Key takeaways
- HMRC confirms that free MTD for Income Tax software exists for people with simple tax affairs, but warns it may come with limits, such as a cap on transactions.
- A free trial, a free tier with a paid filing step and a genuinely free plan are three different things. Check which one you are looking at.
- The software must cover the whole year: digital records, four quarterly updates and the tax return, including any other income you report.
- Landlords need to check property support in detail, especially for overseas lets, and the self-employed need to check every business they run is covered.
- Cheap MTD software is worth paying for when it saves you time, for example with bank feeds, receipt scanning or VAT filing.
With MTD for Income Tax now live for sole traders and landlords with qualifying income over £50,000, and the threshold dropping to £30,000 from April 2027, plenty of sole traders and landlords are looking for free MTD software. There are many options, and on the surface they look alike. The differences tend to show up later, usually when you try to file.
This guide sets out what to check before you commit, so the free option you pick today still works for you at the end of the tax year.
Is free making tax digital software really enough?
For many people, yes. HMRC’s guidance on choosing the right software for MTD for Income Tax says free products are available for those with simple tax affairs. It also notes that these products may limit how you use them, giving a restricted number of transactions as an example.
In practice, free software tends to suit a sole trader with one business or a landlord with straightforward rental income, who is happy to enter or import transactions and wants to meet the rules without a monthly bill. It becomes less of a fit when you want automation, have several properties to track separately, or are VAT registered and need one place for both taxes. If you are still checking whether MTD applies to you at all, start with our guide to who needs MTD for Income Tax.
Free plan, free trial or free tier: know what “free” means
The word “free” covers several quite different offers, and it pays to know which one is in front of you.
A free trial gives you full access for a set period, after which you pay or lose access. That is fine for testing software, but MTD runs all year, so a trial will not see you through four quarterly updates and a tax return.
A free tier with a paid filing step lets you record income and expenses at no cost, then asks you to upgrade when you want to submit to HMRC. The software may be free to use, but compliance is not.
A genuinely free plan covers record keeping, quarterly updates and the tax return without a time limit. That is the version most people mean when they search for free MTD software, and it is worth confirming in writing on the provider’s pricing page.
What to check before you choose free MTD software
It appears on HMRC’s list
Only use software that HMRC has recognised for MTD for Income Tax. HMRC’s software finder tool asks a few questions and gives you a personalised list. Every product on it has been through HMRC’s recognition process, although HMRC does not recommend any individual product or provider. HMRC also suggests choosing your software before you sign up for MTD for Income Tax.
It covers the whole year, not just quarterly updates
Quarterly updates are summaries of your self-employment and property income and expenses. HMRC is clear that they are not tax returns. After the year ends, your software also needs to let you add any other income and submit your tax return by 31 January. That other income can include pensions, savings, dividends or a share of partnership profit. If a free product only handles the quarterly part, you will need a second product at year end, and the two have to work together.
It supports every income source you have
Check that the software handles self-employment, UK property and foreign property, whichever apply to you. HMRC allows you to use more than one product, for example one for your trade and another for your lets, but only one product for each separate submission. It is also worth thinking ahead. If you are a landlord thinking about starting a business, HMRC suggests checking the software will support that new income source too.
There are no transaction limits or filing paywalls
Look for clear wording on the pricing page about how many transactions you can record and whether submitting to HMRC is included. A cap that seems generous in April can feel tight by December, particularly if you record small, frequent sales.
It works with your update periods
Most people use standard update periods that follow the tax year, but if your accounting period ends on 31 March you may prefer calendar update periods. HMRC says the software you choose needs to work with your accounting period, and you cannot change your update periods once you have sent your first quarterly update.
You can export your data and invite your accountant
Your records belong to you, so check you can export them at any time. If an accountant helps you, make sure you can invite them in. HMRC also suggests checking whether software allows multiple agents if you use more than one.
There is help when you need it, and a sensible upgrade path
Free plans usually come with self-service help, such as guides and community forums, rather than phone support. That suits many people, but know what you are getting before your first deadline. Check, too, that you can move to a paid plan later without starting again.
Free MTD software for the self-employed
If you are self-employed, the main question is whether the software matches how your business actually runs. HMRC treats each self-employment as a separate source of income. If you run two businesses, for example as an electrician and a driving instructor, you need separate digital records and separate quarterly updates for each, so make sure a free plan can handle that. Construction subcontractors should also check the software supports the Construction Industry Scheme.
Our guide to MTD for sole traders covers the rules in more detail, and there is more on running your books on the self-employed page.
