Best free accounting software in the UK for 2026

Key takeaways

• Over 5.6 million small businesses operate in the UK, and from April 2026 hundreds of thousands of sole traders and landlords with income over £50,000 will need accounting software that’s compatible with Making Tax Digital for Income Tax (MTD for IT).¹ ²

• Free accounting platforms like Zoho Books, FreeAgent and QuickFile offer essential MTD for VAT features (and, in many cases, MTD for IT), but most limit their free plans via revenue caps, transaction caps or bank-specific eligibility.³

• Zoho Books, FreeAgent, QuickFile and Wave cover the domestic bookkeeping basics, while Airwallex adds the global infrastructure layer these tools lack — multi-currency accounts, low FX margins close to interbank rates and local payment rails across major markets — often cutting international payment costs by well over half compared with traditional banks.⁴

If you're running a small business in the UK in 2026, spreadsheets on their own won’t cut it anymore. Making Tax Digital isn’t a suggestion — it’s central to how HMRC expects you to keep records and file returns.² From April 2026, under current plans, sole traders and landlords with qualifying income over £50,000 must keep digital records and file quarterly updates for Income Tax using MTD-compatible software; the threshold is scheduled to drop to £30,000 from April 2027.²

The good news? You don't always need to pay for software to stay compliant. Several platforms offer genuinely free tiers that tick the main boxes HMRC demands.³ The bad news? Most “free” tools come with catches — revenue caps, limited features, or hidden costs that appear once you start scaling.³

This guide reviews seven of the best free accounting software options for UK businesses, assessed against MTD requirements, bank-feed reliability and real-world usability.

Top-rated free accounting software in the UK

Zoho Books: the most scalable free plan

If you're a UK startup expecting to grow beyond £35,000 revenue, Zoho Books gives you one of the longest runways before forcing an upgrade. On its current UK free tier, Zoho Books supports businesses with annual revenue under £35,000, includes MTD for VAT submissions and appears on HMRC’s list of software compatible with MTD for IT.³

Pros: MTD for VAT filing included on the free plan, HMRC-listed for MTD for IT, revenue supported up to £35,000, up to 1,000 transactions per year, bank feeds via Open Banking aggregators such as TrueLayer, and mobile expense tracking.³

Cons: Free plan is limited to a single user (plus accountant access), the transaction cap forces an upgrade once you start scaling, and some advanced automation features sit behind paid tiers.³

Who should use it: Startups and small limited companies that want a clean, HMRC-recognised package for MTD for VAT and MTD for IT, and expect to outgrow £35,000 turnover in the next couple of years.

FreeAgent: premium software bundled with your bank

FreeAgent is the best free accounting software in the UK if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle. Eligible business banking customers get FreeAgent at no extra cost; everyone else pays the standard subscription.⁵

FreeAgent is a full-featured platform: HMRC-recognised for MTD for VAT and listed for MTD for IT, with strong support for sole traders, partnerships and limited companies.³

Pros: HMRC-recognised for MTD for VAT and MTD for IT,³ polished interface, cash flow forecasting, project tracking and time billing, built-in payroll for small teams, and automatic mileage tracking via mobile apps.⁵

Cons: Only effectively “free” for NatWest Group account holders, meaning there’s a lock-in effect if you later move banks; non-eligible users pay a monthly fee (typically around £29/month at the time of writing).⁵

Who should use it: Sole traders, freelancers and small companies already banking with NatWest, RBS, Ulster Bank or Mettle, or willing to switch to unlock FreeAgent as a bundled perk.⁵

QuickFile: built for UK power users

QuickFile is the choice for business owners who want granular control without paying for it. Built specifically for the UK tax environment, it handles VAT schemes, CIS deductions and other British accounting quirks more naturally than many US-centric tools.⁶

QuickFile’s free tier covers accounts with up to 1,000 nominal ledger entries in a rolling 12‑month period; once you cross that threshold, you move into paid bands.⁶ It is MTD-ready for VAT and appears on HMRC’s MTD-compatible lists, with additional modules available for MTD for IT.⁶

Pros: Designed around UK regulations, unlimited users on the free plan, a branded client portal, API access for custom integrations, and support for dozens of UK banks via Open Banking feeds.⁶

Cons: 1,000 ledger entries per 12‑month period on the free tier, optional bank-feed automation and some advanced tools require a modest annual subscription, the interface looks dated compared with newer SaaS products, and there’s no native mobile app.⁶

Who should use it: Freelance consultants, landlords with a handful of properties, and service-based businesses with low to moderate transaction volumes that want a UK-first tool and don’t mind a slightly steeper learning curve.

