For most UK sole traders and small limited companies, the choice comes down to four platforms: Xero, QuickBooks, FreeAgent and Sage. FreeAgent is the best value if you bank with NatWest, RBS, Ulster Bank or Mettle, because it's free with those accounts. QuickBooks has a low-cost plan built for sole traders. Xero suits businesses that connect lots of other apps or work with an accountant who uses Xero. Sage includes payroll in all its accounting plans. All four offer software for Making Tax Digital, but not always on every plan.
Xero, QuickBooks, FreeAgent and Sage compared
| Xero | QuickBooks | FreeAgent | Sage | |
|---|---|---|---|---|
| Sole trader price (per month, ex VAT) | Ignite £18 | Sole Trader Plus £10 | Sole trader £19, free with NatWest, RBS, Ulster Bank or Mettle | Start £20 |
| Limited company price (per month, ex VAT) | Grow £39 | Essentials £38 | Limited company £33, free with NatWest, RBS, Ulster Bank or Mettle | Standard £43 |
| MTD for Income Tax | Ready on all plans | Sole Trader Plus | Yes | Through Sage's separate sole trader product |
| MTD for VAT | All plans | Simple Start and above | Yes | Yes |
| Payroll | 1 employee on Grow, £1.50 per extra person | Paid add-on | Included | Included in all accounting plans |
| Introductory offer | 90% off for 6 months for new customers | Varies | 50% off for 6 months | Varies |
| Best for | Growing businesses using several apps, or with a Xero accountant | Sole traders wanting a low monthly cost | Freelancers, contractors and small limited companies, especially NatWest-group or Mettle customers | Businesses that want payroll bundled in |
Prices are list prices excluding VAT, checked 15 October 2026. Providers change prices and plan features often. Check the provider's own pricing page before you buy.
Is there free bookkeeping software in the UK?
Yes, with conditions.
- FreeAgent is free for as long as you hold a NatWest, Royal Bank of Scotland or Ulster Bank business current account, or a Mettle account with at least one transaction a month.
- QuickFile has a free tier for small businesses and supports Making Tax Digital for Income Tax.
- Zoho Books has a free plan for UK sole traders that handles digital records and Making Tax Digital for Income Tax. Bank feeds need a paid plan.
- Tide includes free Making Tax Digital for Income Tax features with its free business bank account: record-keeping, quarterly updates and the final declaration. Its full accounting add-on is a paid subscription.
- Starling includes a free Making Tax Digital for Income Tax tool with its sole trader account.
- Free software that covers Making Tax Digital is listed on HMRC's software finder, which lets you filter by price.
Free tools usually mean fewer bank feeds, less receipt capture and slower support. If your records take more than a couple of hours a month, the time saved by a paid plan usually covers its cost.
How to choose
Compare on how your records actually get kept, not on feature count:
- Making Tax Digital: check the plan, not only the brand, is on HMRC's list for the obligations that apply to you.
- Bank feeds: confirm a direct feed for each bank and card you use.
- VAT: check it supports your VAT scheme, for example flat rate or cash accounting.
- Payroll: if you employ anyone, compare the total cost including payroll.
- Receipts: decide whether you need app-based receipt and bill capture.
- Your accountant: shared access is easier on the platform your accountant already uses.
- Switching cost: moving platforms takes time, so pick one you can stay on for several years.
Which software suits which business
- Sole trader under the VAT threshold: QuickBooks Sole Trader Plus or FreeAgent (free with an eligible bank account).
- Sole trader or landlord coming into MTD for Income Tax: any of the four, as long as the plan is on HMRC's list. If your income is over £50,000, you have needed MTD software since 6 April 2026.
- Small limited company: Xero Grow, FreeAgent or QuickBooks Essentials.
- Business with staff: Sage, FreeAgent, or Xero Grow and above, all with payroll included.
Plan before switching
- Choose a clean cut-off date, ideally the start of a VAT quarter or financial year.
- Reconcile opening balances in the new system.
- Keep read-only access to your old records.
- Run one month in the new system before cancelling the old one.
Frequently asked questions
What is the cheapest bookkeeping software in the UK?
FreeAgent is free if you bank with NatWest, RBS, Ulster Bank or Mettle. Otherwise QuickBooks Sole Trader Plus is one of the cheapest paid plans at £10 a month excluding VAT. Introductory discounts from Xero and FreeAgent reduce the first six months further.
Which free software works with Making Tax Digital for Income Tax?
Free options include Zoho Books' free plan, QuickFile's free tier, FreeAgent with an eligible NatWest, RBS, Ulster Bank or Mettle account, and the MTD tools built into Tide and Starling business accounts. Check the product and plan appear on HMRC's software finder for the income you report, such as self-employment or property.
Is Xero or QuickBooks better for a sole trader?
QuickBooks is cheaper for a basic sole trader setup. Xero is the better pick if you expect to register for VAT, take on staff, or use other apps alongside your books, because its higher plans and app connections cover more.
Do I need software for Making Tax Digital for Income Tax?
Yes, if your qualifying income from self-employment and property is over £50,000 you have needed compatible software since 6 April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
Can I switch software partway through the year?
Yes. Switching at the start of a VAT quarter or financial year keeps reporting simplest, but any month works if opening balances are reconciled on the cut-off date.
Sources (reviewed 28 October 2026)
Not sure which platform fits? Larissa sets up and runs bookkeeping on Xero, QuickBooks, FreeAgent and Sage. Book a free 30-minute discovery call and she'll tell you which one suits how your business works.
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