What's Changing?
Making Tax Digital (MTD) for Income Tax means that all self-employed individuals and landlords with qualifying turnover must now keep digital records and file quarterly updates with HMRC using compatible software.
Key point
The threshold is based on your turnover — that's the total amount you invoice, not your profit. If your gross revenue exceeds the threshold, you must comply regardless of how much profit you make.
This is a significant shift from the traditional annual Self Assessment return. Under MTD, your accounting records must be maintained digitally throughout the year and submitted to HMRC every quarter.
Our Recommendation
We always recommend using software that you're already comfortable with or find easiest to learn. However, if you're looking for something that's both affordable and excellent, NatWest's offering is a great place to start.
NatWest, RBS, and Mettle are all brands under the NatWest Group. They each offer business banking services that come bundled with free access to FreeAgent — a fully MTD-compliant accounting platform that covers the needs of most sole traders.
FreeAgent
Visit FreeAgentHow to Get FreeAgent for Free
Follow these steps to set up MTD-compliant bookkeeping at no cost:
Open a qualifying bank account
Open a business account with a NatWest Group brand. We suggest a Mettle account — it's quick to set up and comes with FreeAgent included.
Sign up for FreeAgent
Once your bank account is open, create a FreeAgent account and provide your new bank details to activate the free licence.
Connect your bank account
Allow FreeAgent read-only access to your new bank account. This automatically pulls your transactions into the software.
Use the account for all business activity
Going forward, run all your business income and expenses through this account. Transactions will appear in FreeAgent ready for you, your bookkeeper, or your accountant to categorise and prepare your quarterly returns.
What Happens Once You're Set Up?
- Your bank transactions flow automatically into FreeAgent
- You or your accountant categorise income and expenses
- Quarterly summaries are submitted to HMRC through the software
- At year end, a final declaration replaces the traditional Self Assessment return
Our Fees
Our fees vary depending on the level of service you need — whether that's full bookkeeping and quarterly submissions, or simply a year-end review and filing.
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Common Questions
What is Making Tax Digital for Income Tax?
MTD for Income Tax is an HMRC initiative requiring self-employed individuals and landlords to keep digital records and submit quarterly updates using compatible software, rather than filing a single annual Self Assessment return.
Who needs to comply with MTD for Income Tax?
Anyone who is self-employed or receives rental income with a total turnover (gross revenue, not profit) above the threshold must comply. The threshold is being phased in — those with turnover above £50,000 from April 2026, and above £30,000 from April 2027.
Is FreeAgent really free?
Yes — FreeAgent is completely free when you hold a qualifying business bank account with NatWest, RBS, or Mettle. There is no time limit on this offer as long as your account remains open.
Do I have to use a specific accounting software?
No. You can use any MTD-compatible software. However, we recommend choosing something you find easy to use. FreeAgent via a Mettle account is an excellent free option for sole traders.
What are quarterly updates?
Instead of submitting one annual tax return, MTD for Income Tax requires you to send HMRC a summary of your business income and expenses every quarter using compatible software.