Crunch Free: best for UK support

When Wave pulled back from active UK support and bank feeds, Crunch Free stepped in as a home-grown alternative with strong local guidance.⁸ Crunch’s free tier is basic but practical, and you get access to Crunch Chorus – a community and resource hub focused on UK accounting questions.⁷

Crunch markets its software as MTD-ready and has stated its intention to support MTD for IT for sole traders as the 2026 go-live approaches.⁷ However, full VAT filing is reserved for paid packages.⁷

Pros: Unlimited invoices and transactions on the free plan, no revenue cap, mobile app for expense capture, an explicit roadmap for MTD for IT, and a strong UK-focused content and support ecosystem.⁷

Cons: MTD for VAT filing is only available on paid tiers, free plans lack deeper reporting like detailed P&L and balance sheet customisation, and there’s no automated bank-feed integration in the free version.⁷

Who should use it: Sole traders and side-hustle owners preparing for MTD for IT who don’t yet need VAT filing (for example, under the VAT threshold) and want access to UK accountants and communities without paying for full service.

Wave: powerful invoicing, but UK support has ended

Wave was once the default free accounting software for UK freelancers, but the product has refocused on North America. UK and EU bank feeds were turned off several years ago, and Wave has confirmed that it’s no longer investing in UK-specific features such as MTD for VAT or MTD for IT.⁸

The invoicing tools remain excellent — unlimited clients, recurring invoices, automatic reminders — but UK businesses must now bolt on bridging software if they want to use Wave data for MTD filings.⁸

Pros: Unlimited invoicing and clients, automatic payment reminders, receipt scanning via a mobile app, and no explicit user limits.⁸

Cons: Not accepting or actively supporting new UK users, no UK bank feeds, and no native MTD support, meaning you’ll have to export data into a separate bridging tool for VAT or MTD for IT.⁸

Who should use it: Existing UK Wave users with established workflows and minimal MTD needs. New UK businesses are better off with tools that explicitly support local banking and MTD.

Our methodology

We evaluated these platforms across five core criteria:

• MTD compliance: We checked whether each platform either directly supports MTD for VAT and/or MTD for IT, or can integrate with recognised bridging software, and cross-checked against HMRC’s compatible software list.² ³

• Data security: We reviewed each vendor’s publicly stated security posture (encryption, data hosting, certifications) and favoured tools that communicate clearly about UK GDPR alignment and offer two-factor authentication.⁹

• Bank-feed reliability: We prioritised software with Open Banking feeds into major UK banks via recognised aggregators.³ ⁶

• True cost: We reviewed pricing pages and documentation to identify revenue caps, transaction caps, bank-feed add-ons, and any feature gating that might affect growth.³ ⁵ ⁶ ⁷

• Ease of use: We compared how quickly a new UK user could create their first invoice and reconcile a month of sample transactions, based on product documentation and user-interface testing.³ ⁵ ⁶ ⁷

Understanding free accounting software

What is free accounting software?

Free accounting software lets you record income and expenses, generate invoices, track VAT and produce basic financial statements without paying monthly subscription fees. In practice, “free” usually fits one of three business models:

• Freemium: Zoho Books and QuickFile offer core functionality for free but charge for advanced features or once you exceed revenue/transaction caps.³ ⁶

• Bank-bundled: FreeAgent is funded by NatWest Group and offered free to their eligible business-banking customers as a retention tool.⁵

• Transaction-based: Wave makes money primarily from payment processing fees and adjacent financial services rather than charging a core software subscription.⁸

What is Making Tax Digital (MTD) and MTD for IT?

