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MAKING TAX DIGITAL · APRIL 2027

Free MTD software vs an app that keeps the books for you

Free Making Tax Digital software sends your quarterly update to HMRC. It doesn't write your quotes, chase your invoices or find the receipt from three weeks ago. For about 1,077,000 sole traders and landlords joining on 6 April 2027, sending the update is the easy part. Keeping the records is the work.

Here's an honest look at what the free options do, what they leave to you, and when paying for an app is worth it.

What the 28 October 2026 Budget changed

If you join in April 2027, there are no penalty points for late quarterly updates in 2027-28 (ICAEW; legislation still to be passed). That takes the pressure off the first deadlines, but not off the records: they must be digital from 6 April 2027, every update must be sent before your tax return, and late payment is still penalised. So the real question isn't “how do I avoid a fine?” It's “who keeps the books?”

The free options

Bank-account tools. Some business bank accounts include a free MTD tool, for example Starling and Lloyds. They work from your bank transactions, so you still sort each one into the right category and add cash jobs and receipts yourself.
Free plans from accounting software. For example Sage has a free plan for sole traders who aren't VAT registered. Free plans usually have limits, so check what's included.
HMRC's software finder. GOV.UK lists recognised products and lets you filter for free versions (GOV.UK). HMRC doesn't offer its own MTD software.

If your books are already tidy and digital, one of these may be all you need. Use it.

What each one does for you

In a Tide survey of 500 sole traders and landlords, people expected Making Tax Digital admin to take around six days in the first year (Tide, October 2026). Most of that time is records, not filing.

The job	Free MTD software	Sleepless Tradesman
Send your quarterly update to HMRC	Yes. This is what free MTD software is for.	Not yet. The app prepares the figures; you or your accountant send them (see below).
Keep digital records of every sale and expense	Yes, but you type in or categorise each one yourself.	Built from your invoices automatically. Photograph a receipt and it's filed as an expense.
Write quotes	Rarely. Most free tools are bookkeeping only.	Take a photo of the job, say what's needed or send a message, and the app drafts the quote.
Turn a quote into an invoice and get paid	Some offer basic invoices.	One tap from the quote, with payment links and reminders.
Track CIS deductions and mileage	Varies by product.	Yes. CIS income at the gross amount, deductions and mileage go into your records.
Price	£0, often tied to a business bank account or a free plan with limits.	Free plan. Paid plans from £29.99 a month, with a 7-day free trial.

You can use both

Sleepless Tradesman doesn't send updates to HMRC yet. Filing from the app is built and tested in HMRC's sandbox but is not yet available: HMRC closed production access for new 2026-27 products on 15 September 2026. Until it is, you or your accountant send the figures through HMRC-recognised software.

So for now, a common setup is: let the app do the daily office work (quotes, invoices, receipts, mileage, CIS) and prepare your quarterly figures, then send them with a free MTD tool or hand them to your accountant. You do the trade. The app does the rest.

Try the app free Check if MTD applies to you

Common questions

Is there free Making Tax Digital software?

Yes. HMRC's software finder lists recognised products with free versions for sole traders and landlords, and some business bank accounts, such as Starling and Lloyds, include a free MTD tool. Sage has a free plan for sole traders who aren't VAT registered. Check the GOV.UK software finder for the current list before you choose.

If MTD software is free, why pay for an app?

Free MTD software sends the update, but you still have to keep the records it sends: every sale and every expense, entered and categorised. If you already keep tidy digital books, a free tool may be all you need. If your records live in a notebook, a carrier bag of receipts and your head, the work is keeping the books, not sending them. That's the part Sleepless Tradesman does: quotes, invoices, receipts and records from a photo, a few words or a message.

Can Sleepless Tradesman send my quarterly update to HMRC?

Not yet. It keeps your digital records and prepares your quarterly figures, ready for you or your accountant to send. Filing from the app is built and tested in HMRC's sandbox but is not yet available: HMRC closed production access for new 2026-27 products on 15 September 2026. Until it is, you or your accountant send the figures through HMRC-recognised software.

What happens if my first quarterly update is late?

The Budget on 28 October 2026 announced that people joining Making Tax Digital in April 2027 won't get penalty points for late quarterly updates in 2027-28. The legislation is still to be passed. You still have to keep digital records from 6 April 2027, send every update before you file your tax return, and pay on time: late payment and late tax returns are still penalised.

Sources

Last updated 14 November 2026.