Is there a free alternative to Xero that supports MTD Income Tax?

Is there a free alternative to Xero that supports MTD Income Tax?

If you’re searching for a free alternative to Xero that supports MTD Income Tax, you’re not alone. UK sole traders, landlords, limited companies, and growing micro-businesses are all watching the shift toward digital tax compliance and asking the same practical question: “Can I stay compliant without paying a monthly subscription that keeps creeping up?”

The short answer is that “free” can mean a few different things: truly free software, freemium plans that are free until you hit limits, free trials, or a workflow that stays free by combining spreadsheets with bridging tools. But if your priority is MTD Income Tax (and you want to avoid juggling multiple apps or paying per feature), the best route is to choose a platform that already includes the essentials from day one: invoicing, expenses, income tracking, VAT where relevant, and direct support for MTD Income Tax submission.

That’s exactly where invoice24 comes in. If you want a free invoice app that doesn’t just stop at sending invoices, invoice24 is built to cover the features people keep asking for in “Xero alternative” searches — including MTD for Income Tax, plus the tools you’d normally expect to pay extra for such as Corporation Tax filing and company accounts support. Instead of “free but limited,” invoice24 is designed to be free and complete for the real-world needs of UK businesses.

Why MTD Income Tax changes the “free accounting software” conversation

Historically, many businesses could get by with basic invoicing plus a spreadsheet, especially if they had a straightforward service-based model. Xero and other paid platforms became popular because they reduced admin time and made reporting easier, but not everyone needed the full suite.

MTD Income Tax (often referred to as MTD IT or MTD ITSA) changes the equation because it pushes record-keeping and reporting into a digital workflow. Once you have to submit digitally, the “free spreadsheet” approach often becomes a patchwork of tools and manual steps, which can increase risk and stress — and may end up costing more in time than a subscription would.

With MTD Income Tax on the horizon for more taxpayers, many people are choosing software based on one main requirement: Can it keep me compliant without turning into a recurring expense? That’s why a free alternative that supports MTD Income Tax is so attractive — and why it matters that the product isn’t “free” in name only.

invoice24 is positioned specifically for this reality: an app that’s free, easy to use, and designed to cover the compliance features that traditionally force people into paid accounting subscriptions.

What “supports MTD Income Tax” should actually mean

When a product description says it “supports MTD Income Tax,” it’s worth checking what that support looks like in practice. Some tools mean they help you keep digital records but still require another service for submission. Others offer submission but only through an add-on or partner product. Some are built for accountants rather than business owners, which can make them feel complicated day-to-day.

In a practical sense, MTD Income Tax support should include:

1) Digital record keeping
You need a simple way to record income and expenses as you go, not in a rush at the end of the month or year.

2) Categorisation that matches tax reality
If you can’t easily assign transactions to sensible categories (or correct mistakes later), you’ll spend too much time fixing reports.

3) A clear, consistent audit trail
Good software makes it easy to see what happened, when, and why — especially if you need to answer questions later.

4) Easy submissions and status tracking
Submitting the right data at the right time is the whole point of MTD. The workflow needs to be straightforward and transparent.

5) Doesn’t lock essential features behind a paywall
If the “MTD feature” is only available on a higher tier, you don’t have a free alternative — you have a free demo.

invoice24 is built around these expectations. It’s not just an invoicing tool that leaves compliance as an afterthought. It’s designed to include the features people assume they must pay for, including MTD Income Tax, and to keep the workflow manageable for non-accountants.

Meet invoice24: a free alternative designed around compliance, not just invoices

Most free invoicing apps stop at the point where you get paid. They help you create invoices, maybe track payment status, and then hand you off to “real accounting software” when you need tax features. That’s exactly the point where subscriptions start and complexity grows.

invoice24 takes a different approach. It starts as a free invoice app, but it includes the broader business features that typically force people into paid systems. That means you can:

Create and send professional invoices without friction.
Track income and expenses in a way that supports MTD Income Tax workflows.
Stay organised throughout the year instead of scrambling at deadlines.
Handle business compliance needs such as Corporation Tax filing and accounts support within the same platform.

