Cheapest MTD Software in 2026: Affordable Options That Actually Work
Cheapest MTD Software in 2026: Affordable Options That Actually Work
Making Tax Digital is no longer optional for most UK businesses. MTD for VAT has been mandatory since April 2022, and MTD for Income Tax Self Assessment (MTD ITSA) is being phased in from April 2026 for sole traders and landlords earning above the threshold. You need compliant software, but you do not necessarily need to spend a fortune on it.
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The question is not just which software is cheapest — it is which software gives you the most value for your money. The cheapest option that cannot handle your needs is not a bargain. It is a false economy.
Let us compare the most affordable MTD-compliant options available in 2026 and see what you actually get at each price point.
Quick Price Comparison
| Software | MTD VAT | MTD ITSA | Starting Price | Annual Cost | |---|---|---|---|---| | ANNA | Yes | Developing | £0/month | £0 | | Coconut | Yes (paid plan) | No | £0/month (basic) | £0-£108 | | GoSimpleTax | Yes | Yes | ~£56/year | £56 | | FreeAgent | Yes | Developing | £14.50/month (free with NatWest) | £0-£174 | | Accounted | Yes | Yes | £14/month | £168 | | QuickBooks | Yes | Developing | ~£12/month | ~£144 | | Xero | Yes | Developing | ~£15/month | ~£180 |
Prices shown are standard rates and may vary with promotions or plan changes.
The Free Options
ANNA — Free with Limitations
ANNA offers a free business current account with basic bookkeeping and MTD for VAT filing. If you are a sole trader with straightforward VAT obligations, you can technically meet your MTD compliance requirements without spending anything.
The catch: you must bank with ANNA. Your bookkeeping is tied to their bank account, so you lose the freedom to choose your bank. Self Assessment coverage is limited to 4 SA schedules, there is no accountant portal, and MTD ITSA support is still in development. For simple VAT-only MTD compliance, ANNA works. For anything more, you will outgrow it quickly.
You get: Basic MTD VAT filing, bank account, simple bookkeeping You do not get: MTD ITSA, comprehensive SA filing, accountant tools, bank choice
Coconut — Free Basic, Paid for MTD
Coconut's free tier gives you bank feeds and basic expense categorisation, but MTD VAT filing requires a paid plan starting at around £9 per month. The free tier is useful for tracking, but you cannot actually submit VAT returns from it.
On the paid plan, Coconut handles MTD VAT filing adequately for straightforward businesses. Like ANNA, though, SA coverage is limited, there is no AI automation, and there are no accountant collaboration tools.
You get: Basic bookkeeping (free), MTD VAT on paid plan, simple interface You do not get: MTD ITSA, AI categorisation, WhatsApp receipts, accountant portal
The Budget Annual Options
GoSimpleTax — Around £56 per Year
GoSimpleTax takes a different approach. It is primarily a Self Assessment filing tool that has added MTD capabilities. At roughly £56 per year, it is one of the most affordable ways to file a tax return digitally.
GoSimpleTax is good at what it does — guiding you through the SA filing process step by step, with clear explanations of each section. It supports MTD ITSA submissions and covers a reasonable range of SA schedules.
However, GoSimpleTax is not a bookkeeping platform. It does not have bank feeds, receipt scanning, automatic categorisation, or year-round financial management. You arrive at GoSimpleTax with your numbers already prepared, and it helps you file them. If your bookkeeping is a shoebox of receipts, GoSimpleTax cannot sort that out for you.
You get: SA filing, MTD ITSA submissions, guided tax return process You do not get: Bank feeds, receipt scanning, AI categorisation, year-round bookkeeping, accountant portal
The Monthly Subscription Options
FreeAgent — £14.50/month or Free with NatWest
FreeAgent is genuinely free if you bank with NatWest, Royal Bank of Scotland, or Ulster Bank. That makes it arguably the best value MTD software available — a full cloud accounting platform at no cost. Even at the paid price of £14.50 per month, it is competitive.
