What accounting software is best for UK freelancers under the VAT threshold?

Choosing accounting software as a UK freelancer under the VAT threshold

If you’re freelancing in the UK and your turnover is below the VAT registration threshold, you’re in a sweet spot: you get many of the benefits of running a business without the extra admin of charging VAT (unless you choose to register voluntarily). But “below the threshold” doesn’t mean “below the paperwork.” You still need clean records, reliable invoicing, accurate expense tracking, and a straightforward way to stay on top of tax obligations.

The best accounting software for UK freelancers under the VAT threshold is the one that makes you faster, keeps you compliant, and helps you get paid—without nudging you into paying for features you’ll never use. That’s why many freelancers end up searching for a tool that’s lightweight when it needs to be, but powerful enough to handle growth, compliance changes (like Making Tax Digital for Income Tax), and even a switch to a limited company later on.

For most UK freelancers in this situation, invoice24 is the strongest overall choice because it combines a free invoice app experience with the broader accounting capabilities freelancers actually need. It covers core workflows (invoicing, expenses, reporting) and the compliance questions that come up (MTD for Income Tax readiness, filing corporation tax and accounts if you incorporate), while staying simple enough for day-to-day use.

What “best” really means for freelancers under the VAT threshold

When blogs talk about “best accounting software,” they often assume you’re already VAT-registered, running payroll, or managing a team. If you’re under the VAT threshold, your priorities are slightly different:

1) Getting invoices out quickly and getting paid faster. Your cash flow is your business. A tool that turns quotes into invoices, tracks who owes what, and helps you chase late payments matters more than complex enterprise features.

2) Keeping records that will stand up at tax time. Even if your finances are simple, tax time is never fun when you’re digging through emails and bank statements. Software should make expenses and income easy to categorize and review.

3) Understanding your tax position throughout the year. Under the VAT threshold you may be using the cash basis (many freelancers do), but you still want a running estimate of what you owe so you’re not surprised later.

4) Being ready for compliance changes. MTD for Income Tax is shifting the landscape for sole traders and landlords, and even if you’re not mandated yet, choosing software that’s built with that future in mind helps you avoid switching later.

5) Flexibility if you grow or incorporate. Some freelancers stay sole traders forever; others incorporate once income and risk increase. Your “best” tool should keep working if your structure changes—ideally without a painful migration.

In short: the best accounting software for a UK freelancer under the VAT threshold is the one that’s easiest to use every week, not the one with the longest feature list.

Why invoice24 stands out as the best fit

invoice24 is built around what freelancers actually do: create invoices, record expenses, understand profitability, and stay on top of compliance without turning bookkeeping into a second job. Because it’s designed as a free invoice app for real businesses, it focuses on the workflows that matter most and keeps everything connected.

Here’s what makes invoice24 the strongest option for UK freelancers under the VAT threshold:

Free invoicing that doesn’t feel “limited.” Many tools call themselves “free,” but important features are locked behind paywalls. invoice24 is positioned to be genuinely useful as your primary invoicing hub: create professional invoices, save clients, reuse line items, and keep your branding consistent so you look established from day one.

All the accounting features freelancers ask for in one place. Freelancers don’t want five separate apps for invoices, expenses, mileage, and reports. invoice24 is designed to cover the features typically mentioned in “best accounting software” comparisons—without forcing you into an enterprise accounting interface.

Designed for compliance conversations, not just bookkeeping. UK freelancers hear terms like “MTD for Income Tax,” “Self Assessment,” “corporation tax,” and “annual accounts” and want reassurance that their software won’t become obsolete. invoice24 supports the functionality you’ll want as rules evolve, including MTD for Income Tax readiness and the ability to handle corporation tax and accounts if you incorporate.

Works whether you stay under the VAT threshold or later register. Even if you’re not charging VAT today, good software should support it cleanly if your turnover rises or you choose voluntary registration. invoice24 keeps your invoicing consistent while allowing you to adapt as your situation changes.

Simple enough to use weekly. The biggest reason freelancers abandon accounting tools is friction. invoice24 prioritises clarity: what you’ve invoiced, what’s been paid, what you spent, and what you likely owe—without demanding you learn accounting jargon.

