MTD Software Pricing Comparison 2026: Who Charges What

By April 2026, every sole trader earning above £50,000 must file quarterly through MTD-compatible software. That software will not be free. So before you sign up to whatever pops up first on Google, it is worth asking: who is charging what, and are you paying for features you will never use?

The software market has known this mandate was coming for years. Vendors have had time to price accordingly. You have not necessarily had time to comparison-shop. This post does that legwork for you.

The Mandate Is Real, and the Clock Is Running

HMRC has delayed MTD for Income Tax three times since 2017. Many sole traders have understandably adopted a wait-and-see approach. That approach ends in April 2026. The legislation underpinning MTD ITSA, the Income Tax (Digital Requirements) Regulations 2021, is in force, and HMRC has confirmed the April 2026 date for the £50,000 threshold with no further delays signalled.

If you are a self-employed electrician, plumber, freelance consultant, or any other sole trader turning over between £50,000 and £80,000, you are in the first wave. You will need to:

• Keep digital records of income and expenditure
• Submit four quarterly updates to HMRC each tax year
• Submit an end-of-period statement
• Complete a final declaration (replacing your Self Assessment return)

All of this must go through software on HMRC's approved list. HMRC will not build a free tool to do this. That is not speculation; it is policy. The department confirmed it will not provide its own free MTD ITSA submission service, leaving the market to commercial providers.

Which means you are going to pay. The question is how much, and for what.

MTD Software Pricing Comparison 2026: The Main Contenders

Prices below reflect publicly listed UK rates as of mid-2025. Most providers offer introductory discounts for the first three to six months. The figures shown are the standard ongoing monthly cost, which is what you will actually pay long-term.

QuickBooks Self-Employed and Simple Start

Intuit's QuickBooks remains the most heavily advertised MTD solution in the UK. QuickBooks Self-Employed, their entry-level tier aimed at sole traders, is listed at around £8 per month on promotion but regularly sits at £12 to £16 per month at standard rates. It covers mileage tracking, basic invoicing, and quarterly MTD submissions.

The catch: QuickBooks Self-Employed does not produce a full set of accounts. If your accountant wants a profit and loss statement or balance sheet, you will need to upgrade to Simple Start at approximately £15 to £30 per month, depending on the promotion running at the time.

For a sole trader turning over £60,000 who just needs MTD compliance, the Self-Employed tier is functional. But Intuit's pricing structure has a habit of bundling you upwards. The in-app prompts to upgrade are, to put it diplomatically, persistent.

Xero Starter and Ignite

Xero restructured its UK pricing tiers in 2024, introducing the Ignite plan at around £16 per month as its entry point. The Ignite plan covers MTD quarterly submissions and basic invoicing, but caps you at 20 invoices and five bills per month. For a busy tradesperson invoicing weekly, you will hit that ceiling by week five.

The next tier, Grow, runs at approximately £33 per month and removes those limits. For most sole traders, Xero's feature set is genuinely comprehensive, but that comprehensiveness is built for small businesses with employees, not self-employed individuals working alone. You are paying for payroll preparation, purchase order management, and multi-currency support you will never open.

Xero is excellent software. It is just not built for you, and the price reflects that.

FreeAgent

FreeAgent occupies an interesting position. It was built specifically for freelancers and contractors, which makes it more relevant to sole traders than Xero or QuickBooks at face value. Pricing sits at approximately £19 per month after the initial discount period, rising to £29 for the full package.

FreeAgent is free if you bank with NatWest, Royal Bank of Scotland, or Ulster Bank, which is a meaningful saving. If you do not bank with one of those three, you are paying full price for a product whose free tier is subsidised by a deal you are not party to.

On MTD specifically, FreeAgent has been an early and competent adopter. Its MTD ITSA functionality works. For the Wave vs FreeAgent comparison we published earlier, FreeAgent came out ahead on MTD readiness. The pricing, however, remains a consideration if you are not in the NatWest ecosystem.

Sage Accounting Start

Sage's entry-level plan for sole traders sits at around £15 per month and includes MTD submissions. Sage has the longest track record of any UK accounting software vendor and its MTD implementation is solid.

The issue is the interface. Sage was built in an era of desktop accounting, and while the cloud version has improved significantly, it still carries some of that legacy complexity. For a sole trader who wants to log a job, record an expense, and get out, Sage can feel like operating a freight truck to deliver a parcel.

TapTax

TapTax is designed from the ground up for sole traders navigating MTD, not adapted from a small-business suite. The pricing is built to reflect what a sole trader actually needs: quarterly submissions, expense categorisation, and a clear view of what you owe, without the overhead of payroll modules, stock management, or multi-entity reporting.

Where the major providers charge you for features a ten-person business needs, TapTax charges you for the five things a sole trader actually uses. If you want to understand what drives the cost difference in cloud accounting products, the Cloud Tax Software UK breakdown explains the infrastructure costs that sit behind every monthly subscription.

What You Are Actually Paying For (And What You Are Not)

Here is the structural problem with using an SME accounting suite as a sole trader: you are funding features built for someone else.