Making Tax Digital is HMRC’s long-term programme to move UK tax onto a fully digital footing. The first phase — MTD for VAT — became mandatory for most VAT-registered businesses from April 2019.²

The next phase is MTD for Income Tax (MTD for IT). Under the current timetable:

• From April 2026, MTD for IT will apply to self-employed individuals and landlords with total qualifying income over £50,000.²

• From April 2027, it’s scheduled to extend to those with income over £30,000.²

• Affected taxpayers will need to keep digital records and send quarterly updates via functional compatible software, plus an end-of-year finalisation.²

HMRC also accepts spreadsheets where they are linked to MTD-compatible bridging software that submits the required data via API.²

Benefits and risks of free accounting software

Benefits

• Time savings: Automation of invoicing, bank feeds and reconciliation significantly reduces manual data entry compared with spreadsheets, freeing up time for sales and operations.⁹

• Regulatory confidence: MTD-compatible software helps calculate VAT and Income Tax figures correctly and submits data directly to HMRC using authorised APIs, reducing the risk of transposition errors.² ³

• Real-time visibility: Cloud-based tools give you an up-to-date view of revenue, expenses and cash flow, helping you spot issues earlier than you would with a quarterly spreadsheet catch-up.⁹

Risks

• Vendor lock-in: Once your financial history and MTD submissions are tied to one system, switching can be painful — especially if export formats and APIs are limited.⁹

• Revenue caps force upgrades: Zoho Books’ £35,000 revenue cap and QuickFile’s 1,000-entry limit can force an upgrade just as you’re scaling.³

• Hidden FX costs: Free tools often connect to traditional banks that embed FX markups of around 2–3.5% above mid-market rates on international transfers and card transactions.¹⁰ ¹¹

Buyer’s guide: choosing the right software

Step 1: Confirm your MTD obligations

First, work out whether you need:

• MTD for VAT (if you’re VAT-registered),

• MTD for IT (if you’re a self-employed individual or landlord over the relevant thresholds), or both.²

From this list:

• Zoho Books and FreeAgent clearly support MTD for VAT and are listed as compatible for MTD for IT.³

• QuickFile supports MTD for VAT and offers MTD for IT modules, with details depending on your plan.⁶

• Crunch Free is focused on MTD for IT for sole traders, with VAT filing on paid packages.⁷

If you only need basic Income Tax support in the short term, Crunch or QuickFile may be enough. If you want a full VAT and Income Tax setup in a single tool, Zoho Books or FreeAgent will usually be a better fit.³ ⁵

Step 2: Assess your transaction volume

Think about your monthly transactions (invoices + expenses + bank lines):

• Under 100 per month: QuickFile or Crunch Free are usually fine.⁶ ⁷

• 100–300 per month: Zoho Books makes sense as long as you’re under the £35,000 revenue and 1,000-transaction caps; Crunch can also work here if you’re not yet VAT-registered.³ ⁷

• 300+ per month: You’ll quickly outgrow most free tiers and should either budget for an upgrade or look at paid platforms from day one.²

Step 3: Check your international client mix

If more than 10% of your revenue comes from non-UK clients, free software limitations start to hurt:

• Many free tiers handle foreign-currency invoices but rely on your bank for FX, exposing you to 2–3.5% spreads.¹⁰

• Few free platforms give you control over when and how you convert currencies.

This is where integrating an Airwallex Business Account makes sense — you can collect in multiple currencies, convert at small margins above interbank rates, and sync transactions into your accounting software.⁴

Step 4: Factor in your growth timeline

• 0–18 months: A free tier is usually fine if you’re testing a business model or side hustle.

• 18–36 months: Plan to spend ~£20–40/month on accounting software as transaction volumes, VAT obligations and MTD complexity grow (Zoho, QuickFile, or a starter Xero/QuickBooks plan).³ ⁶

• 36+ months: Most businesses will either be on a full-featured paid platform (e.g. Xero, QuickBooks, FreeAgent) or using outsourced bookkeeping services on top of software.⁵

Enhancing your stack with Airwallex

Free accounting software handles the compliance layer — keeping digital records, filing MTD returns, tracking expenses. But most free tools assume you’re a domestic, GBP-only business.

