As a sole trader, your accounting software needs to handle three core tasks: tracking income and expenses, producing invoices, and filing your Self Assessment tax return. From April 2026, it also needs to support MTD for ITSA (quarterly digital submissions to HMRC) if your self-employed income exceeds £50,000.
What sole traders need from accounting software
Feature
FreeAgent
QuickBooks
Xero
Sage
Self Assessment filing (SA100/SA103)
✓
✓
✓
✓
MTD for ITSA
✓
✓
✓
✓
Bank feeds (auto-import)
✓
✓
✓
✓
Invoicing
✓
✓
✓
✓
Expense tracking / receipt scan
✓
✓
✓
✓
VAT returns (MTD)
✓
✓
✓
✓
From (ex-VAT)
£0–£19/mo
£14/mo
£16/mo
£15/mo
Our top picks for sole traders
FreeAgentOften freeBest overall for sole traders
From £0 (free with Starling/NatWest) or £19/mo + VAT
Self Assessment SA100 + SA103 direct HMRC filing
MTD ITSA ✓ Fully compatible
FreeAgent was built specifically for freelancers and self-employed workers in the UK. Its Self Assessment module walks you through your tax return step-by-step and files directly to HMRC. Get it completely free with a Starling or NatWest business account — making it the easiest choice for most sole traders.
Pros
Free with Starling, NatWest, RBS or Ulster Bank business account
Purpose-built Self Assessment module — walks you through every box
Files SA100/SA103 directly to HMRC
MTD ITSA compatible; clear tax timeline and reminders
Cons
Fewer integrations than QuickBooks/Xero
£19/mo if you don't hold a qualifying bank account
*Free for life with a qualifying NatWest, RBS, Ulster Bank or Starling business account. We may earn a commission if you sign up via our link.
QuickBooks Self-Employed / Simple StartMost popular
From £14/mo + VAT (Simple Start)
Self Assessment SA103 export; works alongside HMRC portal
MTD ITSA ✓ Compatible
QuickBooks Simple Start is the entry-level plan for sole traders — one user, invoicing, bank feeds, expenses and a basic profit & loss view. The QuickBooks Self-Employed product (separate, cheaper plan) is specifically designed for mileage tracking and simplified SA tax return prep, useful for part-time freelancers.
Pros
Most integrations — Stripe, PayPal, Shopify, Amazon
Automatic mileage tracking via app GPS
Strong mobile app
QuickBooks Self-Employed plan is cheaper for simple freelancers
Cons
Price rises significantly after introductory period
SA filing is export-based, not direct HMRC submission on basic plan
We may earn a commission if you sign up via our link — this doesn't affect our editorial independence.
Xero StarterBest if VAT-registered
From £16/mo + VAT (Starter plan)
Self Assessment Via tax advisor integration or export
MTD ITSA ✓ Compatible
Xero Starter suits VAT-registered sole traders who need the best VAT return management in the market. Its MTD bridging and real-time VAT tracking are industry-leading. Note: the Starter plan limits you to 20 invoices and 5 bills per month — upgrade to Standard (£33/mo) if you exceed this.
Pros
Best-in-class VAT return handling and MTD bridging
Clean, modern interface
1,000+ integrations
Strong multi-currency support
Cons
Starter plan limits 20 invoices/5 bills per month
No direct SA filing — relies on accountant or export
We may earn a commission if you sign up via our link — this doesn't affect our editorial independence.
Sage Accounting StartEstablished brand
From £15/mo + VAT
Self Assessment SA filing available
MTD ITSA ✓ Compatible
Sage's entry-level cloud plan covers sole trader basics: invoicing, bank reconciliation, expense capture and VAT returns. Its advantage is the trusted Sage brand and 24/7 UK support — useful if you want telephone help rather than relying on chat or community forums.
Pros
24/7 UK phone support
Trusted brand — widely recognised by accountants
Scales to Sage Accounting or Sage 50 as you grow
Cons
Less modern interface than FreeAgent or Xero
Not as purpose-built for sole traders as FreeAgent
We may earn a commission if you sign up via our link — this doesn't affect our editorial independence.
Tax tip: Accounting software is a fully allowable expense as a sole trader — it reduces your taxable profit. At 20% income tax + 9% Class 4 NI, every £1 of allowable expense saves you 29p in tax. At higher rate it's 42% (40% IT + 2% NI). Use our self-employed tax calculator to see your effective rate.
MTD for ITSA — what sole traders need to know
Income level
MTD ITSA start date
What changes
Self-employed income > £50,000
April 2026
Quarterly digital submissions + end of period statement
Self-employed income > £30,000
April 2027
Same requirements
Under £30,000
TBC (likely 2028+)
No immediate change; traditional SA return continues
All four platforms on this page are HMRC-recognised for MTD ITSA. If you currently use a spreadsheet or legacy software, switch before your mandatory start date to avoid HMRC penalties.
Sole traders must keep records of income and expenses. Spreadsheets are technically acceptable, but accounting software makes Self Assessment faster, reduces errors and automatically satisfies MTD for ITSA requirements. From April 2026 (income >£50k) or April 2027 (income >£30k), MTD-compatible software becomes mandatory.
FreeAgent is completely free for life if you hold a NatWest, RBS, Ulster Bank or Starling business bank account — making it the cheapest option for most sole traders. Among paid options, QuickBooks Simple Start (£14/mo + VAT) and Sage Accounting Start (£15/mo + VAT) are the most affordable entry points.
MTD for ITSA requires sole traders to submit quarterly digital updates to HMRC instead of a single annual tax return. It applies from April 2026 for self-employed income over £50,000 and from April 2027 for income over £30,000. All platforms on this page are fully compatible. Switch before your mandatory start date to avoid penalties.
Yes. FreeAgent files the SA100 and SA103 directly to HMRC from within the software. QuickBooks and Xero produce the figures you need to enter on HMRC's portal. For straightforward self-employment with no other income sources, you don't need an accountant. Consider one if you have rental income, investments, or complex expenses.