Why the software choice now matters
From 6 April 2026, anyone whose combined gross income from self-employment and UK property crosses £50,000 must keep digital records and file five times a year instead of once. That is the change that makes the software choice matter now, roughly eleven months before the first deadline, rather than the week before you file. You send quarterly updates to HMRC by the 7th of August, November, February and May, then a Final Declaration by the following 31 January.
The software is not optional. HMRC will not accept paper returns or loose spreadsheets without bridging software for anyone caught by the threshold. Picking the right tool now gives you time to migrate cleanly and stop wrestling with quarter-end errors after the soft landing period closes. We set this up for owner-managers every week as specialist freelancer and sole trader accountants, and the right answer changes with your bank and your plans.
Most people we onboard start with the same three names: FreeAgent, Xero, QuickBooks. HMRC actually recognises around thirty products on its live software finder at gov.uk, but the big three cover roughly 80 percent of what we see across our client base. If your situation is unusual (multiple property partnerships, foreign income, a trust trading business) check the full HMRC list and ring us before you commit, because the answer moves.
FreeAgent: free if your bank is on the list, otherwise £19 to £36
FreeAgent is free for the vast majority of NatWest-group customers, and £19 a month otherwise. The standalone price is £19 for a sole trader plan, £29 for a partnership, or £36 for a limited company, with the same feature set across tiers. As a sole trader you are on the £19 plan unless you also run a limited company alongside.
The reason FreeAgent dominates sole-trader conversations in 2026 is the bank deal. NatWest, the Royal Bank of Scotland, Ulster Bank and Mettle all include the full FreeAgent subscription as long as you hold a qualifying business current account. No discount, no trial, no expiry. Mettle deserves a special mention: Mettle itself is free, with no monthly account fee and no minimum balance, so Mettle plus FreeAgent is the cheapest MTD ITSA compliant route we have found anywhere on the UK market.
Inside FreeAgent you get digital bookkeeping for self-employment and UK property income, bank feeds, mileage tracking, expense capture, the quarterly update workflow, the Final Declaration and a clean accountant-share workflow. The mobile app is excellent. Where it stumbles: VAT reporting is fiddly on the flat rate scheme, multi-currency is weak, and complex property portfolios push beyond what FreeAgent was designed for.
Xero: the standard most accountants already use
Xero Simple at £15 a month is the cheapest full Xero experience and covers the entire MTD ITSA workflow. Xero restructured its UK pricing in September 2024, and the plans now run Simple at £15, Ignite at £16, Grow at £33, Comprehensive at £47 and Ultimate at £59. For a sole trader with no employees and simple expenses, Simple is the right starting point.
Xero Simple covers digital record keeping for self-employment and property income, the four quarterly updates, the Final Declaration, one bank feed, mileage, receipt capture and a clean accountant share. It does not include VAT, multi-user access or multi-currency. If you register for VAT (turnover crosses £90,000) you upgrade to Ignite at £16 or higher.
What sets Xero apart in 2026 is professional ubiquity. Most UK chartered accountants run Xero across their client base, including us, so adding an accountant later is seamless and the file converts cleanly to a limited company chart of accounts if you incorporate. Where it stumbles: the £15 Simple plan has invoice limits that bite once you issue more than twenty invoices a month, pushing many sole traders to Ignite at £16 within the first quarter.
QuickBooks Sole Trader: the £10 budget tier built for MTD ITSA
QuickBooks Sole Trader is the cheapest dedicated MTD product from any of the three majors at £10 a month. Launched in November 2024, it sits beneath Simple Start (£16) and Essentials (£33) in the QuickBooks Online range, with promotional pricing that drops to roughly £1 plus VAT for the first six months on the current introductory offer.
It was designed specifically for the £20,000 to £100,000 UK sole-trader market preparing for MTD ITSA. The workflow covers digital records of self-employment and UK property income, four quarterly updates filed direct to HMRC by the 7th of the month following each quarter end, and the Final Declaration. You get one connected bank account, mileage tracking, receipt capture, and a year-to-date tax estimate, with the submission going straight to HMRC through Intuit's integration so you do not need bridging software.