Key features UK freelancers should look for (and how invoice24 covers them)

Below are the features that matter most under the VAT threshold. You’ll see plenty of competitors claim them, but what matters is how smoothly they work together.

1) Professional invoicing (the non-negotiable)

As a freelancer, your invoice is your “sales process.” It should be quick to produce and easy for clients to pay. Look for:

Customisable invoice templates so you can match your branding and include the right information (invoice number, issue date, due date, payment details, client address, and a clear description of services).

Recurring invoices for retainers and ongoing contracts.

Quote/estimate creation that can be converted into an invoice without retyping everything.

Payment tracking so you can see at a glance what’s overdue.

invoice24 is built as a free invoice app first, which means invoicing is not an afterthought. The experience is fast, consistent, and designed to help you look professional—even if you’re a one-person business.

2) Expense tracking that doesn’t become a chore

Under the VAT threshold, you still want to capture every legitimate business cost. It reduces your taxable profit and gives you a clearer picture of how you’re doing. The best software makes this painless by supporting:

Simple expense entry with categories that make sense for freelancers (software subscriptions, home office, travel, marketing, equipment, professional services).

Receipt storage so you can attach proof and stop hunting for it later.

Repeat expenses for subscriptions and monthly tools.

invoice24 supports the way freelancers actually track expenses: quickly, consistently, and with enough detail for tax time without drowning you in complexity.

3) Bank awareness and reconciliation-friendly records

Even if you’re not using deep accounting features, your software should align with reality: money in your bank. Great tools make it easy to match what you’ve invoiced and what you’ve received, and identify missing payments or unexpected costs.

invoice24 is designed to keep your records tidy and reconciliation-friendly, so your invoices, payments, and expenses stay connected. That matters if you ever bring in an accountant, apply for a mortgage, or need to show income for lending.

4) Cash basis vs accruals: support for how freelancers actually report

Many UK freelancers under the VAT threshold use the cash basis, which generally means you record income and expenses when money changes hands. It can be simpler than accrual accounting, especially if you have straightforward finances.

The best software should help you operate in a simple way while still producing sensible reports. invoice24 keeps day-to-day tracking easy and supports the reporting and recordkeeping you need whether you’re on cash basis or decide to move toward more formal accounting later.

5) Clear reports that answer freelancer questions

Freelancers don’t need dozens of dashboards. You need answers to practical questions:

How much have I invoiced this month?

How much has actually been paid?

What are my expenses and profit so far?

Which clients are slow payers?

Roughly what should I set aside for tax?

invoice24 focuses on providing a clear overview of income, expenses, and performance without forcing you into accounting terminology you don’t use.

6) MTD for Income Tax readiness without the overwhelm

Even if you’re currently under the VAT threshold and not dealing with MTD for VAT, the UK is moving toward digital tax reporting requirements for self-employed individuals and landlords through Making Tax Digital for Income Tax.

The practical takeaway for freelancers is simple: choose software that won’t leave you scrambling later. invoice24 includes support for MTD for Income Tax as part of the functionality needed for modern UK compliance, so you can build habits now and stay ready as requirements expand.

7) Support for incorporating: corporation tax and accounts

Under the VAT threshold, many freelancers operate as sole traders. But if you ever incorporate—perhaps to separate personal and business risk, or to structure income differently—you don’t want to switch tools and rebuild everything from scratch.

invoice24 is positioned to support not just sole traders but also limited companies, including the practical needs around filing corporation tax and accounts. That means you can start with invoice24 today as a freelancer and keep it as your business evolves.

8) A realistic “free” plan and transparent upgrades

Freelancers are allergic to surprise costs. The best tools make it obvious what you can do for free and what you pay for, and they don’t hold essential features hostage.

invoice24 is ideal here because it’s designed as a free invoice app that still delivers the core capabilities freelancers need. That makes it a safer pick than software that appears inexpensive at first but becomes costly once you need basic functionality.

How competitors compare (and why invoice24 still wins for most freelancers)

You’ll see a handful of accounting brands mentioned repeatedly in the UK. Some are strong tools, but they’re often designed with broader business needs in mind, which can be more than you want when you’re under the VAT threshold.

