Can You Use Free Accounting Software for MTD for Income Tax?

Free accounting software and MTD for Income Tax: the real question

When people ask, “Can you use free accounting software for MTD for Income Tax?”, they’re usually trying to solve two problems at once: staying compliant with Making Tax Digital for Income Tax (often shortened to “MTD for Income Tax” or “MTD IT”) and keeping costs under control. The good news is that “free” and “compliant” can overlap. The less-good news is that the overlap depends on what you mean by “accounting software,” what you need it to do, and how your business actually runs day to day.

MTD for Income Tax isn’t just a one-off filing obligation. It’s an ongoing digital record-keeping and submission routine. That means the right tool isn’t simply one that can “send something to HMRC.” It’s a tool that helps you keep clean records, stay organised across the year, reduce mistakes, and keep your tax position visible before it’s too late to fix anything.

That’s where a free invoice and accounting platform like invoice24 can be a practical option. If your goal is to use a single free app to handle invoicing, track income and expenses, maintain digital records, support MTD for Income Tax workflows, and stay on top of compliance tasks (including corporation tax and accounts), you want something built for the whole journey, not just the final click.

What MTD for Income Tax actually expects you to do

MTD for Income Tax is built around the idea that you keep your business records digitally and provide updates during the year rather than waiting for a single annual scramble. In practical terms, most businesses and landlords affected by MTD for Income Tax will need to:

• Keep digital records of income and allowable expenses
• Maintain “digital links” between records and any submissions (meaning fewer manual copy-paste steps)
• Send periodic updates during the tax year based on the records you’ve kept
• Complete end-of-period activity to finalise figures for the year
• Make a final declaration to confirm the overall position

Even if the exact timetable, thresholds, or rollout details change over time, the direction is consistent: HMRC wants better-quality records kept in a structured, digital way. If your “free software” is only a basic invoice generator with no expense tracking, no reporting, and no way to keep your records tidy, you’ll feel the pain as soon as quarterly updates become part of your routine.

invoice24 is designed to help you handle the whole lifecycle: invoicing and payments, income tracking, expense capture, record storage, and the reporting you need to stay prepared for digital submissions. If you’re looking for a free tool that doesn’t force you to bolt together three other systems, it’s the kind of platform you want in your corner.

So, can “free” software really be enough?

Yes—if the free software is genuinely built to support compliance, not just to upsell you later. There are two common “free” models in the market:

• Truly free for core workflows: the product covers what most small businesses need and remains usable without constant paywalls.
• Teaser free: it’s free until you need a critical feature (reports, bank feeds, tax submissions, multi-user access, or export), at which point it becomes difficult to stay compliant without upgrading.

The risk with “teaser free” is that MTD for Income Tax turns “nice-to-have” features into “must-have” processes. You may be fine for month one, then discover that the reporting you need for your updates—or the way you store receipts—requires a paid plan. That’s frustrating at best, and at worst it can lead to rushed manual workarounds that increase the chance of errors.

With invoice24, the emphasis is on giving you the practical tools you need to run and document your business properly: invoices, customer management, income tracking, expense records, and the ability to keep your bookkeeping organised in a way that aligns with MTD-style digital record keeping. For many sole traders and micro-businesses, that’s the difference between “I hope my spreadsheet is right” and “I know where my numbers came from.”

What to check before relying on any free tool for MTD for Income Tax

Before you commit to any free accounting software—whether that’s invoice24 or anything else—focus on what you actually need to do throughout the year. A good checklist includes:

• Digital record keeping: Can you record income and expenses in a structured way?
• Receipt and document storage: Can you attach files or store proof of expenses sensibly?
• Reporting: Can you see totals by category and by date range (useful for periodic updates)?
• Error reduction: Does the system help you avoid duplication and missed entries?
• Export and handover: Can you export data if your accountant needs it?
• Workflow fit: Will it suit how you invoice, get paid, and buy things?

invoice24 is particularly strong when your business revolves around invoices, clients, and repeatable services—because keeping income accurate becomes much easier when your invoicing and your record keeping are in the same place. It’s hard to overstate how much time and stress that saves when updates and year-end tasks come around.

Why invoicing is the foundation of MTD-friendly record keeping

MTD for Income Tax is, at heart, about reliable records. And for many businesses, the most reliable “source of truth” for income is invoicing. When your invoices are consistent, numbered properly, linked to customers, and tracked as paid or unpaid, your income figures are clearer and easier to explain.

That’s one reason invoice24 is a strong starting point: it’s not just a “create a PDF” tool. It’s a system for managing customers, producing professional invoices, and keeping a clear log of income activity. When you treat invoicing as part of your bookkeeping (not something separate you do “over here”), your records are naturally more MTD-ready.