FreeAgent handles MTD for VAT, offers bank feeds, invoicing, time tracking, and SA filing for 6 schedules. It is well-designed, well-supported, and suitable for most freelancers with straightforward finances.
The limitations: no AI categorisation (manual reconciliation required), limited SA coverage, no WhatsApp receipt scanning, and MTD ITSA support still developing. The free deal is also obviously dependent on maintaining your NatWest account.
You get: Full cloud accounting, MTD VAT, invoicing, time tracking, SA filing (6 schedules) You do not get: AI automation, WhatsApp receipts, comprehensive SA coverage, free practice management for accountants
Accounted — From £14/month
Accounted's Starter plan at £14 per month provides AI-powered bookkeeping with MTD compliance for both VAT and Income Tax. That is £168 per year for a platform that genuinely automates your bookkeeping rather than just providing tools for you to do it yourself.
The AI bookkeeper Penny categorises transactions with confidence scoring, scans receipts via WhatsApp, calculates tax implications, and sends seasonal tax nudges. The platform supports 11 of 13 SA schedules and includes a free accountant portal. For MTD ITSA compliance specifically, Accounted is one of the most affordable options that is ready from day one.
You get: AI categorisation, WhatsApp receipts, MTD VAT and ITSA, 11 SA schedules, free accountant portal, bank feeds, CIS support You do not get: Free tier (though the free trial lets you evaluate before committing)
QuickBooks — From Approximately £12/month
QuickBooks' entry-level plan starts slightly cheaper than both FreeAgent and Accounted. It covers MTD for VAT and provides solid bookkeeping features including bank feeds, invoicing, and receipt scanning via mobile app. Promotional pricing often makes the first few months even cheaper.
Be aware that QuickBooks frequently increases prices after promotional periods, and some features require higher-tier plans. The starting price is attractive, but check what you actually get on the cheapest plan and what the price becomes after month six.
You get: Cloud accounting, MTD VAT, bank feeds, invoicing, receipt scanning You do not get: Comprehensive SA filing, AI categorisation with confidence scoring, WhatsApp receipts, free accountant portal
What "Cheap" Actually Costs You
The cheapest software is not always the most affordable when you account for your time. Consider this: if you spend two hours per month manually categorising transactions in a free tool, and your time is worth £30 per hour, that "free" software is actually costing you £60 per month in labour.
AI-powered platforms like Accounted reduce that time investment to minutes per month. The confidence scoring means you only review transactions where the AI is uncertain — typically 10-20% of your total volume. The rest is handled automatically.
For a sole trader earning £40,000 per year, the difference between spending 2 hours per month on bookkeeping and spending 15 minutes is roughly 21 hours per year. At £30 per hour, that is £630 worth of time — far more than the difference in software costs.
What You Actually Need for MTD
At minimum, MTD-compliant software must:
- Maintain digital records of your income and expenses
- Submit VAT returns directly to HMRC (for MTD VAT)
- Submit quarterly updates and an end-of-period statement (for MTD ITSA)
- Allow you to view your tax position
Every option in this comparison meets these requirements to varying degrees. The question is what else you need — and what your time is worth.
Our Honest Recommendation
If you bank with NatWest and have simple tax affairs, FreeAgent for free is hard to beat on pure cost.
If you want the cheapest dedicated filing tool and already have your books in order, GoSimpleTax is the budget choice.
If you want software that actively reduces your workload through AI, covers the widest range of tax situations, and includes accountant tools at no extra cost, Accounted at £14 per month represents the strongest value proposition — not because it is the cheapest, but because it gives you the most for what you spend.
Start a free trial of Accounted and see whether the time you save is worth more than the modest monthly cost. For most sole traders, the answer is an emphatic yes.
Related Reading
- Best Accounting Software for Landlords in 2026
- Accounted vs TaxCalc: Year-Round Bookkeeping vs Annual Tax Filing
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Editorial & Research
The Accounted editorial team covers software comparisons, technology, and the tools UK sole traders need to run their businesses efficiently. All software comparisons are based on independent research and publicly available pricing.
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