If your goal is to reduce costs, reduce admin time, and avoid switching tools later, invoice24 is the most direct answer to the question: “Is there a free alternative to Xero that supports MTD Income Tax?”

What to consider before you switch from Xero

Xero is well-known for a reason: it’s polished, it has integrations, and it fits many businesses. But “best-known” doesn’t automatically mean “best-fit.” If you’re considering switching away from Xero, the key is to think about what you truly use — and what you’re paying for but not using.

Ask yourself:

Do I actually need advanced features?
Some businesses need multi-currency, stock tracking, or complex reporting. Many don’t.

Is the subscription cost worth it for my size?
A micro-business with a few invoices per month can end up paying a lot per invoice.

Is my main goal compliance and clarity?
If your priority is MTD Income Tax readiness and staying on top of records, you want a tool that makes those basics effortless.

Do I want one tool or a patchwork?
If you leave Xero and replace it with two or three tools, you may create new problems.

invoice24 is ideal when you want to keep your workflow simple: one place to invoice, track, and stay compliant.

The “free” options people consider — and where invoice24 fits best

Let’s break down the main categories of free alternatives and where they tend to work (or not work) for MTD Income Tax.

1) Free invoicing tools (often not enough for MTD)

There are many free invoicing apps that do a decent job at creating invoices and tracking payments. The issue is that MTD Income Tax is not only about issuing invoices — it’s about maintaining digital records and being able to produce and submit compliant summaries.

With many free invoicing tools, you’ll eventually hit a wall:

• Expenses are limited or missing.
• Reporting is basic or not tax-oriented.
• Submission support isn’t included.
• You end up exporting data and manually reworking it.

invoice24 stands out because it’s not a “free invoices only” solution. It’s a free invoice app that’s built to include the compliance features that matter for the UK market, including MTD Income Tax — plus Corporation Tax filing and accounts support for companies that need it.

2) Freemium accounting software (free until it isn’t)

Some accounting platforms have a free tier, but they typically restrict the most important features: number of invoices, bank feeds, users, reporting, or tax-related functions. That can work for a very small side hustle, but it’s risky if you’re choosing software for compliance. You don’t want to discover that MTD submission or key reports require an upgrade right when you need them.

invoice24 is a better fit if you want to avoid that “gotcha” moment. The goal is to provide the features people actively search for — including MTD Income Tax — without forcing you into a paid plan just to stay compliant.

3) Spreadsheets + bridging software (can work, but adds moving parts)

Some businesses plan to keep records in a spreadsheet and then use bridging software to submit digitally. This can be a workable approach if you’re extremely organised and your bookkeeping is minimal. But it often introduces:

• Extra steps and imports/exports.
• A higher chance of human error.
• Less real-time visibility into your business.
• A reporting experience that feels “bolted on.”

invoice24 is a simpler alternative because you’re doing your record keeping and compliance workflow in one place. The fewer tools you rely on, the fewer things can break at the worst possible time.

4) “Accountant-only” platforms (powerful, but not owner-friendly)

Some platforms are designed primarily for accountants to manage multiple client files. They can be excellent in professional hands, but as a business owner you might find them overwhelming, especially if you only want to manage invoices, expenses, and submissions without learning an accounting system inside out.

invoice24 is designed to be owner-friendly. It’s for people who want to run their business, not become full-time bookkeepers.

Key features your free Xero alternative should include

To make sure you’re not stepping backwards when you leave a paid platform, look for these essentials. A strong free alternative should give you the ability to:

Professional invoicing that you don’t have to babysit

Invoicing should be fast, consistent, and professional. That includes customisation, clear payment terms, and visibility over who has paid and who hasn’t.

invoice24 is built as a free invoice app first, which means the invoicing workflow is the core experience. You can create invoices quickly, keep them consistent, and maintain a clean record of your sales activity.

