recognised by HMRC for MTD for Income Tax. Its free tier includes digital record-keeping, quarterly updates, and year-end Final Declaration submission. It also supports MTD for VAT on paid plans (from £6.75/month). Bank feeds, invoicing, and receipt capture are included even on the free tier, though some advanced features (CIS, budgets, multi-currency) require an upgrade.

Pros: No transaction cap on the free plan for basic use; ITSA quarterly and annual submissions included; accountant access available. Cons: MTD VAT filing requires a paid plan; no dedicated mobile app (mobile-responsive web only); limited reporting on the free tier.

QuickFile

Best for: Tech-comfortable sole traders and freelancers who want flexibility and community support.

QuickFile's free plan covers accounts with under 1,000 nominal ledger entries per rolling 12-month period. It includes invoicing, purchase tracking, receipt scanning via OCR, and MTD for VAT submissions. For MTD ITSA, QuickFile is participating in the pilot and is listed on HMRC's software choices page; from April 2026, ITSA reporting will require a subscription.

Pros: Generous free tier with unlimited users and API access; strong community forum; well-established UK product. Cons: Automated bank feeds cost £15+VAT/year extra; MTD ITSA expected to be a paid add-on from April 2026; the 1,000-entry cap can be tight for active businesses.

FreeAgent (via NatWest Group or Mettle)

Best for: Anyone with a business current account at NatWest, RBS, Ulster Bank, or a Mettle account who wants a full-featured product at no cost.

FreeAgent is HMRC-recognised for both MTD for VAT and MTD for Income Tax. It offers invoicing, expense tracking, bank feeds, real-time tax estimates, Self Assessment filing, and a dedicated Landlords version. The full product is free for qualifying bank customers – there is no feature restriction. Mettle accounts simply need one transaction per month to remain eligible.

Pros: No feature limitations; excellent onboarding and UK-based support; strong mobile app; real-time tax forecasting. Cons: "Free" is tied to your bank account – leave NatWest Group or stop transacting on Mettle, and you pay (from ~£12.50/month); optional add-ons like Smart Capture cost extra.

My Tax Digital

Best for: Spreadsheet users who need free MTD bridging for VAT and/or ITSA without changing their existing bookkeeping.

My Tax Digital offers both a bridging mode (importing figures from spreadsheets) and an accounting mode (basic digital record-keeping). It is HMRC-recognised and has been used by tens of thousands of businesses since 2019 for VAT. ITSA support has recently been added. The service is free for both VAT and ITSA submissions.

Pros: Completely free with no transaction caps; supports both bridging and basic accounting; straightforward interface. Cons: No bank feeds or invoicing in bridging mode; less polished than commercial accounting packages; limited support resources.

Sage Individual Free

Best for: Non-VAT-registered sole traders with very simple affairs.

Sage's free offering is specifically designed for self-employed individuals who need basic MTD ITSA compliance. It is backed by a government arrangement to ensure long-term free availability. Agent access is included, so accountants can work alongside their clients.

Pros: Treasury-backed free provision; Sage's established infrastructure and brand trust; agent access included. Cons: Limited to sole traders – no property income support; no VAT filing; feature set is basic compared with Sage's paid products.

PaTMa

Best for: Landlords managing one or more UK rental properties.

PaTMa (Property and Tax Management Assistant) is designed specifically for landlords. It handles per-property income and expense tracking, mortgage interest, and is preparing for full MTD ITSA compliance. Check the current free tier and pricing on PaTMa's website, as plans may have changed.

Pros: Landlord-specific design; property-by-property tracking; simpler than adapting a general accounting tool. Cons: Narrowly focused – no use for trade income; smaller user base and development team than mainstream products.

Other bridging tools worth checking

TaxNav (browser-based, guided submission process, HMRC-recognised for ITSA), Coconut (mobile-first with automatic transaction categorisation), and Self Assessment Direct are also listed on HMRC's compatibility pages. Verify each product's current free-plan limits and supported submission types before signing up.

Step by step: submitting with free MTD software

1. Define your requirements. Work out which MTD regimes apply to you (VAT, ITSA, or both), how many income sources you have, and whether you prefer full accounting software or bridging.

2. Choose and verify your software. Pick a product from the HMRC compatibility list. Confirm it supports the submissions you need on the free tier.

3. Create your account and connect your bank. Set up the software, link your bank via Open Banking (if available on your plan), and configure your chart of accounts or expense categories to match Self Assessment boxes.

4. Authorise MTD access with HMRC. Log in to your Government Gateway through the software and grant it permission to file on your behalf. If you use an agent, they connect via their Agent Services Account. Authorisation typically lasts 18 months before needing renewal.

5. Enter or import data. Record income and expenses as they arise – through bank feeds, manual entry, or CSV import. If you are using bridging software, maintain your spreadsheet with the correct structure and import it when ready.

6. Review, reconcile, and fix errors. Before each quarterly deadline, reconcile bank transactions, check for duplicates or miscategorised items, and run the software's validation checks.

7. Submit your quarterly update. File by the 7th of the second month after the quarter ends (e.g., 7 August for Q1 ending 5 July). Keep the HMRC acknowledgement receipt.

