At a glance:
- MTD for ITSA starts in April 2026 for sole traders earning over £50,000.
- This guide compares four leading MTD software options: Xero, QuickBooks, Sage, and FreeAgent.
- Each platform balances features like mobile access, AI-powered tools, and cost in different ways.
- Some apps are free through banks, while others offer tiered pricing and features.
Hundreds of thousands of UK sole traders across the UK are preparing to file taxes quarterly. In April 2026, MTD for income Tax Self-Assessment takes effect for those with incomes greater than £50,000; more taxpayers will follow in 2027.
To complete these new filings, some traders will use bridging tools and submit quarterly totals from their spreadsheets. But many will prefer a full-featured accounting app that handles everything in one place.
Dozens of MTD applications are available or in development. This guide compares the four most likely to garner the greatest market share:
- Xero Simple
- QuickBooks Sole Trader
- Sage Accounting Individual
- FreeAgent.
These platforms already have large existing user bases, widespread support from accountants and deep integration with UK tax rules.
Developing the software
MTD has had a bumpy journey towards launch, and the experience for software vendors has been much the same.
Xero had to scrap its dedicated mobile app, Xero Go, and instead add MTD features to its long-standing Cashbook product.
QuickBooks discontinued its Self-Employed product in the UK (on sale here since 2015) and constructed a new version, called QuickBooks Sole Trader, on its main QuickBooks platform. (Sage may have benefitted from being late to the game by launching its “Individual” tier with MTD compliance in mind from the start.)
And FreeAgent’s acquisition by a major bank could signal the broader expansion of financial institutions into accounting software – a trend that could have big implications for pricing and access in the years ahead.
To comply with Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA), businesses must use software containing several features. The software must maintain digital records of income and expenses, either through manual input, real-time uploads, or automated bank feeds. It must also support quarterly submissions and final declarations to HMRC.
Those are the only requirements. But most users will want several other features. Among those features are bank feeds, AI-powered categorisation, duplicate detection, and automated reminders. Visibility tools – such as dashboards showing deadlines and filing statuses – are also extremely helpful.
So let’s compare the competitors.
Xero Simple
Xero Simple is Xero’s entry-level offering for sole traders under Making Tax Digital (MTD). It stands out for being built on the well-established Xero Cashbook platform. Importantly, it’s not an entirely new product; it is a rebadged version of Xero’s non-VAT Cashbook, itself a detuned version of the full Xero software.
Xero created Xero Simple by adding key MTD-related features: automated bank feeds, cash coding, reporting, Hubdoc for receipt capture, and improved client access controls.
Hubdoc is reasonably powerful. It supports automated OCR and integrates with cloud platforms like Google Drive and Microsoft OneDrive. However, since Hubdoc is a separate app, users need to switch between applications, which can make the workflow feel fragmented.
Xero Simple distinguishes itself with a unified interface for both accountants and business users. While this can be more complex for non-technical users, it gives business owners full access to the platform’s capabilities (with the necessary permissions). The cash coding feature is particularly powerful for categorising transactions in bulk.
Xero Simple’s greatest drawback is that it was designed to be used in a desktop browser, not as a purpose-built mobile experience. Its interface is essentially a lightweight version of the full Xero product, and is not always intuitive for sole traders new to digital accounting. Users coming from spreadsheets may find the interface overwhelming and hard to navigate.
A particularly significant drawback is the hard cap of 10 invoices per month. That could be a dealbreaker for many sole traders, including those in service industries and those with regular repeat customers.
Despite these constraints, Xero has positioned itself to serve more complex sole trader scenarios. Alone among the four at time of writing, Xero offers a purpose‑built multi‑business setup for MTD for Income Tax within a single sole‑trader/landlord plan. So one Xero licence can cover several trades or property businesses for the same individual.
For sole traders who are comfortable with accounting software and expect their needs to grow over time, Xero Simple offers a scalable and robust path to MTD compliance. But for new users looking for simplicity and mobility, it may present a higher learning curve than some competitors.
Quickbooks Sole Trader
QuickBooks Sole Trader is a purpose-built platform that reflects Intuit’s deep experience with this segment. Much of the current product is grounded in the QuickBooks Self-Employed (QBSE) app, first launched in the UK in 2015. That app’s innovations – mobile workflows, built-in GPS mileage tracking, and swipe-to-categorise logic – have carried over into QuickBooks Sole Trader.
This mobile experience is one of the platform’s biggest advantages. Users can capture expenses and receipts directly within the app using their phone’s camera, with the software extracting and matching transaction details automatically.
Intuit has invested heavily in AI and automation across the whole QuickBooks range, and it shows. Quickbooks Sole Trader uses AI to auto-categorise transactions as they come in, letting users reduce their less manual coding. Users can bulk re-code transactions easily. And the software makes intelligent suggestions to help users assign categories correctly.