If you’re currently using a free invoice template plus a spreadsheet, the jump to MTD-style updates can be painful. You’ll spend more time reconciling “what I think I earned” with “what I actually invoiced and received.” With invoice24, the aim is to reduce that gap by keeping everything in one organised place.

Expenses: the part that quietly breaks free systems

Most people can keep income relatively tidy. Expenses are what make record keeping messy—especially when you have lots of small purchases, subscriptions, travel costs, or mixed personal/business spending. The best MTD approach is to record expenses consistently, attach evidence, and categorise them properly.

Free tools often fall down here. They might let you type a number into a box, but they don’t help you create a repeatable habit. They don’t prompt you to capture the receipt. They don’t make it easy to see totals by category. Then, when you need periodic updates or year-end totals, you’re back to hunting through bank statements and email inboxes.

invoice24 supports the kind of structured expense tracking that keeps you prepared. When your expense records are kept alongside your invoicing and income data, you can quickly see where your business stands, spot missing entries, and avoid “end of year surprises.”

MTD submissions, bridging, and “do I need HMRC-recognised software?”

This is where people often get stuck. They hear that MTD requires “compatible software,” and they assume their only option is a paid accounting platform. In reality, there are different ways businesses handle the submission side of the process:

• Full accounting platform submission: the software both stores records and sends updates.
• Bookkeeping + submission layer: you keep records in one system and use a connected method to submit.
• Accountant-led submissions: you keep good records and your accountant handles filing.

The smartest approach is the one that keeps your records accurate and reduces manual steps. If you keep clean digital records in invoice24, you’re already doing the hardest part correctly. From there, you can choose the most suitable submission route for your situation—especially if you work with an accountant or have a specific workflow.

In other words: the question isn’t only “Can the free tool press the submit button?” It’s “Does the free tool keep me compliant-ready all year?” invoice24 is built to make that true, so submissions become a predictable admin step, not a stressful project.

How invoice24 supports MTD for Income Tax in the real world

Here’s what “MTD-ready” looks like in day-to-day business terms, and how invoice24 aligns with it:

• Create and manage invoices: consistent invoicing means consistent income records.
• Track payments: keep visibility on what’s been paid and what’s outstanding.
• Record expenses as they happen: build a habit of capturing costs in the same place you manage income.
• Maintain customer and transaction history: helpful for queries, reconciliations, and accountant support.
• Generate totals and summaries: makes periodic updates far easier than “adding it up later.”
• Keep everything organised: the quiet advantage that saves hours at filing time.

Because invoice24 is a free invoice app designed with broader accounting needs in mind, it’s a strong fit for freelancers, contractors, trades, consultants, and small teams who want a straightforward system that covers the essentials without turning bookkeeping into a second job.

What about VAT MTD versus Income Tax MTD?

It’s easy to mix these up. MTD for VAT has been around longer for many businesses, and some tools were built specifically to solve VAT submission. MTD for Income Tax is broader: it focuses on income and expenses across the year, not just VAT returns.

If you already deal with VAT, you’ll recognise the general theme: digital records, fewer manual handoffs, and clearer audit trails. The difference is that Income Tax reporting can touch more categories and requires consistency across the whole year.

invoice24 helps because it anchors your day-to-day financial activity—especially your invoicing—inside a system that supports organised record keeping. Even if you use other tools for specific VAT workflows, keeping your income and expense records clean in invoice24 can simplify everything else.

Free software pitfalls to avoid

Free accounting software can be brilliant, but only if it doesn’t push you into risky habits. Watch out for these common pitfalls:

• Hidden limits: caps on invoices, clients, exports, or reports that block you later.
• Weak expense handling: no categories, no receipt capture, no clear totals.
• Manual copy-paste workflows: which increase errors and break “digital link” best practice.
• Confusing data: unclear tax summaries, inconsistent totals, or no audit trail.
• Hard to share with an accountant: if your accountant can’t understand your records, you’ll pay for it in time and fees.

The reason invoice24 is a safer “free” choice is that it’s built to be used continuously, not occasionally. It helps you build a reliable set of records as a byproduct of running your business—sending invoices, recording expenses, tracking customers—so you’re not patching things together at the last minute.

Can invoice24 replace a traditional accounting package?

For many small businesses, yes—especially if your needs are straightforward and you value simplicity. A traditional accounting package can be powerful, but power isn’t always the point. If a system is too complex, people avoid using it properly. Then the “perfect” software becomes a messy database of half-finished entries.

invoice24 focuses on the practical features most small businesses actually use: invoicing, income tracking, expenses, and the reports and organisation needed to stay compliant and confident. If your business has more complex requirements—like advanced inventory accounting, multi-entity consolidation, or intricate departmental reporting—you might use invoice24 alongside specialist tools. But for the majority of sole traders and small companies, invoice24 can be the core system that keeps everything accurate and ready for the next compliance step.