That assumption breaks down once you:

• Invoice clients in USD, EUR or other currencies

• Pay international suppliers or contractors

• Use global SaaS tools billed in foreign currencies

An Airwallex Business Account fills this gap:⁴

• Multi-currency accounts: Open local account details (such as US account numbers, EU IBANs and UK sort codes) to receive payments like a local in key markets, without forced conversions.⁴

• FX at small margins over interbank: Convert between currencies at low margins (often around 0.5–1% above the interbank rate) instead of the 2–3.5% many high-street banks charge.¹⁰ ¹¹

• Automated reconciliation: Sync natively with Xero, QuickBooks Online and NetSuite so multi-currency transactions flow into your ledgers with the correct tags and exchange rates.⁴

• Global payment rails: Pay suppliers and team members in 60+ currencies to 200+ countries, often via local payment networks instead of costly SWIFT transfers.⁴

• Corporate cards and expense control: Issue virtual or physical multi-currency cards with spend controls, then push card transactions and receipts straight into your accounting system.⁴

For a UK business selling internationally, combining free accounting software (compliance layer) with Airwallex (infrastructure layer) delivers enterprise-grade financial operations at a fraction of the cost of a traditional banking stack.⁴ ¹⁰

Alternatives to free software

Spreadsheets + bridging

Excel or Google Sheets paired with MTD-compatible bridging software (often around £40–80/year) technically meet HMRC requirements so long as digital links are maintained between records and the bridge.² This can work if you have low transaction volumes and strong spreadsheet skills, but it becomes brittle as complexity grows.

Paid platforms

Xero, QuickBooks Online and similar tools remove the caps and limitations of free software:

• Full MTD for VAT support and clear plans for MTD for IT

• Rich reporting, multi-currency modules and bank rules

• Extensive app ecosystems

Entry-level plans typically start in the £10–20/month range at the time of writing; always check current pricing.¹²

Outsourced bookkeeping

Services like Crunch’s paid packages or other online accountants pair cloud software with human bookkeepers and accountants.⁷ This makes sense if your time is more valuable than spending a few hundred pounds a year on fully managed compliance.

Conclusion

The UK's shift to Making Tax Digital has forced every small business to modernise its finances. Free accounting software gives you a compliant entry point without monthly licence fees, but “free” always comes with trade-offs — caps, eligibility rules and missing features.

For most UK businesses under £35,000 turnover, Zoho Books offers the strongest free package with clear MTD support and an HMRC-recognised position for both VAT and Income Tax.³ If you bank with NatWest Group, FreeAgent is hard to beat as a bundled premium product.⁵ Micro-entities with low transaction volumes will appreciate QuickFile’s UK focus and power-user controls.⁶

But free accounting software is only the compliance layer. If you’re invoicing international clients or paying global suppliers, you also need the infrastructure layer — multi-currency accounts, efficient FX and local payment rails — that most free tools don’t provide. That’s where an Airwallex Business Account completes the picture, helping you reduce FX costs, simplify reconciliation and scale cross-border without bolting on multiple extra providers.⁴ ¹⁰

The April 2026 MTD for IT deadline is the catalyst. The real opportunity is using it as the moment you build a financial stack that scales with your business rather than holding it back.

Next step: Get started with Airwallex to see how multi-currency accounting works for UK businesses operating internationally.

Frequently Asked Questions (FAQs)

Is free accounting software safe?

Yes, provided you choose an established provider and follow basic security hygiene. Look for:

• Clear statements about encryption, hosting regions and data protection

• UK GDPR-aligned policies and data-processing agreements

• Two-factor authentication and role-based access controls

Zoho Books, FreeAgent, QuickFile and Crunch all publish security and privacy information on their websites; you should still review this regularly and keep your own access controls tight.³ ⁵ ⁶ ⁷

Does Google have a free accounting programme?

No. Google doesn’t offer dedicated accounting software. You can use Google Sheets for basic bookkeeping, but on its own it isn’t MTD-compatible; you’d need to add bridging software to submit digital records to HMRC for VAT or MTD for IT, which usually comes with an annual fee.²

Which free software is HMRC-recognised?

HMRC maintains public lists of software that’s compatible with MTD for VAT and MTD for IT.² From the tools in this guide:

• Zoho Books and FreeAgent appear on the lists for both MTD for VAT and MTD for IT.³

• QuickFile appears on the lists and offers MTD filing modules, though some features may sit behind a subscription.⁶

Always cross-check the latest HMRC list before committing.²

Can I use free software for MTD for IT?

