Modern sole traders increasingly bank with app-based providers like Monzo, Starling, and Tide. The good news: most of these work with MTD-recognised software. The catch: the level of integration varies significantly between banks and software providers.
Quick answer
| Bank | FreeAgent | Xero | QuickBooks | Sage | QuickFile | Zoho Books |
|---|---|---|---|---|---|---|
| Starling | Yes | Yes | Yes | Yes | Yes | Yes |
| Tide | No | No | Yes | Yes | Yes | Yes |
| Monzo | No | Limited | Limited | Limited | Yes | Limited |
Starling Bank — the best choice for MTD
Starling Bank integrates directly with all major MTD-recognised software via Open Banking. You can connect your Starling account in FreeAgent, Xero, QuickBooks, Sage, QuickFile, and Zoho Books, and transactions will be automatically imported. Starling is the clear winner for sole traders who want an app-based bank with full MTD support.
Tide — good but not universal
Tide integrates with QuickBooks, Sage, QuickFile, and Zoho Books, but not with FreeAgent or Xero. If you bank with Tide and want to use FreeAgent or Xero, you will need to manually import transactions or use a bridging tool.
Monzo — limited integration
Monzo Business has the most limited MTD integration of the three. Only QuickFile supports Monzo directly. For other software, you will need to manually import transactions via CSV export. If Monzo is your preferred bank, QuickFile is your best MTD software option.
What is Open Banking?
Open Banking is a UK regulation that allows banks to share your financial data with authorised third-party providers (like MTD software) via secure APIs. When you connect your bank account via Open Banking, transactions are automatically imported into your MTD software — no manual entry required. Starling, Monzo, and Tide all support Open Banking, but the specific integrations they offer vary.
Best setup for app-bank users
If you bank with Starling: Choose any MTD software. FreeAgent (if you qualify for the free NatWest deal) and Zoho Books (if under £50k turnover) are excellent free options.
If you bank with Tide: Choose QuickBooks, Sage, QuickFile, or Zoho Books. Avoid FreeAgent and Xero unless you are willing to import transactions manually.
If you bank with Monzo: Choose QuickFile for automatic import. For other software, use CSV import or a bridging tool.
What about NatWest?
NatWest is not an app-first bank, but it is the key to getting FreeAgent and Sage Sole Trader for free. If you are willing to open a NatWest business current account, you can get FreeAgent or Sage Sole Trader at no cost. Many sole traders use Starling as their everyday bank and NatWest as a free-account for MTD purposes.
Verdict
Starling is the best app-bank for MTD — it integrates with every major MTD software provider. Tide is a good second choice. Monzo has limited support; if you bank with Monzo, QuickFile is your best option. For the absolute cheapest setup, consider NatWest for FreeAgent or Sage Sole Trader.
FAQ
Can I use Starling Bank with FreeAgent?
Yes. Starling integrates directly with FreeAgent via Open Banking. Transactions are automatically imported.
Can I use Monzo for MTD?
Only QuickFile supports Monzo directly. For other MTD software, you will need to manually import transactions via CSV.
Do I need a traditional bank account for MTD?
No. Starling and Tide are fully supported by most MTD software. However, having a NatWest account gives you access to FreeAgent and Sage Sole Trader for free.
What is Open Banking?
Open Banking is a UK regulation that allows banks to share your financial data with authorised third-party providers via secure APIs. It is what enables automatic transaction import in MTD software.