Starling unveils free MTD tax tool for sole traders

Starling Bank has launched a free digital tool for Making Tax Digital (MTD) for Income Tax, giving sole traders and landlords access to HMRC-recognised software ahead of new reporting requirements.

The tool is now live for business customers at no cost. It is aimed at sole traders and landlords in the first group, required to submit quarterly updates under the MTD for Income Tax regime.

MTD for Income Tax starts in April 2026. Sole traders and landlords with qualifying income above £50,000 will need to keep digital records and send quarterly reports using HMRC-recognised compatible software.

Integrated into Starling's business accounts, the tool lets customers submit updates to HMRC from within the banking app, without logging into third-party software.

Accounting update

The launch follows changes to Starling's bookkeeping and tax management offering. Its refreshed Accounting proposition replaces the Business Toolkit.

Starling's Accounting product has two plans. Accounting Essentials is free and includes the MTD for Income Tax tool. Accounting Plus costs £7 a month and includes VAT record keeping and VAT submissions directly to HMRC.

The £7 a month price applies until April 2027, before rising to £14 a month. Accounting Plus is aimed at VAT-registered businesses.

Sole traders can also use Accounting to categorise transactions as they happen and view finances in real time. Because the features sit inside the account experience, spending and income flow directly into the bookkeeping view.

As the MTD programme expands, the choice of software is becoming more urgent for sole traders and landlords. HMRC has already rolled out digital VAT reporting for many businesses. The next phase extends the approach to income tax for self-employed people and landlords who meet the threshold.

HMRC recognition

Starling's software is HMRC-recognised for MTD for Income Tax. For those in scope, this matters because HMRC requires compatible software for digital record keeping and quarterly reporting.

Daniel Hogan, Director of Business Tools at Starling, said: "At Starling, we know that small businesses have a million things on their mind, so that's why we focus on helping make managing their money easier. Our free Making Tax Digital and Accounting tools enable businesses to keep on top of bookkeeping and tax management straight from their bank account. Our customers don't have to pay or shop around to adapt to the new Making Tax Digital rules; we've created a fully integrated solution for them."

HMRC said the changes will help taxpayers keep records up to date throughout the year, rather than focusing activity around annual deadlines. Jennifer Staves, Deputy Director, Software Partnerships, Making Tax Digital at HMRC, said: "Making Tax Digital for Income Tax will help people keep clearer records throughout the year and reduce the stress that often comes towards the Self Assessment deadline. From April 2026, sole traders and landlords with a turnover of more than £50,000 from self-employment and property will be required to use HMRC-recognised software, which supports accurate record-keeping and helps them get their tax right first time."

Customer impact

Starling also pointed to demand from small business owners who want to prepare for the new rules earlier, including existing business banking customers looking for a single place to manage finances and tax administration.

Natasha Swan, Sole Trader and Owner of Natasha Swan Ceramics, said: "As a busy shop owner and mum, to be reassured that Starling has created a free solution to the upcoming Making Tax Digital changes means that I can concentrate more on keeping my customers happy and running my business."

Swan added, "I'm an organised person, so I'd already researched ways I could stick to HMRC's new rules, but didn't really know what to do. I've been with Starling since starting my business five years ago, so it's great I could rely on them to solve the problem for me and take a weight off my mind."

The tool is also available to sole traders with lower turnover, even though the first mandatory cohort is above the £50,000 threshold. Starling said this reflects the likelihood of further expansion to smaller businesses over time, as well as demand from those who want to switch to digital record keeping early.

The move adds to competition among banks and accounting software providers targeting small businesses with packaged financial administration tools. Providers have increasingly built bookkeeping, invoicing and tax features alongside current accounts to increase engagement with business customers.

Starling is headquartered in London and has offices in Southampton, Cardiff and Manchester. It also sells banking technology through its subsidiary Engine, which offers its software platform to other financial institutions. The bank said the MTD for Income Tax tool is available now for business customers, ahead of the April 2026 reporting requirement.