Best Bookkeeping Software for UK Sole Traders in 2026
What to Look for in Bookkeeping Software
Making Tax Digital is now live for those earning over £50,000, and the £30,000 threshold kicks in from April 2027. Here's what matters when choosing software.
MTD Compliance
Non-negotiable. Your software must be HMRC-recognised for Making Tax Digital and capable of submitting quarterly updates directly to HMRC. Penalties for non-compliance start at £100 per missed submission.
Bank Connections
Open Banking integration means your bank transactions flow into your software automatically. Look for connections to all major UK banks that sync reliably every day.
Receipt Capture
HMRC requires records for at least five years. Good software lets you photograph receipts and attach them digitally. Great software matches receipts to transactions automatically.
Tax Calculations
Your software should calculate Income Tax and National Insurance in real time, so you always know roughly what you owe.
The Contenders
We've tested six popular options. We'll be honest about all of them, including our own.
1. Accounted
Price: From £12/month (all features included) | Best for: Sole traders who want bookkeeping to happen automatically
The standout feature is Penny, the AI bookkeeper, which categorises transactions using a three-tier reasoning system that learns your business patterns. WhatsApp receipt capture lets you photograph a receipt, send it via WhatsApp, and Penny handles the rest.
Strengths: AI categorisation, WhatsApp integration, built for UK sole traders, MTD native, simple pricing Weaknesses: UK only, no invoicing yet, relatively new Our take: We're biased, but we believe it's the best option for minimal-effort bookkeeping. See our detailed comparisons.
2. Xero
Price: £15–£47/month | Best for: Businesses working closely with an accountant
The market leader, with an unmatched ecosystem of integrations and near-universal accountant familiarity.
Strengths: Massive app marketplace, excellent accountant collaboration, strong invoicing Weaknesses: Starter plan limited to 20 invoices/month, full plan expensive for sole traders, MTD retrofitted Our take: If your accountant insists on Xero, use Xero. Otherwise, you're paying for complexity you don't need. See our full comparison.
3. QuickBooks Self-Employed
Price: £10–£35/month | Best for: Sole traders who need invoicing
A purpose-built Self-Employed plan with solid receipt capture and mileage tracking.
Strengths: Good receipt scanning, solid mileage tracker, well-known brand Weaknesses: Upgrading for more features is a big price jump, US-centric design adapted for UK Our take: Decent at a fair price. Sometimes feels like a simplified US product. Check our QuickBooks comparison.
4. FreeAgent
Price: £14.50/month (free with NatWest/RBS) | Best for: Freelancers and contractors
The tax timeline feature is brilliant, and free banking partnerships make it hard to argue with.
Strengths: Excellent tax timeline, free with NatWest/RBS, good for contractors Weaknesses: Interface feels dated, limited automation, bank connections can be unreliable Our take: If you bank with NatWest or RBS, try it first — it's free and good. At full price, there are better options.
5. Sage Accounting
Price: £14–£33/month | Best for: Businesses needing traditional accounting features
A reliable, established choice, especially for those transitioning from Sage desktop products.
Strengths: Strong payroll integration, established brand, reliable Weaknesses: Higher learning curve, confusing pricing structure, limited automation Our take: The safe choice. Won't save you time like AI-powered alternatives will.
6. Coconut
Price: From £9/month | Best for: Very simple sole trader businesses
Started as a banking app for freelancers, now a simple bookkeeping tool at an affordable price.
Strengths: Very simple, affordable, good for beginners Weaknesses: Limited features, MTD via partnership, fewer bank connections Our take: A good starting point. You may outgrow it quickly.
Pricing Comparison
| Software | Basic Plan | Full Plan | Free Trial | |----------|-----------|-----------|------------| | Accounted | £12/month | £12/month (one plan) | 30 days | | Xero | £15/month | £47/month | 30 days | | QuickBooks | £10/month | £35/month | 30 days | | FreeAgent | £14.50/month | £14.50/month | 30 days | | Sage | £14/month | £33/month | 30 days | | Coconut | £9/month | £14/month | 14 days |
Prices correct as of February 2026.
The Verdict
- Minimal effort: Accounted — AI categorisation and WhatsApp receipts mean bookkeeping happens in the background
- Accountant chooses: Xero or Sage — go with their preference
- NatWest/RBS customer: FreeAgent — free and good
- Need invoicing now: QuickBooks or Xero — mature invoicing features
- Brand new and want simple: Coconut — start here, upgrade later
The best bookkeeping software is the one you'll actually use. Whatever you choose, make sure it's MTD-compliant.
Get Started with Accounted
Full MTD compliance, AI-powered categorisation, and WhatsApp receipt capture — all for one simple price. Start your free trial today — no credit card required.
Related Reading
- ATED: Annual Tax on Enveloped Dwellings Explained
- Tax Guide for Personal Trainers and Fitness Instructors
Accounted is built for UK sole traders — bookkeeping, tax, and MTD compliance in one place. See how it works →
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