Making Tax Digital for Income Tax (MTD for Income Tax) applies to sole traders and landlords with qualifying income above £50,000, mandatory for the 2026/27 tax year onwards. HMRC estimates 864,000 people fall within this first threshold. The threshold falls to £30,000 from the 2027/28 tax year and £20,000 from 2028/29. Several HMRC-recognised products are genuinely free, so you do not have to pay a subscription to be compliant.
This guide covers every free MTD for Income Tax option on HMRC's recognised software list as at 28 May 2026. The status of each product has been checked one by one against its individual HMRC product page on tax.service.gov.uk, including which income sources and tax return items are 'Ready now', 'In development' or 'Not included'.
KEY TAKEAWAYS
MTD for Income Tax is live for sole traders and landlords with qualifying income above £50,000 in 2024/25. The threshold drops to £30,000 in 2027 and £20,000 in 2028.
HMRC's recognised software list contains more than 20 products with a genuine free option. Being MTD-compliant does not require paying a subscription.
FreeAgent via Mettle, NatWest, RBS or Ulster Bank is the most powerful bank-bundled free deal.
RentalBux Free is the leading free option built specifically for landlords and sole traders together — all three MTD income types (including foreign property) on a single licence at zero cost, free until March 2028 per the provider page.
For taxpayers with foreign property income at zero cost, the free options are: RentalBux Free, Acxite, Adminsoft Accounts, Self Assessment Direct and My Tax Digital (Free) for full accounting; TaxUpdates and AbraTax for bridging.
Six products commonly listed in 'free MTD' roundups have 'Free version: Not included' on their HMRC product page: !Coconut (standard), Acctax/SelfTax, ANNA Self Assessment, Kletta and Nomi. TaxNav's HMRC page still shows free, but the provider's pricing page contradicts this — verify before signup.
'Ready now' on a HMRC product page means the feature is certified. 'In development' is a commitment to ship. 'Not included' means the provider will NOT support it.
Sign up for MTD for Income Tax with HMRC at gov.uk before onboarding with any software. The HMRC sign-up step is the gateway to filing.
Who Must Use MTD for Income Tax Software?
You must use HMRC-recognised MTD for Income Tax software if you are a sole trader or landlord with qualifying income above £50,000. Qualifying income is gross income from self-employment and UK or foreign property, before any expenses or allowances. HMRC uses your 2024/25 Self Assessment return to determine whether you fall within the first threshold from the 2026/27 tax year.
Three thresholds are being phased in:
Qualifying income is tested per individual, so jointly held property is split between owners on each return. Limited company landlords are outside MTD for Income Tax; they remain within Corporation Tax.
First-Year Penalty Grace Period
HMRC has confirmed that taxpayers joining MTD for Income Tax in April 2026 will not receive penalty points for late quarterly updates during the first 12 months. From 2027/28, the points system applies in full: each late update adds one point, and four points trigger a £200 fixed penalty. The first-year grace period does not extend to late payment penalties or the Final Declaration deadline of 31 January.
Your 2026/27 Deadlines at a Glance
Period | Coverage Dates | Deadline |
|---|---|---|
Q1 Update | 6 April – 5 July 2026 | 7 August 2026 |
Q2 Update | 6 July – 5 October 2026 | 7 November 2026 |
Q3 Update | 6 October 2026 – 5 January 2027 | 7 February 2027 |
Q4 Update | 6 January – 5 April 2027 | 7 May 2027 |
Final Declaration & Tax Due | 2026/27 Tax Year | 31 January 2028 |
What 'Free' Really Means: Three Pricing Models
Not every product marketed as 'free MTD software' is free in the same way. Understanding which model, you are looking at avoids hitting a wall when you outgrow a free tier or close the bank account the free access depends on.
1. Unconditionally Free
No subscription, no transaction caps, no bank-account requirement. Anyone can use these products. The trade-off is usually a more basic feature set, fewer integrations, and limited customer support compared with paid software.
For Example
HMRC-listed examples (28 May 2026): My Tax Digital (Free), Self-Assessment Direct, TaxUpdates, AbraTax MTD, Acxite, Pandle, Adminsoft Accounts, bluQube Tax Connect, flonancial, SumUp Accounting, RentalBux Free.
2. Bank-Bundled (Conditionally Free)
Free only while you hold a qualifying business bank account. This is the route to the most feature-rich free software for sole traders, but you are locked into the bank, and free access stops the moment you close or switch the account.
For Example
HMRC-listed examples (28 May 2026): FreeAgent (free with NatWest, Royal Bank of Scotland or Ulster Bank business current accounts, or with a Mettle account that has at least one monthly transaction); Monzo (free with Monzo Business); Starling (free with Starling Business; launched March 2026); Tide Accounting (free with Tide Business); Lloyds Bank (free with Lloyds Business); !Coconut Free (free for two years with a Zempler Bank business account; this is a separate HMRC listing to the standard '!Coconut' product, which has no free tier).
3. Freemium with Caps
Free up to an invoice, transaction or property limit. Once you cross the cap, a paid plan is needed. These work well for low-volume taxpayers but should be checked against your actual or projected volumes before signing up.
For Example
HMRC-listed examples (28 May 2026): QuickFile (free up to 1,000 nominal ledger entries per rolling 12 months); Zoho (1,000 invoices and 1,000 expenses per year, 1 user + 1 accountant on the free plan); Sage Sole Trader Free (5 sales invoices per month, non-VAT only); PaTMa (free for one property); GetGround (free for property income); Clear Books Free.
