Starling Launches Free ‘Making Tax Digital’ Tool to Help Sole Traders Manage New Rules

WHY THIS MATTERS: The move by Starling to offer its proprietary Making Tax Digital (MTD) solution for free is a major competitive escalation in the UK’s SME banking market. As the April 2026 deadline for mandatory quarterly reporting for sole traders and landlords approaches, compliance becomes a core business function. By fully embedding a free, HMRC-recognised tool directly within the bank account, Starling transforms tax management from an expensive, friction-filled third-party integration into a seamless, value-added service. This not only protects their existing customer base from migrating to dedicated accounting software providers but also strongly positions the bank to acquire new business customers who are specifically seeking digital tax simplification to comply with new regulations.

Starling has made its proprietary Making Tax Digital for Income Tax tool available to business customers for free today, before new HMRC rules come into force on 6th April. Sole traders and landlords turning over more than £50,000, who will be the first cohort required to start making quarterly tax reports online, can now start getting used to the tool as part of their regular accounting practice. It is also available for sole traders with lower turnovers.

The new solution is fully integrated into Starling bank accounts, meaning customers can submit tax updates to HMRC instantly without having to log into third party software. It is also part of a refreshed ‘Accounting’ software proposition that is replacing Starling’s ‘Business Toolkit’.

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.”

As well as managing their tax reporting through Starling, sole traders can categorise transactions as they happen and see a real-time picture of their finances. ‘Accounting Essentials’ is free, and for those who additionally want to keep VAT records and submit VAT returns directly to HMRC, ‘Accounting Plus’ is £7 a month. 

Jennifer Staves, Deputy Director, Software Partnerships, Making Tax Digital, 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.”

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.

“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.”

FF NEWS TAKE: This strategy is highly effective and absolutely moves the needle. By bundling essential, mandated tax compliance for free, Starling immediately creates a significant switching cost for competitors who rely on paid third-party software integration. The core benefit is removing the “software hopping” requirement for sole traders. We should watch closely to see if other challenger banks are forced to follow suit with their own free, integrated solutions, or if traditional banks will double down on existing marketplace partnerships.

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