Free MTD software for landlords
Landlords should look closely at property support, because HMRC’s rules differ between UK and overseas lets. All your UK properties count as one UK property business, so the software can group them into one quarterly update. Foreign property is different: HMRC asks for separate digital records for each overseas property, which are then combined into one update.
There are other details to check too. If you let jointly, you only need to record your share. If you let residential property in the UK, you need to record which expenses are restricted finance costs, such as mortgage interest. A free plan that handles one property well may not suit a growing portfolio, so check what changes as you add more. Our guide to MTD for landlords explains the property rules in plain English.
When cheap MTD software is worth paying for
Free software meets the rules. Paid software can save you time, and for some people a few pounds a month is a good trade.
It is usually worth paying when typing in transactions takes longer than you would like, and a bank feed or receipt scanning would do much of it for you. The same goes if you invoice customers and want that in the same place as your records, or if you are a landlord who wants to see which property is making money. If you are VAT registered, you already need MTD-compatible software for VAT, and HMRC suggests checking whether your VAT software also works for MTD for Income Tax, or whether your new software can meet your VAT needs. Our guide to MTD for VAT covers those rules.
When comparing cheap MTD software, look at the total yearly cost including VAT, what support each plan includes and whether moving between plans keeps your records intact.
Questions to ask any free MTD software provider
Before you sign up, it helps to have clear answers to these questions:
- Is the software on HMRC’s list for MTD for Income Tax?
- Does the free plan include quarterly updates and the year-end tax return?
- Is there a time limit, a transaction cap or a charge to submit to HMRC?
- Does it cover all my income: self-employment, UK property and foreign property?
- Can I export my records and invite my accountant?
- What support is included on the free plan?
- What happens to my records if I upgrade or leave?
How the Clear Books free MTD plans measure up
Clear Books is UK accounting software that has helped sole traders, landlords and small businesses since 2008. It has been HMRC recognised for MTD for Income Tax since 14 February 2025, under recognition reference 4TLCTU. Its recognition for the year-end tax return covers employment, self-employment, property, savings and investment income.
The free plans are free for good, with no time limit and no upgrade needed to file. Sole Trader Free and Property Free both include MTD quarterly updates, year-end filing, income and expense recording, no transaction limits and the option to invite your accountant. Property Free covers one property or a group of UK properties, and there is a separate free plan for one overseas property. The sole trader plan also works for CIS subcontractors. If you are self-employed and a landlord, you can run a free account for each income type and switch between them with one login. You can export your data at any time.
Support on the free plans is self-service, through help articles and the user community. If you later want automated bank feeds, bill and receipt scanning, invoicing or profitability tracking across several properties, the paid Sole Trader and Property plans start at £5 a month plus VAT, with email support. VAT-registered sole traders can move to Sole Trader Plus at £15 a month plus VAT, which adds MTD VAT reporting and phone support. Upgrading keeps your records as they are. See the pricing page for the full comparison.
The next quarterly update deadline is 7 November 2026, so there is no time like the present to get set up. Pop the kettle on, and you can be ready before it boils.
Ready to get started? Get free MTD software.
Frequently asked questions
Is there genuinely free MTD for Income Tax software?
Yes. HMRC confirms free products exist for people with simple tax affairs, although some limit how you can use them. Clear Books offers free MTD software for sole traders and landlords, with quarterly updates and year-end filing included and no transaction limits.
What is the best free MTD software?
HMRC does not recommend any provider, so the best free MTD software is the one that covers all your income sources, files your quarterly updates and tax return without a paywall, and lets you export your data. Our MTD for Income Tax guide explains what the software has to do throughout the year.
Can I use free MTD software if I am VAT registered?
Free MTD for Income Tax plans do not usually include VAT returns. In Clear Books, VAT-registered sole traders can use Sole Trader Plus, which adds MTD VAT reporting. Read more in our guide to MTD for VAT.
Is free MTD software suitable for landlords with several properties?
It can be. UK properties are treated as one property business, so a free plan that groups properties may be enough. If you want to see profit for each property, a paid plan is likely to suit you better. Compare the options on our pricing page.
Do I need MTD software if my income is below the threshold?
Not yet. You only need to use MTD for Income Tax once your qualifying income passes the threshold for your tax year. Check the dates on our MTD deadlines and timeline page, and use the time to get your records in shape.
Can I keep my spreadsheet and still use free MTD software?
Yes, if the software can connect to your spreadsheet as bridging software through a digital link. Many people find it simpler to move their records into full MTD software instead. Our guide to MTD bridging software compares the two routes.
