Choosing MTD software comes down to five things: your UK bank (FreeAgent is free with NatWest/RBS), how many clients or properties you have, whether you need accountant collaboration, your budget, and how much you want the software to do for you.
Step 1: Check your bank
This is the single easiest way to narrow your options. FreeAgent is free if you have a business current account with NatWest, RBS, Mettle, or Ulster Bank. If you bank with one of these, start with FreeAgent — you are getting a full MTD-recognised package at zero cost. If you bank elsewhere, you will be paying a monthly subscription no matter which software you choose, so move on to step two.
Step 2: Count your clients or properties
The number of clients or properties you manage affects which software scales best:
- 1–3 clients or properties: FreeAgent or Coconut keeps things simple. Both are designed for straightforward sole-trader bookkeeping and handle quarterly MTD submissions without extra configuration.
- 4+ clients or properties: Xero or QuickBooks scales better. Xero’s tracking categories let you separate income and expenses per client or property. QuickBooks offers similar functionality with a stronger mobile app.
Step 3: Decide if you need an accountant
Some sole traders prefer to do their own bookkeeping; others want an accountant to review and submit on their behalf. This matters because:
- Xero is the most accountant-friendly. It has the widest advisor network in the UK. If your accountant already uses Xero, it is the easiest platform to collaborate on.
- FreeAgent is the most self-serve. It is built for people who do their own bookkeeping. The interface is opinionated and guides you through the right workflows without needing accountant input.
If you do not use an accountant, FreeAgent or Coconut are the simplest choices. If you do, check which platform your accountant prefers before signing up.
Step 4: Set your budget
MTD software pricing falls into four tiers:
- Free: FreeAgent with a NatWest, RBS, Mettle, or Ulster Bank business current account.
- £6–10/month: Coconut (£6), Xero Simple (£7), QuickBooks Sole Trader (£10). These are the most affordable paid options.
- £14+/month: Sage Start (£14), Xero Grow (£33). These offer more features and are better suited to larger businesses.
For most sole traders with qualifying income below £50,000, the free or £6–10/month tier is sufficient. If your income is above the MTD threshold, the cost of the software is modest compared to the penalties for missing a quarterly deadline.
Step 5: Pick your priority
Finally, decide what matters most to you:
- Simplicity: FreeAgent or Coconut. Both are opinionated, guided experiences that do the right thing without configuration.
- Flexibility: Xero. The widest range of integrations, custom reporting, and accountant-friendly workflows.
- Mobile: QuickBooks. The best mobile app for invoicing and expense capture on the go.
- Price: FreeAgent (free with NatWest) or Coconut (£6/month). The lowest-cost paths to MTD compliance.
Quick decision table
| If you are… | Best pick | Why |
|---|---|---|
| A NatWest/RBS customer | FreeAgent | Free, simple, MTD-ready |
| A freelancer with 1–3 clients | FreeAgent or Coconut | Simplest bookkeeping for small workloads |
| A freelancer with 4+ clients | Xero Simple | Tracking categories scale better |
| A landlord with 1–3 properties | FreeAgent (if NatWest) or Coconut | Low cost, straightforward |
| A landlord with 4+ properties | Xero Simple | Per-property reporting via tracking categories |
| Working with an accountant | Xero | Widest advisor network, best collaboration |
| On a tight budget | Coconut (£6/mo) | Cheapest paid option with full MTD support |
| Wanting the best mobile app | QuickBooks Sole Trader | Strongest mobile invoicing and expense capture |
FAQ
What is the cheapest MTD software for UK sole traders?
FreeAgent is free if you bank with NatWest, RBS, Mettle, or Ulster Bank. Otherwise, Coconut at £6/month and Xero Simple at £7/month are the most affordable HMRC-recognised options.
Can I switch MTD software later?
Yes. Most MTD software allows you to export your data and switch providers. Your quarterly submission history with HMRC is preserved regardless of which software you use.
Do I need an accountant to use MTD software?
No. All HMRC-recognised MTD software is designed for self-serve use. However, if you want accountant collaboration, Xero is the most accountant-friendly platform with the widest advisor network.
Which MTD software is easiest to set up?
FreeAgent and Coconut are the quickest to set up. Both guide you through a short setup wizard and can import bank transactions automatically. Xero and QuickBooks have more configuration options which take longer initially.
What happens if I choose the wrong MTD software?
Nothing permanent. You can export your data and switch to a different HMRC-recognised package at any time. Your quarterly submission history with HMRC stays intact.