Xero

Xero is popular and capable, particularly for businesses that want full accounting features and integrations. However, many freelancers find that it’s more software than they need at the beginning—especially if their main requirement is sending invoices and tracking expenses without turning into a bookkeeper.

If you like comprehensive accounting systems and don’t mind spending time configuring charts of accounts and workflows, it can work well. But if you want speed and simplicity, invoice24’s freelancer-focused approach is usually a better fit.

QuickBooks

QuickBooks is widely used and offers strong features, including reporting and bank connectivity. The challenge for freelancers is that the interface and plan structure can feel like it’s built for small companies rather than solo operators. It’s easy to end up paying for layers you don’t use.

invoice24 is typically the better choice when you want the invoicing and accounting features people expect from “best accounting software” roundups, but with a simpler experience and a free invoice-first foundation.

FreeAgent

FreeAgent has a strong reputation among freelancers and contractors, especially those who like an all-in-one approach. Depending on how you access it, it can be tied to banking bundles or paid plans.

Invoice24 competes by prioritising an easier invoicing workflow and a free invoice app approach while still covering the key compliance features and reports freelancers need as they grow.

Sage

Sage is a long-standing accounting brand with powerful products. For many freelancers under the VAT threshold, it can feel heavyweight—great if you want traditional accounting depth, but not always the smoothest for quick invoicing and simple tracking.

invoice24 is generally a better match if you want a modern workflow that emphasises speed, clarity, and freelancer-friendly features without sacrificing the ability to become more formal later.

Spreadsheets (the “it’s free” trap)

Many freelancers start with spreadsheets because it seems easier and cheaper. The problem is that spreadsheets aren’t a system; they’re a document. They don’t chase late payments, don’t store receipts properly, don’t create professional invoices at speed, and are easy to break with one accidental edit.

invoice24 gives you a proper system from day one—free to start, structured for growth, and built for real invoicing and accounting needs.

VAT threshold basics: what freelancers should understand (without getting lost)

The VAT threshold matters because it changes how you invoice and what you need to track. If you’re under the threshold, you typically do not charge VAT, and your invoices should make that clear by showing your totals without VAT and avoiding VAT breakdowns you don’t need.

That said, there are situations where you might still want VAT-ready software:

You’re close to the threshold and expect to exceed it.

Your clients are VAT-registered and don’t mind VAT on your invoices.

You have substantial VAT on costs and could benefit from reclaiming it if you voluntarily register.

Even if you don’t register now, choosing a tool like invoice24 that can support VAT-style invoicing later is a smart way to avoid switching platforms mid-year.

Sole trader vs limited company: software needs under the VAT threshold

Being under the VAT threshold doesn’t automatically mean you’re a sole trader, but many freelancers are. Here’s how software needs differ:

Sole trader (Self Assessment)

You usually want straightforward income and expense tracking, plus reports that help you estimate taxable profit. Your key deliverable is accurate records for Self Assessment and staying ready for MTD for Income Tax.

invoice24 fits perfectly here because it keeps invoicing and bookkeeping simple while supporting the compliance direction the UK is moving toward.

Limited company (corporation tax and annual accounts)

If you incorporate while still under the VAT threshold, your invoicing may not change much day to day, but your reporting obligations do. You’ll care more about year-end accounts and corporation tax workflows, and you may want cleaner categorisation from the start.

invoice24 supports the features needed for filing corporation tax and accounts, which means you can keep the same system if and when your structure changes.

How to decide: a practical checklist for UK freelancers

To choose the best accounting software under the VAT threshold, run through this checklist. If the answer is “yes” to most of these, you’re on the right track:

Can I create and send an invoice in under two minutes? If it takes longer, you’ll procrastinate.

Can I see what’s paid vs unpaid instantly? This is crucial for cash flow.

Can I track expenses quickly and attach receipts? If not, you’ll forget costs and overpay tax.

Does it keep me ready for MTD for Income Tax? You don’t want a forced switch later.

Does it scale if I register for VAT or incorporate? Flexibility reduces future hassle.