8. Year-end: EOPS and Final Declaration. After Q4, make any closing adjustments, submit an End of Period Statement for each income source, add any non-business income (dividends, bank interest, employment), and file the Final Declaration by 31 January.

Making your spreadsheet MTD-compliant

If you prefer spreadsheets, you can still comply – but you need to get the structure right.

Your spreadsheet should have clearly labelled columns for date, description, amount, and category. Formulas that calculate totals must feed directly into the bridging software's import – there can be no manual re-typing. Use CSV export or a direct API connection, depending on what your bridging tool supports.

HMRC's digital link rules mean every figure that reaches them must be traceable back to an original digital record without a manual step in between. Copy-pasting totals from one sheet into a web form breaks the chain and is not compliant.

Maintain version control (date-stamped file names, change logs) and keep backups. If HMRC queries a quarterly update, you need to show the underlying records and the path from record to submission.

Data protection, security, and backups

Free does not mean you can ignore data security. Any software holding your financial records must comply with UK GDPR. Check where the provider stores data (ideally UK or EEA data centres), what their retention policies are, and whether they offer two-factor authentication.

Enable 2FA on every MTD tool you use. If the software supports user roles, restrict permissions so that only authorised people can submit to HMRC. If you work with an accountant, use the platform's built-in accountant access rather than sharing your personal login.

Before committing to any product, verify that you can export your full data set (invoices, transactions, reports) in a standard format such as CSV or Excel. If you ever need to switch software, you do not want to lose years of records.

For accountants and bookkeepers

If you manage clients on free MTD plans, you will need an Agent Services Account (ASA) linked to your existing Government Gateway credentials. Each client must authorise you – there is no bulk sign-up process, so allow time for this.

Free tools vary in how they handle multi-client access. Clear Books offers a practice dashboard; FreeAgent has a dedicated partner programme. QuickFile supports accountant access on the free tier but with limited practice management features.

Know when to move a client from free to paid. Common triggers include hitting transaction caps, needing automated bank feeds to keep up with quarterly deadlines, requiring VAT and ITSA in the same tool, or the client outgrowing the feature set. A timely upgrade avoids last-minute scrambles at filing deadlines.

Troubleshooting common issues

HMRC authorisation errors (403 or token expired). Your software's connection to HMRC typically expires after 18 months. Re-authorise through the Government Gateway. If you see "scope mismatch" errors, check that the software has permission for the correct MTD regime (VAT vs ITSA).

Bank feed interruptions. Open Banking consents usually last 90 days. If transactions stop appearing, re-consent within the software. Fill any gaps with a manual CSV upload from your bank.

Spreadsheet upload failures. The most common causes are mismatched column headers, incorrect date formats (use DD/MM/YYYY for UK submissions), and VAT rate mapping errors. Check the bridging tool's template against your file before uploading.

Missing EOPS or Final Declaration on a free plan. Some free tiers exclude year-end submissions. If your software cannot file the Final Declaration, you have two options: upgrade to the paid tier for that one submission, or use a second HMRC-recognised product that does support it. Confirm the approach before year-end to avoid a panicked search in January.

Glossary

Bridging software – a tool that connects non-MTD-compatible records (usually spreadsheets) to HMRC's MTD systems.

Digital links – electronic or digital transfers of data between software programs, products, or applications, with no manual re-entry. Required throughout the chain from original record to HMRC submission.

EOPS (End of Period Statement) – a year-end summary for each income source confirming that all income and expenses have been reported. Required under MTD ITSA.

Final Declaration – the annual submission that replaces the traditional Self Assessment tax return for taxpayers within MTD ITSA. Due by 31 January after the tax year ends.

ITSA – Income Tax Self Assessment. MTD for ITSA is the extension of Making Tax Digital to self-employment and property income.

Qualifying income – gross income from sole trade(s) and property business(es) combined, measured before expenses, used to determine whether you fall within MTD ITSA thresholds.

Official HMRC resources

• MTD-compatible software for Income Tax – GOV.UK: Find software that's compatible with MTD for Income Tax
• MTD-compatible software for VAT – GOV.UK: Find software for MTD for VAT
• Sign up for MTD for Income Tax – available via the Government Gateway; agents sign up through the Agent Services Account
• MTD for ITSA pilot – open for voluntary sign-ups for the 2025/26 tax year onwards; join through HMRC's online services

FAQ

Can I switch free MTD software mid-year without breaking digital link rules?

Yes, provided you export your data from the old tool and import it into the new one digitally – no manual re-keying. Keep records from both products for audit purposes.

Does free MTD software support both cash basis and accrual accounting?

Most do. Cash basis is the default for sole traders under £150,000 turnover. Check your chosen product's settings before your first quarterly submission.

Can my accountant access my free plan?

It depends on the product. Clear Books and FreeAgent support accountant access on free plans. QuickFile allows it but with limited practice management. Always check before assuming.

What happens if my income falls below the MTD threshold after I've signed up?

You remain within MTD until your qualifying income has been below the relevant threshold for three consecutive tax years. You do not drop out immediately.

Can I amend a quarterly update or VAT return on a free plan?

Generally yes – most free tools allow amendments to submitted updates. However, the process varies; check your software's documentation for the specific steps.