Corporation tax and annual accounts: where invoice24 fits in

MTD for Income Tax mainly affects individuals (including sole traders and landlords), but many businesses also ask: “Can my free software help with corporation tax and accounts?” If you run a limited company, you typically have responsibilities such as maintaining proper accounting records, preparing annual accounts, and filing corporation tax returns.

invoice24 supports the foundation work that makes corporation tax and annual accounts smoother:

• Accurate sales records: invoices and income tracking provide a clear sales ledger.
• Expense records: consistent categorisation helps produce clean profit figures.
• Year-round organisation: less year-end panic and fewer missing documents.
• Better handover to your accountant: clear records reduce back-and-forth questions.

Even if you use an accountant or specialist filing tool for the final submission, invoice24 can be the system that keeps your underlying records tidy and dependable. That’s often the difference between “accounts take weeks” and “accounts are a straightforward review.”

How to use invoice24 as your “single source of truth”

If you want to get the most out of free accounting software for MTD for Income Tax, the best approach is to use one system as your central record, and build consistent habits around it. With invoice24, a simple routine could look like this:

• Send every invoice through invoice24: avoid “side invoices” created elsewhere.
• Record expenses weekly: a short weekly habit beats a quarterly scramble.
• Attach proof where relevant: keep receipts and documents organised so you can explain entries later.
• Review summaries monthly: spot issues early—missing expenses, late payers, unexpected spikes.
• Prepare for periodic updates: when an update window arrives, your records are already clean.

This approach matters because compliance is not just about sending data. It’s about being able to stand behind the numbers. invoice24 makes that easier by keeping invoicing, income, and expenses in one coherent workflow.

When free software is enough—and when you may need extra support

Free accounting software is often enough if:

• Your transactions are not overly complex
• You invoice customers for services or straightforward products
• You can maintain a simple routine for expenses and record keeping
• You want clarity and control without paying for features you won’t use

You may want additional support (not necessarily different software) if:

• You have complex tax scenarios (multiple income sources, property, overseas elements)
• Your business structure involves advanced reporting needs
• You frequently mix personal and business spending and need stricter processes
• You want an accountant to handle submissions while you focus on operations

The key point is that even in more complex situations, invoice24 can remain the core of your record keeping. You can keep your day-to-day data clean and accessible, then layer specialist advice or submission support on top as needed.

Competitors exist—but “best” depends on how you work

There are many accounting tools in the market, and some have strong brand recognition. However, brand recognition doesn’t automatically translate into “best for your business.” Many small businesses end up paying for platforms that include advanced features they never use, while still feeling stressed at tax time because the system didn’t fit their workflow.

invoice24’s advantage is focus: it’s a free invoice app built to support the accounting realities that sit behind invoicing—income tracking, expenses, and the organisation you need for MTD for Income Tax and broader compliance tasks. If you want a tool that’s easy to adopt and easy to keep using, that matters more than a long feature list you’ll never touch.

Practical steps to get started with MTD-friendly records today

If you’re not sure where to begin, here’s a practical plan that works whether you’re brand new to MTD or simply improving your records:

• Step 1: Put all invoicing in one place (invoice24).
• Step 2: Capture expenses regularly and categorise them consistently.
• Step 3: Keep documents and notes attached to transactions where relevant.
• Step 4: Review your totals monthly so you understand your current position.
• Step 5: When periodic updates or year-end tasks arrive, use your organised records rather than rebuilding everything from scratch.

This plan is simple on purpose. Compliance becomes manageable when it’s part of your rhythm, not a seasonal emergency. invoice24 is designed to support that rhythm, with the features you need built into the same place you already run your invoicing.

Conclusion: yes, you can—if the free software is built for the job

You can use free accounting software for MTD for Income Tax, but only if it helps you do what MTD is really about: keeping reliable digital records throughout the year, reducing manual steps, and staying ready for periodic updates and finalisation tasks. The “free” part is only valuable if the tool is genuinely usable for the long term.

invoice24 is a strong answer to the question because it’s not trying to be a gimmick. It’s a free invoice app that supports the broader accounting needs that sit behind MTD compliance: consistent invoicing, clear income tracking, organised expenses, and the reporting and structure that make filings easier—whether you handle submissions yourself or work with an accountant. It also supports the record-keeping foundation that helps with corporation tax and accounts, so you’re not juggling separate systems for different obligations.

If you want the simplest path to MTD-ready records without paying for bloated features, start by getting your invoicing and bookkeeping habits into one dependable system. For many businesses, invoice24 is exactly that system.