Best MTD-Compatible Software for UK Tradespeople 2026
From April 2026, sole traders earning over £50,000 must use HMRC-compatible software for Making Tax Digital. If you’re below that threshold you’ve got more time – but choosing the right software now means you’re ready when the deadline arrives. This guide covers the four main options specifically for tradespeople.
What to Look For as a Tradesperson
Before comparing tools, apply this filter. Good MTD software for a tradesperson needs to:
- Be HMRC-recognised for MTD Income Tax – not just VAT. Check the GOV.UK software list before committing
- Handle CIS – if you pay subcontractors or receive payments under CIS, you need this. Not all software handles it
- Work properly on mobile – receipt capture, invoicing, and mileage tracking all need to work from your phone
- Connect to your bank account – automatic bank feeds pull transactions in without manual entry
- Be used by your accountant – if your accountant already uses a platform, use the same one
The Best MTD-Compatible Accounting Software for UK Tradespeople
1. Xero – Best for Growing Trade Businesses
Xero is the most widely used accounting platform among UK accountants. It handles CIS contractor and subcontractor tracking, VAT returns, payroll via Xero Payroll, and MTD quarterly updates all within one platform. The interface is clean, bank feeds are excellent, and the app marketplace integrates with Tradify for job management.
Tradespeople with employees or subcontractors, those already using Xero Payroll, or anyone planning to grow. Best long-term fit for businesses that need CIS, payroll, and accounts in one place.
2. FreeAgent – Best for Sole Traders Who Want Simple
Built specifically for UK freelancers, contractors, and sole traders. Self Assessment, MTD quarterly updates, and VAT returns all work cleanly without much setup. Standout features for tradespeople: mobile receipt capture and mileage tracking that genuinely work on the go. If you bank with NatWest, RBS, Ulster Bank, or Mettle, it’s completely free.
Sole trader tradespeople with straightforward income, no employees, and limited CIS involvement. Especially strong value if you bank with NatWest or RBS – it’s completely free.
3. QuickBooks – Best Budget Option for Simple Sole Trades
Cheapest entry point of any major MTD-compatible platform at £10/month for the sole trader plan. If your business is straightforward – one income stream, no employees, limited subcontractor work – it covers the MTD bases at the lowest monthly cost. Best receipt capture feature of the main platforms.
Sole trader tradespeople with simple finances who want the lowest monthly cost from a major MTD platform. Upgrade needed for VAT registration or CIS work.
4. Sage Accounting – Best for the Sage Ecosystem
If you’re already using Sage Payroll for employees, Sage Accounting is the natural companion – everything integrates without manual journal entries. Strong CIS functionality is one of Sage’s traditional strengths in the construction sector.
Trade businesses already using Sage Payroll, or those who prefer a traditional UK brand with phone support.
What About Spreadsheets?
You can still use spreadsheets under MTD – but only if you connect them to HMRC via bridging software such as VitalTax or MyTaxDigital. It works, but adds a step each quarter and requires your spreadsheet to be structured correctly. For most tradespeople, purpose-built accounting software is cleaner once bank feeds are pulling transactions in automatically.
Quick Verdict: Which One Should You Choose?
- Bank with NatWest, RBS or Mettle: FreeAgent free – don’t pay for software you can get at no cost
- Sole trader, simple finances, lowest cost: QuickBooks Sole Trader (£10/month)
- Sole trader wanting clean UK-focused software: FreeAgent (£14.50/month)
- Growing trade business with employees or subcontractors: Xero (£16/month)
- Already using Sage Payroll: Sage Accounting
- Your accountant uses a specific platform: use the same one, always
How Tradify Fits In
Tradify handles your quoting, job management, and invoicing – and integrates directly with Xero and other accounting platforms. Every invoice you raise in Tradify flows into your accounting software automatically, feeding your MTD records without any double entry. For a tradesperson getting set up for MTD, pairing Tradify with Xero or FreeAgent gives you job management and tax compliance working together from day one.
Try Tradify Free →Frequently Asked Questions
Making Tax Digital is HMRC’s requirement to use approved software to keep digital tax records and submit quarterly income updates. From April 2026, it applies to self-employed tradespeople earning over £50,000 per year. Those earning between £30,000 and £50,000 will follow from April 2027. If you are a sole trader in this range, you must use HMRC-recognised software – spreadsheets alone are no longer sufficient without bridging software.
For most sole trader tradespeople, the best options are FreeAgent (free if you bank with NatWest, RBS, or Mettle – otherwise £14.50/month), QuickBooks Sole Trader (£10/month, lowest cost paid option), or Xero (£16/month, best for growing businesses with CIS or employees). All three are HMRC-recognised for MTD Income Tax, work on mobile, and connect to bank feeds for automatic transaction import.
Not all MTD software handles CIS equally. Xero has the strongest CIS functionality – it handles subcontractor verification, CIS deductions, and monthly CIS returns within the same platform. Sage Accounting also has strong CIS support. FreeAgent handles subcontractor payments but does not file CIS returns directly. QuickBooks requires its Advanced Payroll module for CIS. If CIS is significant to your business, Xero is the safest choice.
Yes – but only if you connect your spreadsheet to HMRC via bridging software such as VitalTax or MyTaxDigital. Bridging software acts as the link between your spreadsheet and HMRC’s systems, allowing quarterly digital submissions. Most tradespeople find purpose-built accounting software more practical once bank feeds are pulling transactions in automatically.
Yes – FreeAgent is completely free for business account holders at NatWest, RBS, Ulster Bank, and Mettle. This includes full access to all features including MTD Income Tax submissions, VAT returns, Self Assessment, bank feeds, receipt capture, and mileage tracking. If you bank with one of these providers, this removes the cost of MTD software entirely.
Tradify is a job management platform handling quoting, scheduling, timesheets, and invoicing. It integrates directly with Xero and QuickBooks, so every invoice raised in Tradify syncs automatically to your accounting software. This means your income records feed into your MTD-compliant accounting platform without any manual re-entry.
This guide is for informational purposes only and does not constitute financial or tax advice. Consult a qualified accountant for advice specific to your situation. Some links on this page are affiliate links; if you sign up through them we may earn a commission at no extra cost to you.