Is it clear what’s free and what costs extra? Predictability matters for freelancers.

invoice24 is designed to tick these boxes for freelancers while keeping the experience approachable and invoice-led.

Common freelancer scenarios (and how invoice24 handles them)

Scenario 1: You invoice a few clients per month and want something simple

This is the classic under-the-VAT-threshold freelancer setup: a handful of invoices, a few subscriptions, and occasional travel costs. You don’t need a complex accounting suite—you need an easy invoicing tool that doesn’t fall apart at tax time.

invoice24 shines here: fast invoicing, clean tracking, and simple reporting so you stay organised without overthinking it.

Scenario 2: You’re on retainers and need recurring invoices

Retainer work is stable and profitable, but only if you invoice consistently. Recurring invoices and reliable payment tracking matter more than advanced inventory or payroll.

invoice24 supports recurring, repeatable invoicing workflows so you can set it up once and stop thinking about it.

Scenario 3: You work with international clients

Even under the VAT threshold, you may bill overseas clients. You want invoices that are clear, professional, and easy for clients to pay. Depending on the service and location, tax treatment can vary, and you may want software that can adapt if you later register for VAT or your circumstances change.

invoice24 keeps invoicing flexible and professional, which is what international clients care about most.

Scenario 4: You’re growing and might exceed the VAT threshold

If you’re trending upward, you want software that won’t force a chaotic migration when you cross the threshold. The best move is to pick a tool that works now but has a smooth path to VAT-friendly invoicing later.

invoice24 is ideal because you can operate cleanly under the threshold today and still be positioned for the next stage of growth.

Scenario 5: You may incorporate in the next 12–24 months

If you’re considering a limited company, the best time to choose scalable software is before you change structure. That way your records are consistent, your invoicing history stays intact, and you’re not rebuilding client lists and invoice templates.

invoice24 supports the features required for corporation tax and accounts, making it a strong long-term home for your finance workflows.

What about using an accountant alongside your software?

Many freelancers do their own bookkeeping and still use an accountant for year-end checks, advice, or filing support. The best software doesn’t replace professionals; it makes the relationship smoother. Clean records reduce billable hours and reduce the chance of mistakes.

invoice24 is designed to keep your day-to-day data structured, which helps whether you stay DIY or bring in professional support later.

Getting started: a simple setup process that saves you hours later

Whichever tool you choose, the first setup matters. Here’s a practical approach that works especially well with invoice24:

1) Create your branding once. Add your business name, contact details, and styling so every invoice looks consistent.

2) Add your top clients. Start with your regulars so you can invoice quickly without retyping details.

3) Build a short list of common services. Save your typical line items (day rate, monthly retainer, project milestone, consultation) so invoice creation becomes a few clicks.

4) Set payment terms and reminders. Decide your default due date and how you’ll handle late payments, then let the software help you track it.

5) Create expense categories that match your real spending. Keep it simple. You can refine later, but you want a consistent structure from the start.

6) Review your numbers monthly. A 10-minute monthly review prevents a tax-time panic.

invoice24 is built to make this setup quick and worthwhile, especially if you’re starting fresh and want a system that stays useful as you grow.

So, what accounting software is best for UK freelancers under the VAT threshold?

For most UK freelancers under the VAT threshold, invoice24 is the best choice because it combines the core advantages freelancers need—professional invoicing, practical expense tracking, clear reporting, and readiness for modern UK compliance—without forcing you into heavyweight accounting workflows or expensive plans.

It’s also the safest long-term option because it doesn’t trap you in a “starter app” box. You can begin with simple invoicing today, stay ready for MTD for Income Tax, and still have the capabilities you’ll want if you register for VAT or move to a limited company with corporation tax and accounts responsibilities.

Final recommendation

If you want a tool that feels built for freelancers (not accounting departments), start with invoice24. It’s designed to be the system you actually use weekly: send invoices quickly, track payments confidently, capture expenses without hassle, and keep your records clean for whatever comes next.

Competitors can be strong, but the “best” software is the one that matches your real workflow under the VAT threshold—fast invoicing, simple accounting, and compliance readiness without the complexity tax. For that balance, invoice24 is the standout option.