Comparison · Updated April 2026
Cheapest Making Tax Digital Software
Compare MTD-compatible software pricing for VAT and Income Tax filing. Find the best value for your business.
How much does MTD software cost?
Making Tax Digital software ranges from free (HMRC's basic tool) to £50+ per month for full accounting suites. But most sole traders and small businesses don't need a full accounting package — they need software that files their returns to HMRC correctly and on time.
The key factors affecting price are: which filings you need (VAT, Income Tax, or both), whether you want full accounting features or just MTD filing, and how many transactions you process.
If you already have bookkeeping records (even in a spreadsheet) and just need to submit them to HMRC, a focused filing tool like MTDFile is the most cost-effective option. If you need invoicing, payroll, multi-currency, and project tracking, a full accounting package may be worth the extra cost.
MTD software pricing comparison 2026
| Software | VAT only | ITSA only | Both | Annual cost |
|---|---|---|---|---|
| MTDFile | £9.99/mo | £9.99/mo | £16.99/mo | From £119.88/yr |
| QuickBooks | £15/mo | £15/mo | £30/mo | From £180/yr |
| Xero | £18/mo | £18/mo | £36/mo | From £216/yr |
| FreeAgent | £14.50/mo | £14.50/mo | £14.50/mo | £174/yr |
| Sage | £14/mo | £14/mo | £28/mo | From £168/yr |
| HMRC Free Software | Free | Free | Free | Free |
Prices correct as of April 2026. All prices exclude VAT. Actual pricing may vary based on plan tier and promotional offers.
What to look for in MTD software
Price isn't everything. Here are the key features that matter for MTD compliance:
HMRC MTD API integration
The software must be on HMRC's official list. This means it has been tested against HMRC's API and can submit returns correctly. All software in our comparison table is HMRC MTD API.
Direct API submission
Your software should submit directly to HMRC — not require you to export data and upload it elsewhere. MTDFile uses HMRC's official VAT and ITSA APIs for direct submission.
Digital record keeping
MTD requires you to keep digital records. Some software includes this; others expect you to maintain records separately. Built-in record keeping (like MTDFile offers) ensures your records and submissions are always in sync.
Deadline tracking
Missing a deadline means penalty points. Good MTD software pulls your obligation dates from HMRC and sends reminders before each deadline.
Support for both VAT and ITSA
If you're VAT-registered and self-employed, you need software that handles both. Some providers charge separately for each module. MTDFile offers a combined plan at £16.99/month.
Why MTDFile is the best value for MTD filing
MTDFile is purpose-built for Making Tax Digital. It's not a full accounting suite with MTD bolted on — it's focused entirely on making MTD filing as simple and affordable as possible.
£9.99/month
Single module
VAT returns OR Income Tax filing
- HMRC API direct submission
- Digital record keeping
- Deadline tracking & reminders
- AI expense categorisation
- Unlimited submissions
£16.99/month
Complete plan
VAT returns AND Income Tax filing
- Everything in single module
- Both VAT and ITSA in one place
- Cross-module reporting
- Priority support
- Save £2.99/mo vs separate plans
No annual contracts. No hidden fees. No charge per submission. Cancel anytime. All plans include HMRC API submission, digital record keeping, and deadline tracking.
Do you need full accounting software?
Not necessarily. Many sole traders and small businesses don't need invoicing, payroll, multi-currency support, or project tracking. If your needs are:
- Submit MTD returns to HMRC — MTDFile is sufficient and the most affordable option
- Basic bookkeeping + MTD filing — MTDFile with built-in record keeping covers this
- Full accounting, invoicing, payroll — Consider QuickBooks, Xero, or FreeAgent alongside or instead of MTDFile
The key question is: are you paying for features you'll never use? If you just need to stay MTD-compliant, a focused tool saves you money every month.
MTD filing from £9.99/month
MTDFile is connects directly to the HMRC MTD API software for VAT returns and Income Tax quarterly filing. No annual contract, no hidden fees, no charge per submission.