| Tool | Starting price | Free plan | Free trial | Best for | Source |
|---|---|---|---|---|---|
| FreeAgent | From £33/month (limited company) | Free with some UK business bank accounts | 30 day free trial | Sole traders and limited companies who want payroll and tax filing included | Official pricing |
| Xero | Ignite £18/month (excl. VAT) | No | Not stated (intro discount offered) | Growing businesses that need higher limits or multiple currencies | Official pricing |
Prices are the starting paid plans on each official UK pricing page. Offers change, so confirm on the official site.
Price
FreeAgent lists its limited company plan at £33 a month, with 50% off for the first 6 months, or £330 a year. The sole trader plan is listed at £190 a year. Extras such as Smart Capture Unlimited (£5 a month, excl. VAT) and the Amazon integration (£6 a month, excl. VAT) cost more. The standard plan includes 10 Smart Capture receipts.
Xero has four UK plans, all excl. VAT. Ignite £18, Grow £39, Comprehensive £55 and Ultimate £70 a month. New UK customers are offered 90% off for 6 months. Ignite is capped at 20 invoices and 10 bills a month, and payroll on Ignite is charged at £1.50 per person. Comprehensive adds multiple currencies.
Ways to get it free
FreeAgent is free with NatWest, RBS and Ulster Bank business accounts, and with Mettle if you make at least one transaction a month. If you already bank with one of these, FreeAgent is very hard to beat on price. Xero has no free plan. Its route to a lower bill is the introductory discount.
Making Tax Digital and tax returns
Both are MTD compatible for VAT and for Income Tax. FreeAgent includes Self Assessment filing, payroll, projects and time tracking in its plans. Xero handles VAT returns and the Construction Industry Scheme, and lists company accounts and corporation tax filing at £120 a year. If you are not sure when MTD for Income Tax applies to you, read our Making Tax Digital guide.
Day to day features
Both connect to your bank, send invoices and estimates, and track expenses. Xero includes Hubdoc for receipts and bills, and notes that some banks charge for bank feeds. FreeAgent offers UK based support and keeps the extras you need as a sole trader in one plan.
Verdict by business type
- You bank with NatWest, RBS, Ulster Bank or Mettle. FreeAgent, since it can cost nothing.
- Sole trader filing Self Assessment. FreeAgent, as filing is included in the plan.
- Few invoices a month on a tight budget. Xero Ignite, as long as the invoice and bill limits suit you.
- Growing company with staff or foreign currency. Xero Grow or Comprehensive.
Working out what to charge or chasing a late invoice? Try our VAT calculator and late payment interest calculator, or get a bookkeeping shortlist in the finder.
Sources
FAQ
Is FreeAgent cheaper than Xero?
It depends on your bank. FreeAgent is free with NatWest, RBS, Ulster Bank and Mettle business accounts. Otherwise FreeAgent lists £33 a month for a limited company, while Xero starts at £18 a month excl. VAT on Ignite, which has invoice and bill limits.
Do FreeAgent and Xero work with Making Tax Digital?
Yes. Both are listed as MTD compatible for VAT and for Income Tax.
Which is better for a sole trader?
FreeAgent suits most sole traders because its sole trader plan includes Self Assessment filing, and it can be free through some UK business bank accounts. Xero suits sole traders who expect to grow quickly and want room on the higher plans.
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