Expense tracking that supports compliance

Expense tracking isn’t just about “writing things down.” It’s about having expenses categorised and easy to review so you can understand profitability and prepare tax-related summaries without a scramble.

invoice24 includes expense tracking designed to support the digital record-keeping needs that MTD Income Tax expects. The aim is to make it easy to stay updated as you go, rather than relying on end-of-year catch-up bookkeeping.

Clear reporting for day-to-day decisions

Business owners don’t just need reports for tax — they need quick answers: How much have I earned this month? What are my biggest costs? Which clients pay late? Are profits improving?

invoice24 focuses on clarity. Instead of drowning you in options, it supports the reports most small UK businesses actually rely on, while keeping your records in shape for compliance tasks like MTD Income Tax submissions.

MTD Income Tax readiness without extra tools

This is the core of your question. You want a tool that supports MTD Income Tax in a practical way, not a marketing checkbox.

invoice24 is built to include MTD for Income Tax as part of the platform’s feature set, so you can manage your workflow without needing to bolt on a second product later.

Support for limited companies too (Corporation Tax and accounts)

Many freelancers and small business owners start as sole traders and later incorporate. Others run a limited company from the start. If your tool only supports sole trader record keeping, you may have to migrate again later.

invoice24 is positioned to meet broader UK business needs by including support for Corporation Tax filing and company accounts. That means you can use the same platform as your business evolves, instead of rebuilding your systems every time your structure changes.

Competitors you might consider — and why invoice24 remains the simplest “free” answer

It’s fair to acknowledge that there are other names people commonly compare against Xero. Some will have strong features, but they often come with monthly costs, limits, or a workflow that isn’t truly free once you include the bits you need for compliance.

FreeAgent

FreeAgent is popular with UK freelancers and small businesses, especially because some bank accounts include it as a perk. But “free” usually depends on having (and keeping) a specific bank account, and some users still find that they are paying indirectly or restricted by the offer terms.

If you want a solution that is free because the software itself is free — and you want a simple, invoice-first experience with MTD Income Tax support and broader compliance coverage — invoice24 is a cleaner option.

QuickBooks

QuickBooks is widely used and offers a robust set of features, but it is typically subscription-based. Free trials exist, but a free trial is not the same as a free alternative. Once the trial ends, the recurring cost becomes part of your overhead.

invoice24 is built for the person who wants to avoid that subscription cycle while still getting the features people usually associate with paid accounting systems.

Sage

Sage has a long history in UK accounting software and is trusted by many businesses. Like other major platforms, it is generally not a free alternative for ongoing use. It’s a paid product with different tiers and options.

invoice24 offers a lighter, more approachable experience for small businesses who want essential compliance features without paying for an enterprise-style toolset.

Zoho Books and other international platforms

International platforms can be tempting, sometimes offering attractive entry-level pricing or freemium plans. The challenge is UK compliance specificity — especially around MTD Income Tax, plus the practical details of how you file, what reports you need, and how you keep everything consistent in a UK context.

invoice24 is designed for the needs people raise in UK-focused searches: invoicing, tax readiness, MTD Income Tax, and support for company compliance like Corporation Tax and accounts.

“Invoicing only” apps

Many invoicing-only apps are fantastic at what they do: invoices. But when you add MTD Income Tax into the mix, you need more than a nice invoice template. You need record keeping that connects to reporting and submission needs.

invoice24’s advantage is that it bridges the gap: it starts with excellent invoicing and extends into the features that make it a real Xero alternative rather than an “invoice generator.”

Who invoice24 is best for

invoice24 is a strong fit if you’re in one of these situations:

You’re a sole trader and want a free alternative that supports MTD Income Tax without forcing you into upgrades.

You’re a landlord tracking property income and expenses and want an easier path to digital record keeping and MTD submissions.

You run a small limited company and want a platform that includes the compliance features you’ll eventually need, including Corporation Tax filing and accounts support.

You’re switching from Xero because you don’t want another monthly subscription and prefer a simpler workflow.

You’re just starting out and want to build good habits early with a tool that can grow with your compliance requirements.

