UK sole traders have specific accounting software needs that limited company directors don't: SA302 / Self Assessment workflow, cash basis support, mileage tracking, MTD ITSA readiness for April 2026. This guide walks the criteria that actually matter, plus the realistic picks by budget.
What's different about sole trader accounting
The mechanics are simpler than for a Ltd, but specific:
- Income = personal income. No corporation tax — your business profit goes straight on your Self Assessment as income.
- Cash basis allowed up to £150,000 turnover. Most sole traders use it — simpler, less timing complexity.
- SA302 is the output. The HMRC tax calculation document lenders, mortgages and HMRC all use.
- MTD ITSA mandate from April 2026 — sole traders earning over £50,000 must submit quarterly digital updates, an end-of-year statement and a final declaration. £30k threshold from April 2027. £20k proposed for April 2028.
- Mileage tracking — most sole traders claim mileage at HMRC simplified rates (45p/25p). Good software automates the log.
- VAT registration optional below £90k turnover.
What to look for
- Self Assessment generation. Software that maps directly to SA categories. Saves hours at year-end.
- MTD ITSA readiness. If you'll cross £50k in any 12-month period before April 2027, you need MTD-ITSA-compliant software.
- Bank feed for UK banks. Auto-pull transactions instead of manual entry.
- Receipt capture. Photograph at point of sale; OCR extracts data.
- Mileage tracking. Manual entry or auto-detect via mobile GPS.
- VAT toggle. Easy to switch on when you register; doesn't get in the way before then.
- Mobile app. Sole traders do bookkeeping in odd moments — phone matters.
- Accountant invite if you might hire one. Free read-only access for them, saves your fees.
Picks by budget
£0/month — FreeAgent via Mettle banking
The cleanest free UK sole trader setup. Switch to Mettle banking, get FreeAgent free indefinitely. Includes Self Assessment generation, MTD-VAT, MTD-ITSA-ready, full bank feed, receipt capture, mileage tracking. See our Mettle review.
£10/month — QuickBooks Self-Employed
If switching banks isn't possible, QuickBooks Self-Employed is the next cheapest serious option. Purpose-built for UK sole traders. Real-time tax estimate, auto mileage tracking via mobile GPS, Self Assessment generation. £10/mo (often discounted in first 3–6 months). See our QuickBooks Self-Employed review.
£15/month — Xero Starter or QuickBooks Simple Start
If you want full double-entry bookkeeping (rather than the simplified Self-Employed structure), Xero Starter or QuickBooks Simple Start at £15/mo each. Better long-term if you might grow or go Ltd — you stay on the same platform. Worse short-term as the Self Assessment workflow is less automated.
Detailed: QuickBooks vs Xero.
£0 — structured spreadsheet
Works for under £20k turnover, not VAT-registered, low transaction volume. Our free expense tracker is purpose-built. Above £20k, software starts paying for itself in time saved.
MTD ITSA — the April 2026 mandate
Important and changing the sole trader software landscape. From April 2026:
- Sole traders + landlords with gross self-employment + property income over £50,000 must comply with MTD ITSA
- April 2027 extends to £30,000+
- April 2028 proposed for £20,000+
MTD ITSA replaces the annual Self Assessment return with:
- Quarterly digital updates (4 per year)
- An end-of-year statement
- A final declaration
Plus mandatory digital record-keeping (no more paper-only). Bridging software allows spreadsheets to comply, but realistically most UK sole traders crossing the £50k threshold will move to dedicated accounting software.
If you'll cross £50k in 2025/26, you need MTD-ITSA-compliant software by April 2026. All four mainstream UK options (FreeAgent, QuickBooks, Xero, Sage) are MTD-ITSA-ready. Full coverage: MTD for VAT explained (also covers ITSA).
Cash basis vs accrual
Sole traders can elect cash basis if turnover is under £150,000. Most do — it's simpler.
- Cash basis: record income when received, expenses when paid. Year-end is when the bank balance shows the year's activity.
- Accrual: record income when invoiced, expenses when incurred. More accurate for cash-flow-volatile businesses.
All UK sole trader accounting software supports both. Most default to cash basis with a toggle for accrual. Stick with cash basis unless your accountant specifically recommends otherwise.
Specific scenarios
New sole trader, low income (under £20k)
Spreadsheet is fine. Use our free expense tracker. Self Assessment is annual and manageable. Reconsider at £20k+ turnover.
£20k–£50k turnover, not VAT-registered
FreeAgent free via Mettle is the best value. If banking is fixed, QuickBooks Self-Employed at £10/mo.
£50k+ turnover (MTD ITSA mandated)
FreeAgent (free via NatWest banking), QuickBooks Self-Employed, or Xero Starter. All MTD-ITSA-ready. The choice is about workflow, not compliance.
VAT-registered sole trader
MTD-VAT compliance is mandatory. All four mainstream options handle it. QuickBooks Self-Employed VAT is functional but feature-thin — for serious VAT, consider QuickBooks Online (£15+/mo) or Xero.
Mileage-heavy sole trader (consultants, photographers, drivers)
QuickBooks Self-Employed's auto-mileage tracking is the most polished mobile experience. FreeAgent has solid manual entry; Xero has it via add-ons.
Considering switching to Ltd in the next 12 months
Don't pick a sole-trader-only platform (QuickBooks Self-Employed). Use Xero Starter or QuickBooks Simple Start or FreeAgent (which handles both structures). Migration when you go Ltd is much smoother. See sole trader vs Ltd.
Not legally. Below ~£20k turnover, a spreadsheet works. Above that, time saved typically exceeds subscription cost. Above £50k turnover (MTD ITSA mandate from April 2026), digital records become required.
Yes — file directly via HMRC's online service. The challenge isn't filing — it's having clean numbers to file. Software automates the bookkeeping that produces those numbers.
These are accountant services that include bookkeeping. Cost is typically £150–300 for an annual Self Assessment filing. Reasonable for sole traders earning under £30k who don't want to learn software. Above that, dedicated software + occasional accountant help is usually cheaper.
Intuit has hinted at consolidating product lines internationally. As at May 2026, QuickBooks Self-Employed remains live and supported in the UK. Worth checking the live position before committing long-term.
If your income is below £50k, you're not in scope for April 2026. If you'll cross £50k in 2025/26, you need MTD-ITSA software from April 2026. Most mainstream platforms have been ready for over a year — Xero, FreeAgent, QuickBooks, Sage all support MTD ITSA.
If your gross self-employed income is under £1,000/year, no software needed — you don't even need to register for Self Assessment. If income exceeds £1,000, you can either claim the £1,000 allowance flat or claim actual expenses (not both). Above £20k turnover, actual expenses with software easily beats the flat allowance.
UK accountants are typically fluent in 2–3 of: Xero, FreeAgent, QuickBooks Online, Sage Accounting. Ask before subscribing. Working in their preferred system typically saves 10–20% on annual fees.
General sole trader buyer's guidance as at May 2026. Pricing and features change — verify on provider sites.