Payroll processing, multi-user access, inventory tracking, project profitability reporting, purchase order workflows. These are valuable tools for a business with employees and a finance function. For a self-employed electrician with one van and twelve regular clients, they are overhead you are subsidising through your monthly fee.

The more focused comparison is this: what does MTD compliance actually require?

1. Digital records of income (what came in)
2. Digital records of allowable expenses (what went out)
3. Quarterly submission of those figures to HMRC
4. An end-of-period statement
5. A final declaration

That is it. Software that does those five things costs less to build and maintain than software that does those five things plus payroll plus inventory plus CRM integration. You should pay accordingly.

For context on what HMRC's approved software list actually guarantees versus what it implies, the MTD API Compatible Software post is worth reading before you sign up to anything.

The Hidden Costs No Comparison Table Shows

Monthly subscription is not the only cost. Before signing up, ask these questions.

Accountant add-on fees. Some sole traders use an accountant to review their MTD submissions or handle the final declaration. Several software providers charge accountants a separate fee to access client files, and some pass that cost on. Ask your accountant which platforms they prefer before you commit.

Data export limitations. If you want to leave a provider, how easy is it to take your records with you? Some platforms make CSV export straightforward. Others make it genuinely difficult, creating a switching cost that locks you in even if a cheaper option launches.

Price increase history. QuickBooks raised its UK prices in 2023. Xero restructured its tier pricing in 2024. FreshBooks has raised prices twice in three years. The price you sign up at is not necessarily the price you will pay in 2027 or 2028. Check the provider's pricing history before treating today's rate as fixed.

Integration costs. If you use a separate invoicing tool, a mileage tracker, or a receipt scanning app, check whether integration with your chosen MTD software requires a paid plan on either side. The best free accounting apps post covers this in detail, including which free tools hit paywalls the moment you need MTD compatibility.

The Penalty Arithmetic That Makes This Urgent

If the cost of software feels frustrating, consider the alternative. HMRC's penalty points system for MTD ITSA works similarly to driving penalty points: miss a quarterly submission, collect a point. Accumulate four points and you receive a £200 penalty. Late payment attracts interest at the Bank of England base rate plus 2.5 percentage points.

The MTD Penalty Points System post runs through the exact arithmetic. The short version: missing two quarters in a year could cost you more in penalties than a year's software subscription. The maths favours compliance.

How to Choose: A Sole Trader's Decision Framework

Rather than defaulting to the biggest brand, run through this sequence.

Step 1: Establish what you actually need. Do you need payroll? Almost certainly not. Do you need multi-currency? Probably not. Do you need more than basic invoicing? Possibly, depending on your client volume.

Step 2: Confirm MTD ITSA readiness. Not all plans within a provider's range include quarterly MTD submissions. The HMRC approved MTD software list post explains what the approval actually covers and what to verify before buying.

Step 3: Calculate the true annual cost. Monthly fee multiplied by twelve, plus any accountant access fees, plus any integration costs. Compare that figure across providers, not the promotional monthly rate.

Step 4: Test the interface before you commit. Most providers offer a free trial. If you cannot figure out how to log an expense in under two minutes during a trial, that friction does not improve when you are tired after a twelve-hour job on a Thursday evening.

Step 5: Check the switching terms. What happens to your data if you leave? Can you export everything in a usable format? Is there a minimum contract?

The Bigger Picture: Why HMRC Did Not Build a Free Tool

It is worth pausing on a structural question: why are sole traders being compelled to buy commercial software to fulfil a legal obligation?

HMRC's position is that the commercial market delivers better innovation and user experience than a government-built tool. That argument has some merit in the abstract. It is less persuasive when the people bearing the cost are self-employed individuals who did not ask for quarterly filing and who have no choice but to pay.

The software vendors lobbied for MTD. They benefit directly from a mandate that creates millions of new recurring subscribers. HMRC benefits from more accurate, more frequent data. The sole trader pays the subscription and does five times the admin. The accountability sits clearly with HMRC's policy design, and it is worth naming that plainly rather than treating the cost as an inevitable feature of tax compliance.

For a full analysis of who benefits from MTD's commercial software requirement, the HMRC Approved MTD Software List post sets out the commercial incentive structure in detail.

What to Do Before April 2026

If your income is above £50,000, the April 2026 deadline is fewer than twelve months away. Here is what a time-poor tradesperson should do this month.

First, confirm whether you are in scope. If your trading income exceeded £50,000 in the 2024/25 tax year, you will almost certainly need to comply from April 2026. Use the TapTax tax calculator to get a quick read on your position.

Second, shortlist two or three MTD software options using the framework above. Do not sign up yet; take free trials seriously.

Third, speak to your accountant if you use one. They will have strong views on which platforms they can access efficiently. That conversation is worth having before you commit to a year-long subscription.

Fourth, register for MTD ITSA with HMRC. The software subscription does not replace HMRC registration; the two are separate steps. The how to link MTD software to HMRC guide walks through that process without the jargon.

You asked at the start who is charging what. The honest answer is: everyone is charging more than you should have to pay for mandatory compliance with a system you did not vote for. The practical answer is that the gap between the most expensive and most appropriate option is several hundred pounds a year, and choosing the right tool takes about an hour. That is an hour well spent.