Where it stumbles: one bank account only, no VAT (you would need Simple Start at £16), and no multi-user so you cannot add a partner without upgrading. The product is new, which means features arrive monthly and the occasional bug lands on production. If your bookkeeping is genuinely simple and you want the minimum cost, this is the answer; if you want stability and a deeper feature shelf, Xero is the safer pick.
The deadlines you are filing against in 2026/27
Whichever product you pick, the deadlines do not move. The 2026/27 quarterly deadlines for sole traders and landlords above £50,000 are fixed dates you should put in your calendar today:
- Q1 (6 April to 5 July 2026): due by 7 August 2026
- Q2 (6 July to 5 October 2026): due by 7 November 2026
- Q3 (6 October 2026 to 5 January 2027): due by 7 February 2027
- Q4 (6 January to 5 April 2027): due by 7 May 2027
- Final Declaration: due by 31 January 2028, replacing the old SA100 return
HMRC has confirmed a soft landing period for 2026/27: late quarterly updates will not attract penalty points during the first year. Penalties for late Final Declarations still apply normally. We treat the soft landing as a window to fix process and bed in the software, not a licence to file late.
The honest verdict
Bank deal first, everything else second. If you bank with NatWest, RBS, Ulster or Mettle, the answer is FreeAgent, because paying for software you already get free never makes sense, even if Xero is your preferred professional environment. The £180 to £228 a year you would otherwise spend buys roughly three months of our quarterly filing service instead.
If you do not bank with any of the four, the question becomes Xero Simple at £15 or QuickBooks Sole Trader at £10. Pick QuickBooks if your bookkeeping is genuinely simple (one bank account, no VAT, no plans to scale) and you want the lowest cost. Pick Xero if you expect to scale, register for VAT, or work with an accountant over the long term. The £5 a month difference is small money compared with the cost of switching software in year two.
Here is how the three actually compare at a glance for a sole trader:
| Factor | FreeAgent | Xero Simple | QuickBooks Sole Trader |
|---|---|---|---|
| Monthly price (sole trader) | £19 | £15 | £10 |
| Free with a business bank account? | Yes (NatWest, RBS, Ulster, Mettle) | No | No |
| Quarterly filing and Final Declaration | Yes | Yes | Yes |
| VAT submissions included | Yes | Upgrade to £16 | Upgrade to £16 |
| Bank feeds | Unlimited | 1 connection | 1 connection |
| Accountant access | Yes | Yes (1 advisor) | Upgrade needed |
| Scales to limited company later | Separate plan | Plan upgrade only | Plan upgrade |
| Net cost over 12 months (no bank deal) | £228 | £180 | £120 |
The bank-bundle row is the single biggest factor: it flips FreeAgent from the dearest option to free for around a third of UK small business owners.
What this means for you
Do not overthink it: the decision comes down to four checks you can run in ten minutes.
- Confirm whether your gross combined self-employment and property income crosses £50,000. If yes, you are inside MTD ITSA from 6 April 2026. If no, the £30,000 threshold catches you from April 2027 instead.
- Check whether your business bank is on the FreeAgent free list (NatWest, RBS, Ulster, Mettle). If yes, set up FreeAgent today; it is the cheapest route by a long margin.
- If you do not bank with one of those four, decide between Xero Simple (£15) and QuickBooks Sole Trader (£10). Either is fine; Xero is the safer long-term pick.
- Put the four quarterly deadlines in your calendar now: 7 August 2026, 7 November 2026, 7 February 2027, 7 May 2027, with the Final Declaration for 31 January 2028.
If you would rather not think about any of it, we run the bookkeeping inside the software and file each quarter for you from £150 a quarter, including software set-up if you do not have an account yet. You can hand it over in a free call with LOYALS.