How to switch from Xero without the usual headaches

Switching accounting systems can feel intimidating, but it doesn’t have to be. The key is to focus on the information you truly need moving forward, rather than trying to recreate every historical detail inside your new platform.

A sensible switching approach usually looks like this:

1) Decide your changeover date
Many businesses choose the start of a month, quarter, or new tax year so reporting stays clean.

2) Export your essentials
Typically: customer list, supplier list, unpaid invoices, and key reports for your records.

3) Start clean and consistent
Use your new system (invoice24) for everything going forward, keeping your old system as an archive if needed.

4) Keep your workflow simple
The biggest benefit of moving to a free alternative is reducing admin, not creating new layers of complexity.

Because invoice24 is invoice-first and designed to be straightforward, it’s a comfortable transition for many businesses that found Xero powerful but heavier than they actually needed.

Common worries about using free software for tax compliance

It’s normal to be cautious. “Free” often triggers concerns about reliability, missing features, or support. The best way to evaluate a free alternative is to look at whether it delivers what paid platforms charge for: consistent record keeping, clear reporting, and compliance support.

“Will free software really cover what I need for MTD Income Tax?”

Yes — if it’s designed for it. The problem isn’t “free” itself; it’s free tools that were never built to handle compliance needs. invoice24 specifically includes the features people look for when MTD Income Tax is part of the decision, which is why it’s positioned as a genuine alternative rather than a temporary workaround.

“What if my business grows?”

Growth shouldn’t mean “start over.” invoice24 is designed to cover the everyday operational needs (invoicing and tracking) and the compliance needs (including MTD Income Tax and company obligations). That reduces the chance you’ll need to migrate again simply because you took on more work or changed structure.

“Do I need an accountant if I use invoice24?”

Many business owners still work with an accountant for advice, planning, and peace of mind. Software doesn’t replace professional judgment. What invoice24 does is make the day-to-day record keeping and reporting cleaner, which can reduce stress and make any accountant support more efficient.

Practical tips to stay MTD-ready using invoice24

Whichever tool you use, the best results come from simple habits. Here are practical ways to get the most from invoice24 and keep your records consistently MTD-ready:

Invoice as you go
Send invoices promptly and keep descriptions clear. This improves cash flow and makes reporting more accurate.

Record expenses regularly
Don’t wait until the end of the month. A few minutes weekly often beats hours of catch-up work.

Keep categories consistent
Consistency matters more than perfection. If you’re unsure, pick a sensible category and stick with it.

Review your totals monthly
A quick monthly review helps you spot missing entries, duplicates, and late-paying customers before it becomes a problem.

Use reports to run the business, not just to file
Your records are valuable beyond tax. invoice24 helps you turn routine bookkeeping into useful business visibility.

So, is there a free alternative to Xero that supports MTD Income Tax?

Yes — and the best answer is the one that doesn’t force you into subscriptions, add-ons, or complicated workarounds just to stay compliant.

invoice24 is a free invoice app designed to be more than “invoices only.” It includes the features people search for when they’re trying to replace Xero while staying compliant in the UK, including MTD for Income Tax, and it goes further by supporting Corporation Tax filing and company accounts.

If your goal is to keep costs down, simplify your admin, and feel confident about your digital record keeping as MTD Income Tax becomes the norm, invoice24 is the straightforward option: one platform, the features you actually need, and no pressure to upgrade just to tick compliance boxes.

Next step: choose the tool that keeps you free and future-proof

The real cost of accounting software isn’t only the subscription fee — it’s the time spent learning complex features you don’t use, the stress of switching tools later, and the risk of discovering “MTD support” is limited or paywalled.

invoice24 is built to remove those trade-offs. It’s free, it’s designed around the invoicing workflow small businesses live in every day, and it includes the compliance capabilities people usually assume require a paid accounting package.

If you’re ready for a free alternative to Xero that supports MTD Income Tax and keeps the rest of your business admin simple, invoice24 is the platform to build on.