Record keeping and Making Tax Digital submissions for UK sole traders.
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Why we pick it
- Works with
Suits a sole trader without VAT registration who wants a free starting plan. You keep your sales and costs as digital records in Sage, then use them for Making Tax Digital quarterly updates.
The guide
Each step in the order you'll need it.
Who Sage suits
You are a sole trader without VAT registration, selling on Vinted, eBay or Etsy, and you want digital records without a monthly bill. Sage's sole trader software has a free plan.
It suits you if you are preparing for Making Tax Digital for Income Tax and want to start simple, with the option to upgrade later.
It fits if you buy stock at charity shops or car boots and want a simple way to log costs for your quarterly updates.
The free plan and its limits
Sage describes its free sole trader plan as a Making Tax Digital ready app for non-VAT-registered sole traders, with no time limit. It records income and expenses and supports quarterly updates to HMRC.
Paid plans add features beyond the free plan. Check Sage's UK site for current pricing and plan details.
The free plan leaves out VAT returns. Read Sage's plan comparison for its other limits before you commit.
Categories, bank feed and a weekly routine
Sign up for the sole trader product, add your business details, and connect a bank account if your plan supports it. Create categories for stock, postage, packaging and fees.
Enter each sale and cost as it happens, or weekly at the latest. Before each quarterly deadline, check the totals and submit the update.
Pick one evening a week to enter Vinted and eBay payouts and fees, and attach your postage and packaging receipt photos.
FreeAgent, Xero or no software yet
FreeAgent is free with NatWest, RBS, Ulster Bank and Mettle business accounts, and covers Self Assessment filing; pick it if you bank with one of them.
Xero and QuickBooks suit a growing business with VAT, staff or many transactions, at a monthly cost.
If your sales are tiny and below HMRC's trading allowance, gov.uk tells you whether you need to register at all before you choose software.
Kit for this step
Quarterly updates in practice
Under Making Tax Digital for Income Tax, you send HMRC a summary of income and costs each quarter, then a final return. Sage's own guidance gives 7 August and 7 November 2026 as the first deadlines for standard quarters; gov.uk confirms your dates.
Keep a photo of each stock and packaging receipt with its entry, so you can show HMRC the cost if asked.
If your numbers include sales of personal items you owned for your own use, ask an accountant or read HMRC's guidance on whether they count as trading income.
Common mistakes
Each one costs you money or reviews, and each has a fix.
- The free plan is for non-VAT-registered sole traders, so you need a different plan once you register for VAT.
- If you log only sales, you miss allowable costs such as packaging. Record each expense too.
- If you leave a quarter's entries until deadline week, you risk missing the deadline.
- Check the Making Tax Digital threshold on gov.uk before you decide it doesn't apply to you.
- Match what you paid for each item to its sale so your profit figure is correct.
Guides that use it
Step-by-step help where this product does a job.
Questions
Is Sage free for sole traders?
Sage offers a free sole trader plan for users without VAT registration. Its site has the current terms.
Does it handle Making Tax Digital for Income Tax?
Yes. Sage describes its sole trader software as ready for quarterly updates.
Can I upgrade later?
Sage has paid plans with more features; its site lists current pricing.
Does it file my VAT return?
The free plan is aimed at non-VAT sole traders. If you are VAT registered, compare Sage's paid plans.
Can I record cash purchases from car boots?
Yes. Enter each purchase as an expense with the date and item, since a car boot stall may give no receipt.
Do I need Sage if I only sell my own old clothes?
Selling your own unwanted items may not count as trading. Read HMRC's guidance on gov.uk before you set up any software.
Alternatives
Other picks for the same job, cheaper and pricier.
FreeAgent
Suits a sole trader who banks with NatWest, RBS, Ulster Bank or Mettle, since those business accounts include FreeAgent at no extra cost. You can file your Self Assessment return to HMRC from inside the app.
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QuickBooks
Suits you if you have registered as a sole trader and want income and costs in one place. HMRC recognises it for Making Tax Digital, and it can submit VAT returns to HMRC.
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Xero
Suits you once your shop has grown into a small business with stock, invoices and maybe VAT. It reads receipts you photograph and is HMRC recognised for Making Tax Digital.
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