Free MTD Software
If you are looking for free MTD software for VAT, then you are in the right place. We have compiled a list of the best free MTD software solutions available to help you manage your VAT obligations. All of these solutions offer different features and benefits, so you should take the time to explore each one and find the one that best suits your business needs.
What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a new initiative by the UK government to make it easier for businesses to submit accurate and timely VAT returns. All VAT-registered businesses should be signed up and submit their returns to HMRC digitally.
By using MTD software, businesses can take advantage of an array of features such as automatic calculations, digital records, and submission options. MTD will also help businesses keep up with their VAT obligations and remain compliant with the HMRC.
Free MTD Software Options
There are two main options Accounting software and Bridging Software. Accounting software is all-in-one for completing your accounts, including invoicing, expenses and reports.
Bridging software allows you to keep your existing software or Excel Spreadsheets and link it up to HMRC systems. It acts as a bridge between your current system and HMRC.
Free Making Tax Digital Software Options
As a small business owner, you might be looking at keeping costs down and looking for free accounting software that is VAT MTD Compliant. Here are some of the top free software solutions that we recommend:
Free Making Tax Digital Accounting Software
A fully integrated accounting package helps you manage your finances and meet Making Tax Digital obligations.
FreeAgent
If you bank with NatWest or Royal Bank of Scotland, you can get a free account with FreeAgent and have access to all the features.
FreeAgent is an award-winning package that is easy to use and includes all the features you need to manage your business finances, including:
- Automatic bank feeds
- Tax calculations and submissions
- Invoicing and expenses
- Self-assessment tax returns
- VAT return online
The paid version is £29.00 per month.
Zoho Books
Zoho Books offers a free plan for revenue below £35,000. It is designed for freelancers and small businesses, with features such as:
- Automated bank feeds
- Invoicing and expenses
- Tax calculations and submissions
- Cash flow projections
- VAT Returns
The paid version starts from £10.00 per month. One advantage of Zoho Books is that as your business grows, they have over 40 apps to integrate, which covers most aspects of running a business.
Pandle
Pandle is a free online accounting package designed for small businesses. It offers all the features needed to manage your finances and easily submit your VAT returns digitally:
- Invoicing and expenses
- Recurring transitions
- Bank Imports
- VAT return
The Pro version is only £5 per month and offers bank feeds, cash flow forecasting and receipt uploads.
Free Making Tax Digital Bridging Software
If you use Excel spreadsheets for your bookkeeping, there is an option without transferring to accounting software. You can use bridging software. These are pieces of software that act as a bridge between your current system and HMRC and therefore submit your VAT return electronically.
Anna Money
Anna Money is a free bridging software solution allowing you to stay with your existing system, such as Excel spreadsheets, and submit your VAT return digitally to HMRC.
You sign up for a free account and download the VAT submission template. The template is then uploaded to Anna money and submitted to HMRC. They plan to keep the service free and offer a business account with invoicing, expenses and debit cards for either pay-as-you-go or £14.90 per month.
My Tax Digital
My Tax Digital is an Open source product, meaning it has been developed by the community, not by a commercial company. It is free to use and lets you digitally submit your VAT return to HMRC.
When you sign up, you can use their income and expenses to produce an automated VAT calculation or to upload the VAT figures and submit a VAT return using the bridging software.
Paid Options For VAT Registered Businesses
Paid options are available if you are a larger business and need a complete accounting package that makes Tax Digital compliant.
Xero
Xero is an online accounting software package for small businesses, which includes features such as invoicing and payments, linking a bank account, expense tracking, payroll, project management and bank reconciliation.
Xero is popular with small business owners, bookkeepers and accountants.
FreshBooks
FreshBooks is an online invoicing and bookkeeping solution for freelancers, small businesses and entrepreneurs.
It includes projects, expenses, time tracking and MTD VAT returns.
MTD for Self Employed
The next stage for making tax digital is for the self-employed to submit their quarterly accounts to calculate Income Tax and National Insurance.
The dates for the introduction are:
6th April 2026 for income above £50,000
6th April 2027 for income above £30,000
MTD Compliant Software Conclusion
Many options are available to help businesses become MTD compliant and submit a VAT return. Whether you choose a free or paid option depends on the size and needs of your business.
If you’re starting, Zoho Books and Pandle provide excellent free basic packages. Anna Money or My Tax Digital is a perfect choice if you need bridging software that allows you to stay in Excel spreadsheets.
Whatever solution you decide upon, it will be worth ensuring that your accounting system meets all of HMRC’s digital VAT return submissions requirements.
