Cheap accounting software for sole traders (UK)

What does accounting software cost a UK sole trader?

A UK sole trader pays between nothing and roughly GBP 700 a year for accounting software, depending on whether they need only bookkeeping and Making Tax Digital filing, or stock and a till as well. Skyline Nexus ERP Solo costs GBP 15 a month ex-VAT, with a launch offer of GBP 7.50 for the first 3 months until 31 January 2027, after a free first month.

The spread is wide because the products are different. Some apps are built around one job: keeping digital records and sending them to HMRC. Others add payroll, multi-currency or inventory on higher tiers. An ERP puts sales, purchasing, stock, a point of sale and the general ledger in one system. Comparing only headline prices hides those differences, so this guide sorts the options by what they include and then does the 12-month arithmetic.

All competitor prices below were checked on the vendors' own pages on 30 September 2026. Prices and promotions change often, so confirm the current figure on the vendor's page before you buy.

What do you actually need: records, MTD filing, stock or an ERP?

Start with your obligations, not with a feature list. Every sole trader needs records good enough for Self Assessment. Many now also need software that sends updates to HMRC under Making Tax Digital. Only some need stock control, a till or payroll, and those needs are what push the price up.

• Records and Self Assessment only: income below the MTD thresholds, no VAT registration. A free plan or a spreadsheet is often enough.
• MTD for Income Tax: quarterly updates and a tax return sent from compatible software. Free and low-cost options exist, as HMRC itself notes.
• MTD for VAT: needed once you are VAT-registered, with VAT returns filed from compatible software.
• Stock, a till and several modules: buying and reselling goods, selling in person, tracking cost of sales. This is where an ERP starts to pay its way.

Making Tax Digital as of September 2026: who must use it and when

As of September 2026, according to GOV.UK, a sole trader or landlord must use Making Tax Digital for Income Tax from 6 April 2026 if their qualifying income for 2024 to 2025 was over GBP 50,000. The threshold falls to GBP 30,000 (based on 2025 to 2026) from 6 April 2027, and to GBP 20,000 (based on 2026 to 2027) from 6 April 2028.

Qualifying income is your total income from self-employment and property before expenses, in other words turnover, not profit. A plumber with GBP 38,000 of sales and GBP 15,000 of costs in 2025 to 2026 has qualifying income of GBP 38,000 and falls into the April 2027 group.

Making Tax Digital for VAT is separate. HMRC's VAT Notice 700/22 requires all VAT-registered businesses to keep digital records and file VAT returns using software, including businesses registered voluntarily below the threshold. As of September 2026, you must register for VAT when taxable turnover for the last 12 months goes over GBP 90,000, or you expect it to within the next 30 days.

Free accounting software in the UK that works with HMRC

HMRC's own software guidance says free products are available for people with simple tax affairs, usually with limits such as a cap on transactions. Two free plans stand out on the pages we checked on 30 September 2026.

Pandle's free plan includes Making Tax Digital submissions for Income Tax and VAT returns, according to Pandle's pricing page, but no bank feeds and no stock control. Zoho Books Free for the UK includes SA100 Self Assessment filing and Making Tax Digital for Income Tax, according to Zoho's page, but no inventory. For a service business with a simple year, either can be the whole answer.

Before choosing any product for MTD, check that it appears in HMRC's software finder on GOV.UK for the obligation you have, Income Tax, VAT or both.

UK prices compared: Xero, QuickBooks, Sage, FreeAgent and others

List prices per month ex-VAT unless stated, as published on each vendor's UK page on 30 September 2026. Many vendors run introductory discounts, shown separately, because the list price is what you pay after the promotion ends.

• Xero Ignite: GBP 18 a month, GBP 216 a year; up to 20 invoices a month and VAT returns to HMRC; multi-currency excluded, inventory not stated for this plan. Promotion: 90% off the first 6 months. Xero Simple, for non-VAT-registered businesses, is GBP 7 with 10 invoices a month.
• QuickBooks Sole Trader Plus: GBP 10 a month, GBP 108 a year on annual billing in QuickBooks' own price feed; 1 user, aimed at MTD for Income Tax, no inventory. QuickBooks Simple Start is GBP 16 with MTD VAT submission, no inventory. Promotion: 90% off the first 6 months.
• Sage Accounting Start: GBP 20 a month ex-VAT, GBP 240 a year; unlimited invoices, MTD VAT, payroll for 1 employee; no inventory (Plus only). Promotion: 90% off the first 6 months.
• FreeAgent Sole trader: GBP 19 a month or GBP 190 a year ex-VAT; MTD for VAT and Income Tax per FreeAgent's site. Promotion: GBP 9.50 a month for 6 months or GBP 95 for the first annual year.
• Coconut MTD filing: GBP 21.99 a month or GBP 129.99 a year; HMRC-recognised MTD for Income Tax. Coconut MTD Bridging for spreadsheets is GBP 49.99 a year, annual only. The page also says monthly pricing is not available, and VAT treatment is not stated.
• Pandle: free plan with MTD for Income Tax and VAT submissions; Pandle Pro GBP 5 a month plus VAT adds bank feeds and stock control.
• Zoho Books UK: Free plan with MTD for Income Tax; Standard GBP 12 a month (GBP 10 on annual billing), no inventory.
• Skyline Nexus ERP Solo: GBP 15 a month ex-VAT, GBP 157.50 for the first 12 paid months with the launch offer until 31 January 2027; ledger, stock, POS, CRM and VAT reports. Direct MTD filing is being rolled out.

