How much does MTD software cost?
How much does MTD software cost in 2026? Free tiers, bridging tools from ~£30/yr and paid plans ~£5–£36/mo compared honestly — plus what drives the price.
Quick answer: MTD for Income Tax software ranges from genuinely free (free tiers, or a full package bundled with some business bank accounts) through cheap bridging tools at roughly £30 a year, up to full cloud accounting at around £5–£36 a month. Most sole traders and landlords will not need to pay much — and some pay nothing. First check whether you even need it yet with the free MTD Scope Checker.
Making Tax Digital for Income Tax (MTD ITSA) requires you to keep digital records and file through HMRC-recognised software — you can no longer type figures straight into the old Self Assessment form once you're mandated. The obvious worry is cost. The honest answer is that prices vary widely, and "the cheapest MTD software" is often free, so it pays to understand the landscape before you commit.
All the figures below are indicative market prices as at mid-2026. Software pricing changes often, so always confirm the current price on the provider's own site before you sign up. HMRC keeps the definitive list of compatible products on its Find software that works with Making Tax Digital for Income Tax page, and importantly HMRC does not recommend or endorse any particular product — the choice is yours.
Do you even need to pay yet?
Cost only matters once you're actually mandated. MTD ITSA is being phased in by income band, measured on your gross self-employment turnover plus gross property rents (before expenses) from your prior-year Self Assessment return:
| Qualifying income | Return it's measured on | Mandated from |
|---|---|---|
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 | 2026/27 | 6 April 2028 |
If you're below £20,000 you're not currently in scope at all, so paying for MTD software may be premature. Check your position with the MTD Scope Checker and see the key dates on the MTD Deadline Calculator. For a fuller explanation of who is affected, read Am I in scope for Making Tax Digital as a sole trader in 2026?.
The price landscape, cheapest first
Free options (£0)
There are three genuinely free routes:
- Free tiers. Some providers — including Ledgers — offer a free tier aimed at people with simple affairs. HMRC has said it expects free products to be available for those with the simplest tax affairs who are mandated; the compatible-software list flags which products are free.
- Bundled with your bank account. FreeAgent is provided free for as long as you hold a NatWest, Royal Bank of Scotland, Ulster Bank or Mettle business account (Mettle requires at least one transaction a month). For those customers the full package — bank feeds, invoicing, Self Assessment and MTD filing — costs nothing extra. See FreeAgent's Mettle page for current terms.
- Free tools around the edges. Calculators and checkers (like the ones on this site) are free and always will be — they help you plan, though they don't file for you.
Bridging software (from ~£30/year)
If you'd rather keep your records in a spreadsheet, bridging software connects Excel, Numbers or Google Sheets to HMRC's API so you can submit the quarterly figures. This is the cheapest paid route: tools such as VitalTax advertise around £30 a year. You keep doing your own bookkeeping in the spreadsheet; the bridge just handles the digital submission. It's inexpensive but you do more of the manual work yourself, and your spreadsheet has to be properly digitally linked — no retyping between cells and the filing tool.
Budget apps (~£5–£15/month)
A tier of low-cost apps targets sole traders and landlords specifically — think self-employed bookkeeping apps and landlord-focused tools. Indicative 2026 prices run from about £5 a month at the bottom to £10–£15 a month for entry cloud plans. These typically add bank feeds, expense capture and a simpler interface than a full accounting suite.
Full cloud accounting (~£15–£36/month)
Established platforms — Xero, QuickBooks, Sage, FreeAgent (if you pay directly, roughly £19–£36 a month depending on plan) — sit at the top. You're paying for breadth: full double-entry ledgers, VAT, multi-user access, integrations and reporting you may not need if you're a single landlord or a one-person trade.
One-off setup and add-ons
Beyond the subscription, budget for the odd extra: some providers charge for receipt-capture add-ons, and if you use an accountant to get set up, professional fees are separate. Industry commentary has floated setup costs in the low hundreds of pounds where an accountant does the migration for you — but that's a service fee, not the software price.
A worked example
Priya is a self-employed graphic designer with £46,000 of turnover and no property. On her 2025/26 return that's over £30,000, so she's mandated from 6 April 2027. Her options:
- She banks with Mettle, so she could run FreeAgent free — total software cost £0.
- If she preferred to stay in her existing spreadsheet, a bridging tool would cost roughly £30 a year (~£2.50/month).
- A budget app with bank feeds might run £8–£12 a month (~£96–£144/year).
- A full cloud suite she doesn't really need could be £24 a month (~£288/year).
Same obligation, a 0-to-£288 spread — which is exactly why it's worth shopping around rather than defaulting to the biggest brand. Priya can sanity-check her tax bill separately with the Self-employed tax calculator.
What actually drives the price
- How much bookkeeping is bundled. Bridging = you do the books, software just files (cheap). Full accounting = the software does the ledger for you (dearer).
- Number of income sources. One rental or one trade is simple; a trade plus several properties needs more. All your UK rental properties count as one UK property business for MTD, which helps keep landlord costs down.
- Bank feeds and automation. Live bank connections and auto-categorisation cost more to run, so they push the price up — but save you hours.
- Multi-user / accountant access. Paying for extra seats you don't need is a common overspend for solo traders.
- Your bank. As above, the right business account can make the software free entirely.
You can double-check which HMRC-recognised products fit your situation on the official Find software that works with Making Tax Digital for Income Tax list, and read the wider background on the MTD for Income Tax campaign site.
Where Ledgers fits
Ledgers is transaction-led accounting built for MTD ITSA: it owns your general ledger, categorises as it goes, and shows you the working so you can approve the edges (what we call glass-box trust). Our public tools are free, and there's a free tier for simple affairs — so you can start planning and, when you're mandated, file without an eye-watering bill. We're guidance and software, not personalised tax advice; if your affairs are complex, an accountant is still worth keeping for year-end.
Frequently asked questions
Is there any free MTD for Income Tax software?
Yes. Some providers offer free tiers for simple affairs, and FreeAgent is free for NatWest, RBS, Ulster Bank and Mettle business-account holders. HMRC has said it expects free products to be available for those with the simplest tax affairs — check the "free" filter on the GOV.UK software list.
What's the cheapest MTD software if I want to keep using spreadsheets?
Bridging software is usually the cheapest paid route — some tools cost around £30 a year. It links your spreadsheet to HMRC's system so you can submit quarterly updates, but you keep doing the bookkeeping in the spreadsheet yourself, and it must be properly digitally linked.
How much does full MTD accounting software cost per month?
Full cloud accounting typically runs from about £5 a month for budget landlord/sole-trader apps up to roughly £15–£36 a month for established suites, depending on the plan and features. Always confirm the current price on the provider's site, as these change frequently.
Can I just carry on typing figures into the Self Assessment form?
No. Once you're mandated for MTD ITSA you must keep digital records and file through HMRC-recognised software or bridging software — you'll send four quarterly updates plus a final declaration instead of one return. Check when that applies to you with the MTD Deadline Calculator.
Does HMRC recommend a specific product?
No. HMRC publishes a list of compatible software but does not recommend or endorse any particular provider. The choice — free, bridging, budget or full — is yours, based on how much bookkeeping you want the software to do.