MTD Software for Beginners: Low-Cost Options for Sole Traders and Landlords

By Jessica

If you are a sole trader or a landlord in the UK, the phrase "Making Tax Digital" (MTD) has likely been hovering over your head like a persistent rain cloud. For years, many of us have managed our finances with a trusty Excel spreadsheet or even a physical ledger. The idea of being forced to use complex, expensive accounting software can feel like an unnecessary burden.

However, the reality of MTD for Income Tax (ITSA) and VAT is far less intimidating: and significantly cheaper: than the myths might suggest. You don’t necessarily need a £30-a-month subscription to a high-end cloud suite to stay compliant. Whether you want to stick with your spreadsheets or find a budget-friendly app, there are plenty of low-cost options designed specifically for beginners.

In this guide, we’ll break down the best low-cost MTD software options for sole traders and landlords, helping you choose the path that fits your budget and your tech-confidence level.

Busting the MTD "Expensive Software" Myth

Before we look at the tools, let’s clear up some common misconceptions often discussed on platforms like AccountingWEB. Many business owners believe that MTD will be a massive financial drain.

Myth 1: MTD software is going to be expensive. Reality: Some compliant options cost less than a single takeaway coffee per month. Bridging tools can start as low as £30 per year.

Myth 2: You must use a full-featured system like Xero or Sage. Reality: While these are excellent tools, they are often "overkill" for a landlord with two properties or a sole trader with a simple service business. HMRC has recognized dozens of simpler, cheaper products.

Myth 3: HMRC provides the software for free. Reality: This is a dangerous one. Unlike the old Self Assessment portal, HMRC does not provide a filing tool for MTD. You must use third-party software.

Knowing that you have choices is the first step toward stress-free compliance. If you're feeling overwhelmed by the technicalities, it might be worth finding an accountant for your small business who can help you set up the right system from the start.

Option 1: Bridging Software (Stick to Your Spreadsheets)

For many landlords and sole traders, Excel is the "gold standard." It's flexible, familiar, and free if you already own it. Under MTD rules, you can still use spreadsheets, but you cannot simply "type" your figures into the HMRC website anymore. You need "bridging software" to link your spreadsheet to HMRC’s systems. If you want a practical walkthrough, see How to Integrate Excel With MTD Bridging Software in 5 Minutes.

VitalTax

VitalTax is a popular choice for those who want to keep things as simple as possible. It works as an "add-in" directly inside Excel. You click a button, and it sends your data to HMRC.

• Cost: Approximately £30 + VAT per year.

• Best for: People who are comfortable in Excel and don't want to learn a whole new software interface.

My Tax Digital

If your budget is zero, My Tax Digital is a fantastic option. It is a genuinely free bridging tool that allows you to upload .xlsx or .csv files and submit them to HMRC.

• Cost: Free.

• Best for: Micro-businesses and landlords on a tight budget who just need to tick the compliance box.

123 Sheets

This is another low-cost favorite that supports both Excel and Google Sheets. You simply copy and paste your data into their template.

• Cost: Around £1.65 - £2 per month for the basic tier.

• Best for: Users who want a very simple, web-based portal to manage their submissions.

Option 2: The "Free" Bank-Linked Software (FreeAgent)

One of the best-kept secrets in UK accounting is the partnership between certain banks and the software provider FreeAgent.

If you have a business current account with NatWest, Royal Bank of Scotland (RBS), or Mettle, you can get a full subscription to FreeAgent for free. FreeAgent is a powerful cloud accounting tool that handles MTD submissions, invoicing, and expense tracking.

• Pros: It’s a "pro" level tool for no cost. It automates your bank feeds, meaning you don't have to manually type in every transaction.

• Cons: If you switch banks, you lose the free access and have to pay the standard monthly fee (which can be over £15/month).

For many, opening a Mettle account just to get free software is a very smart move for SME growth and cost-saving.

Option 3: Low-Cost Niche Options (TaxNav and Landlord Apps)

If you find Excel a bit fiddly but don't want a massive cloud suite, there are niche apps designed for your specific situation.

TaxNav

TaxNav is often cited as a solid, low-cost option for sole traders. It typically costs around £60 per year, making it more expensive than a basic bridge but much cheaper than a full Xero subscription. It focuses specifically on what you need for your tax return without the "bloat" of payroll or complex inventory tracking.

Landlord Studio

For property owners, Landlord Studio offers a free tier for those with only one or two properties. It allows you to track rent, log expenses, and eventually submit MTD updates. It’s built for landlords, so it uses language you understand (like "tenants" and "safety certificates") rather than accounting jargon.

Option 4: Basic Cloud Tiers (Xero and Sage)

The "Big Two" of the accounting world also have entry-level plans, though they are usually more expensive than the bridging options mentioned above. If you're reviewing software choices more broadly, our guide to low-cost MTD software for sole traders and landlords may also help.

Xero Starter / Ignite

Xero is world-class software, but its basic plans often limit how many invoices or bills you can enter per month.

• Cost: Usually starts around £10-£15 per month (though they often run 50% off promos).

• Pros: Highly professional, connects to every bank, and your accountant will definitely know how to use it.

• Cons: Can get expensive quickly if your business grows or you need more features.

Sage Accounting Individual

Sage offers a streamlined tool specifically for sole traders with a single income source. It's designed for digital record-keeping and MTD readiness without the complexity of their larger corporate packages.

Comparing the Options: Which is Right for You?

Software Type	Typical Cost	Ease of Use	Best For...
Bridging (VitalTax)	£36/yr	Easy (if you know Excel)	Spreadsheet lovers
Free Bridge (My Tax Digital)	Free	Moderate	Absolute lowest cost
FreeAgent	Free (via NatWest)	Very Easy	Users who want automation for free
TaxNav / Niche Apps	£60/yr	Easy	Simple sole traders
Xero Starter	£120+/yr	Professional	Growing businesses

Conclusion: Start Small and Simple

Making Tax Digital doesn't have to be a tech nightmare or a financial drain. For most landlords and simple sole traders, a bridging tool or a free bank-linked account like FreeAgent is more than enough to stay on the right side of HMRC.

The key is to compare MTD bridging software vs full apps before you commit to a long-term subscription. If you’re also thinking about wider support beyond software, read Accounting Services UK: The Complete Guide to Finding the Right Accountant for Your Business. If you’re still unsure which tool fits your specific tax situation, we can help.

At Accountant Search, we match you with professional accountants who specialize in SME tax services. They can guide you through the software setup, ensure your records are compliant, and help you save money on your tax bill.

Ready to take the stress out of MTD? Let us find the perfect accountant to help you navigate these changes.