Another standout feature is the mileage tracking tool, which runs in the background of the mobile app and automatically detects trips.
The simplicity of the platform comes with a few trade-offs. One ongoing criticism is the dual-interface approach: QuickBooks presents different views for business users and accountants. While this helps reduce cognitive load for non-accountants, it also limits access to certain tools.
For example, sole traders were initially unable to create their own transaction categories or chart of accounts – a major frustration for users with more complex income streams. That gap has recently been addressed, with a new “Manage Categories” feature giving business users direct control. But some differences still remain.
QuickBooks also lacks support for multi-entity reporting within a single MTD record. That may be a critical gap for sole traders who also have income from property or other distinct sources.
Sage Accounting Individual
Sage’s approach to Making Tax Digital (MTD) for sole traders has been to offer two tiers of product specifically designed for this market: Sage Accounting Individual Free, and Sage Accounting Individual (paid). Rather than repackaging existing small business tools, Sage has created bespoke MTD-ready products, aimed to keep things simple while still meeting compliance requirements.
The standout feature is the price for small business end-users. Alone among the big three (QuickBooks, Sage, Xero), Sage offers a truly free, non-trial option for digital record keeping. The free plan includes basic functionality like manual income and expense recording, bank feed integration (manual or automated), and full MTD for ITSA filing support.
For those who need more automation – such as receipt scanning and unlimited invoicing – the paid plan costs £7 per month.
Sage Individual was purpose-built for mobile. It includes a “Swipe to Categorise” feature (as seen in QuickBooks Self Employed) so users can classify transactions as business or personal from the mobile app.
Receipt capture and categorisation are integrated directly into the app, with an AI function learning from the user’s behaviour over time. For example, a user can scan a BP fuel receipt once, and the system will remember it next time.
The platform also includes support for accountants, with strong MTD agent functionality and a shared interface for clients and advisors. Although there are still some limitations – such as limited financial reporting in the free plan and no direct integration with Sage’s personal tax tool – accountants can still export and submit data using connected tools.
There are trade-offs. Even the paid version of Sage Individual doesn’t match the depth of customisation or reporting found in Xero Simple or QuickBooks Sole Trader.
However, for sole traders looking for a low-cost, mobile-friendly, and compliant tool – especially those submitting fewer than five invoices per month – Sage Individual Free will be highly attractive.
FreeAgent
FreeAgent stands out not just for its features but for its business model. Now owned by the NatWest Group – also owner of Royal Bank of Scotland, Ulster Bank, and neobank Mettle – the FreeAgent program is available for free to any sole trader who banks with these institutions.
The program gives users the entire product regardless of how they access it. If you hold a business current account with NatWest, RBS, Ulster Bank or Mettle, you can access FreeAgent for free. For others, it’s available via direct subscription at around £19/month.
FreeAgent includes unlimited invoicing, automated bank feeds, receipt capture and mileage tracking. It has an “MTD Tools” section where users can view deadlines, submit quarterly updates, and monitor tax estimates.
The mobile app is particularly strong: setting up bank feeds and categories takes only a few hours. You can set categories in your online banking portal and they will flow through to FreeAgent, keeping it all in sync. Auto-matching and categorisation features work reliably.
FreeAgent’s “Radar” and “Tax Timeline” functions give users consolidated views of missing admin, upcoming filings and live projections of their tax bills, acting as a practical in‑app tax assistant for busy sole traders.
Similar dashboards exist in its competitors, but FreeAgent shows these prompts through those dedicated Radar and Tax Timeline views.
Another unique feature is the inclusion of multi-currency capability. Sole traders using FreeAgent can invoice clients in foreign currencies. Competitors require you to upgrade to more expensive business plans.
This program does come with limitations. The interface, while simple and functional, may lack some of the customisation and advanced reporting features available in Xero and QuickBooks. Additionally, FreeAgent does not offer the same breadth of third-party integrations or deep inventory features as platforms like Xero or QuickBooks.
FreeAgent is one of the most complete MTD tools available for sole traders, and in many cases, it’s completely free. It’s a strong contender for any sole trader, especially if they’re already banking with the NatWest Group.
Sole traders facing the impending bureaucracy of MTD will not appreciate the flood of software competing for their attention. However, these apps can simplify the discipline of capturing expenses and coding transactions. If the end result is greater financial literacy, better planning and smarter operations, they may find MTD worth the hassle after all.
Reminder: the MTD for ITSA rollout schedule:
- April 2026: Mandatory for sole traders and landlords with total qualifying income (turnover) of more than £50,000.
- April 2027: Mandatory for those with qualifying income of more than £30,000.
- Further phases: The government announced a further rollout for those with income of more than £20,000 by April 2028.
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