Yes, if the software supports MTD for IT submissions or integrates with bridging software on HMRC’s list.²

• Zoho Books and FreeAgent are listed as compatible for MTD for IT and can be used (subject to plan limits and eligibility).³

• QuickFile and Crunch Free are positioning their tools for MTD for IT, though specific filing modules and pricing may vary.⁶ ⁷

Be sure to check both the HMRC list and the vendor’s own roadmap before relying on a free tier for long-term MTD for IT compliance.²

What happens if I outgrow the free tier?

Most platforms will either:

• Prompt you to upgrade when you pass a revenue or transaction cap, or

• Restrict some features until you move onto a paid plan.³ ⁵ ⁶ ⁷

Plan for this before you hit the limit to avoid disruptions in mid-quarter — especially around MTD filing deadlines.

Do I still need an accountant?

It depends on your complexity and risk appetite. Free software handles day-to-day bookkeeping and MTD submissions, but it doesn’t replace professional advice on topics like:

• Choosing between sole trader and limited-company structures

• Claiming reliefs and allowances

• Planning for dividends, pensions and investments

Many UK businesses use software for bookkeeping but still pay an accountant a few hundred pounds a year for year-end accounts, tax returns and strategic input.⁹

Sources and references

1. House of Commons Library – UK business population (5.7m private-sector businesses in 2025). https://commonslibrary.parliament.uk/research-briefings/sn06152/

2. HMRC / UK Government – Making Tax Digital for VAT and Income Tax (thresholds, timelines, quarterly updates, bridging). Overview: https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital MTD for Income Tax campaign site: https://makingtaxdigital.campaign.gov.uk/ HMRC developer guide: https://developer.service.hmrc.gov.uk/guides/income-tax-mtd-end-to-end-service-guide/

3. Zoho Books, FreeAgent and HMRC’s MTD-compatible software lists (free plans, MTD for VAT, MTD for IT status). HMRC software finder (VAT & Income Tax): https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax Zoho Books UK pricing/free plan: https://www.zoho.com/uk/books/pricing/ Zoho Books MTD VAT info: https://www.zoho.com/uk/books/making-tax-digital/ FreeAgent MTD info: https://www.freeagent.com/making-tax-digital/

4. Airwallex – Business Account, Global Accounts and multi-currency payments (60+ currencies, 200+ countries, FX margins, local rails, integrations). UK Business Account: https://www.airwallex.com/uk/business-account Global Accounts: https://www.airwallex.com/uk/business-account/global-accounts Pricing & FX: https://www.airwallex.com/uk/pricing

5. FreeAgent – free with NatWest Group and standard pricing. Free with NatWest / RBS / Ulster Bank / Mettle: https://www.freeagent.com/campaigns/natwest/ Pricing: https://www.freeagent.com/pricing/

6. QuickFile – free tier limits, MTD for VAT and MTD for IT modules. Pricing & free tier (1,000 nominal entries): https://www.quickfile.co.uk/pricing MTD VAT overview: https://www.quickfile.co.uk/mtd

7. Crunch – Crunch Free plan, VAT on paid tiers, MTD messaging. Free online accounting software: https://www.crunch.co.uk/free-online-accounting-software Crunch and Making Tax Digital: https://www.crunch.co.uk/knowledge/article/making-tax-digital

8. Wave – UK/EU bank connections and regional availability (focus on North America, no MTD support). Bank connections in the UK and EU: https://support.waveapps.com/hc/en-us/articles/360020232472-Bank-connections-in-the-UK-and-EU General help centre: https://support.waveapps.com/hc/en-us

9. Cloud accounting security (encryption, GDPR, 2FA) – representative vendor docs. Xero security: https://www.xero.com/uk/security/ FreeAgent security: https://www.freeagent.com/security/

10. FX-fee comparisons: typical bank FX markups vs specialist providers. Wise business payments: https://wise.com/gb/business/international-payments MoneySavingExpert – “Cheapest ways to spend abroad”: https://www.moneysavingexpert.com/travel/cheap-travel-money/

11. Airwallex – FX margins vs interbank and local-rails coverage. Airwallex pricing (FX margins): https://www.airwallex.com/uk/pricing International transfers (local vs SWIFT routes): https://www.airwallex.com/uk/international-payments

12. Xero and QuickBooks UK – indicative entry-level pricing. Xero UK pricing: https://www.xero.com/uk/pricing/ QuickBooks Online UK pricing: https://quickbooks.intuit.com/uk/pricing/