Xero or QuickBooks alternative when you hold stock

Stock is where entry-level prices stop being comparable. On the pages checked on 30 September 2026, QuickBooks puts inventory in Plus at GBP 56 a month (GBP 604.80 a year on annual billing, 5 users), Sage puts stock and inventory management in Accounting Plus at GBP 59 a month, and Zoho Books puts inventory in Professional at GBP 24 a month or GBP 20 on annual billing. Xero's inventory page does not say which UK plan includes it.

At the ERP end, Microsoft Dynamics 365 Business Central Essentials is GBP 61.50 per user per month ex-VAT, on annual commitment, according to Microsoft's UK page. Pandle Pro, at GBP 5 a month plus VAT, lists stock control, which makes it the low-cost option for simple stock if you do not need a till.

The 12-month arithmetic, including the cost of MTD filing

Here is what each route costs for the first 12 paid months, ex-VAT, on prices published on 30 September 2026. Skyline Nexus ERP figures start after the free first month. Because Skyline Nexus ERP does not file MTD returns today, its route includes bridging software.

• Skyline Nexus ERP Solo, monthly with the launch offer: 3 x GBP 7.50 + 9 x GBP 15 = GBP 22.50 + GBP 135 = GBP 157.50.
• Skyline Nexus ERP Solo plus Coconut MTD Bridging: GBP 157.50 + GBP 49.99 = GBP 207.49. On annual billing: GBP 150 (covering 15 months under the launch offer) + GBP 49.99 = GBP 199.99.
• QuickBooks Plus with inventory: 12 x GBP 56 = GBP 672 at list price, or GBP 369.60 in year 1 with 90% off 6 months (6 x GBP 5.60 + 6 x GBP 56). That is GBP 464.51 a year more than the Solo-plus-bridging route at list price.
• Sage Accounting Plus with inventory: 12 x GBP 59 = GBP 708 at list price, GBP 389.40 in year 1 with the promotion; GBP 500.51 more than Solo plus bridging at list price.
• Zoho Books Professional with inventory, annual billing: 12 x GBP 20 = GBP 240, which is GBP 40.01 more than Solo on annual billing plus bridging.
• Pandle Pro with stock control and MTD filing: 12 x GBP 5 = GBP 60 plus VAT. For simple stock without a till, that is less than the Skyline Nexus ERP route.

Hidden costs to check before you sign up

The monthly figure on a pricing card is rarely the annual cost. Work through this list and add only what you will actually use. Every price in this guide excludes VAT: Sage and FreeAgent state 20% VAT on top, and if you are not VAT-registered you cannot reclaim it, so the VAT-inclusive price is your real cost.

• Promotion cliffs: 90% off for 6 months at Xero, QuickBooks and Sage means month 7 costs ten times month 6.
• Invoice caps: Xero Simple allows 10 invoices a month and Ignite 20.
• Payroll add-ons: QuickBooks Payroll Core is GBP 5 a month plus GBP 1.50 per employee; Xero Ignite adds GBP 1.50 per person.
• Other add-ons: Xero auto-reconcile is GBP 3.50 a month on Ignite.
• MTD filing: if your main system does not file, add bridging software, for example GBP 49.99 a year at Coconut.
• Users: Skyline Nexus ERP Solo is 1 user and 1 branch with no add-on seats; a bigger team means moving to the Core plan.

When a free or cheaper tool is the better choice

No single product is cheapest for every sole trader. If you sell services, hold no stock and just need MTD for Income Tax, Pandle's free plan, Zoho Books Free or QuickBooks Sole Trader Plus at GBP 10 a month will do the job for less than any ERP, and they file to HMRC directly.

If you hold a modest amount of stock but never sell over a counter, Pandle Pro at GBP 5 a month is hard to beat on price. Skyline Nexus ERP makes sense when the business is more than a ledger: stock at more than one location, a point of sale with cash registers, customer records and quotes, and the plan to grow into purchasing, HR or asset modules without changing systems.

Skyline Nexus ERP Solo: what you get for GBP 15 a month

Skyline Nexus ERP Solo is one user and one branch with the same modules as the Core plan: a general ledger with automatic posting from sales, purchases, payments and depreciation, invoices with credit and debit notes, inventory per location with FIFO costing, a POS with cash registers, bank reconciliation with CSV and XLSX statement import, CRM, VAT reports, and a trial balance, profit and loss, balance sheet and cash flow statement. Every plan starts with a free first month with no card. Launch offer until 31 January 2027: GBP 7.50 a month for the first 3 months on monthly billing, or GBP 150 for 15 months on annual billing.

Be clear on filing: Skyline Nexus ERP does not submit Making Tax Digital returns today. If you must file under MTD for Income Tax or MTD for VAT, submit through HMRC-recognised bridging software or your accountant's MTD software, or use a filing tool such as Pandle's free plan, Coconut or FreeAgent alongside it. Direct MTD filing in Skyline Nexus ERP is being rolled out; tell us your MTD start date and we will confirm the timing.

Skyline Nexus also includes an in-app AI help assistant and an MCP server for Claude, and upgrading to Core applies at once with unused time credited.