Xero, QuickBooks and FreeAgent are all HMRC-approved for MTD for VAT and MTD for Income Tax. The question isn’t which one works, they all do. It’s which one fits how you already work, what you need beyond MTD compliance, and whether the price makes sense for a sole trader or landlord rather than a larger business.
This is written for people choosing software primarily for MTD for Income Tax. If you run a limited company, the considerations are a bit different, this article is focused on sole traders, freelancers, and landlords.
Quick answer: If you bank with NatWest, RBS, Ulster Bank, or Mettle, use FreeAgent, it’s free and handles MTD for Income Tax properly. If you don’t, QuickBooks Sole Trader Plus at £10/month is the cheapest route in. Xero costs more and has the largest accountant following in the UK, worth it if your accountant already uses it, or if the business is growing.
FreeAgent
Find out more at: FreeAgent
Free with NatWest, RBS, Ulster Bank, or Mettle. Around £16/month otherwise.
FreeAgent was designed for freelancers and small businesses, which is still fairly obvious in how it’s laid out. The things a sole trader needs such as invoicing, expense tracking, bank connection, MTD quarterly updates, self-assessment, are all accessible without much configuration. You’re not navigating a system built for a 50-person company that’s been scaled down.
The free tier via NatWest group banks is a genuine ongoing subscription, not a trial with a deadline. Hold the qualifying account, keep it active, and you pay nothing. If you close the account or switch banks, you’d need to move to a paid plan.
FreeAgent’s MTD for Income Tax support is well developed. They’ve handled MTD for VAT since it launched and have built out the quarterly ITSA workflow thoroughly. The submission process is guided as it prompts you through what to send and when, which reduces the chance of missing a deadline in the early months.
The ceiling is lower than Xero’s. Multi-currency is limited. Stock and inventory management is basic. If your business sells physical products at scale or you’re managing a team, you’ll likely outgrow it. For a consultant, a designer, a tradesperson, or a buy-to-let landlord, anyone whose needs are essentially income, expenses, invoicing, and tax, it covers everything.
QuickBooks
Find out more at: QuickBooks
Sole Trader Plus: £10/month + VAT. Simple Start (if VAT-registered): £16/month + VAT.
QuickBooks is the cheapest paid MTD-capable option for a sole trader who isn’t on a NatWest-group account. At £10/month it includes MTD for Income Tax, quarterly update submissions, bank feeds, invoicing, and expense tracking. For most unregistered sole traders, that’s the full list of requirements.
The phone app holds up well for day-to-day use. Photographing a receipt and matching it to a bank transaction works reliably. For anyone who handles admin from their phone rather than at a desk, this is a practical advantage.
The thing that can complicate the choice is accountant compatibility. QuickBooks has a smaller UK accountant user base than Xero. If your accountant uses Xero or FreeAgent and you sign up for QuickBooks, you’ll be working across different systems, which usually means more manual handoffs. Worth asking your accountant what they use before you pick.
QuickBooks retired its separate Self-Employed product in the UK and replaced it with Sole Trader Plus. If you were previously on the Self-Employed plan, you’ll have been migrated. The new product costs more but does more, whether the additional features are ones you need depends on your situation.
Xero
Find out more at: Xero
Ignite: £16/month + VAT. Grow: £33/month + VAT.
The Ignite plan at £16/month covers MTD submissions, bank reconciliation, invoicing, and expenses. The catch is the cap: 20 invoices and 10 bills per month. For a consultant who sends a handful of invoices, that’s not a problem. For a freelancer working with multiple clients simultaneously, or a tradesperson quoting and invoicing regularly, you’ll hit it.
The Grow plan at £33/month removes the limits. That’s a meaningful price jump to £204 more per year than Ignite. Whether it’s justified depends on volume.
The strongest argument for Xero is the accountant ecosystem. More UK accountants use Xero than any other platform, so if you use Xero, you’re likely using the same software as your accountant. That means they can log in directly, review your books, and submit your MTD updates without you exporting anything. For businesses where the accountant does a lot of the heavy lifting, that convenience is real.
Xero also handles property income alongside trading income in a way that’s clearly laid out, which matters for landlords or sole traders with mixed income sources. Under MTD, each income stream needs separate quarterly submissions, and Xero’s setup for this is less confusing than it could be.
For a simple sole trader who wants the minimum functional setup for MTD compliance, Xero Grow at £33/month is more than you need. For a business with some complexity such as VAT registration, multiple income streams, staff payroll, a bookkeeper or accountant who’s going to work in the platform regularly, then it earns its price.
Which one should I choose?
If you bank with NatWest, RBS, Ulster Bank, or Mettle: FreeAgent. Free, MTD-ready, and well-suited for the businesses this comparison is aimed at.
If you’re a straightforward sole trader without a NatWest-group account: QuickBooks Sole Trader Plus at £10/month. The cheapest MTD-capable paid option, solid mobile app, does everything a sole trader needs.
If you’re VAT-registered: QuickBooks Simple Start or Xero Ignite, both £16/month. Similar price; Xero has more accountant support, QuickBooks has the better phone experience.
If your accountant uses one of these platforms: use theirs. The value of your accountant being able to work directly in your account, without data exports and reformatted spreadsheets, outweighs most other differences. Ask before you sign up.
If you have a mix of trading income and rental income: all three handle this, but check how your accountant wants it set up. Property income and trading income are submitted to HMRC separately under MTD and need to be set up as separate businesses in the software.
If you’re planning to grow and take on staff, sell products, bring in a bookkeeper: Xero Grow. It’s the most scalable of the three.
Annual costs
| Software | Monthly | Annual (ex. VAT) |
| FreeAgent (NatWest/Mettle) | £0 | £0 |
| QuickBooks Sole Trader Plus | £10 | £120 |
| FreeAgent (paid) | ~£16 | ~£192 |
| Xero Ignite | £16 | £192 |
| QuickBooks Simple Start | £16 | £192 |
| Xero Grow | £33 | £396 |
All prices exclude VAT. QuickBooks regularly runs introductory half-price offers on new subscriptions — worth checking the current deal before paying full price.
A few things that come up
Can I switch later? Yes. Migrating accounting data between platforms is possible — most export a standard format. It’s easier to do at the start of a new tax year than mid-year. If you pick one now and change your mind in 12 months, it’s not locked in, just a bit of work.
Do I have to submit the quarterly updates myself? No. If your accountant has access to your account, they can handle submissions on your behalf. The requirement is that your records are digital — who actually clicks “submit” is flexible.
Is FreeAgent really free? Yes. The NatWest and Mettle arrangement is an ongoing free subscription as long as you hold the qualifying account. It’s not a promotional trial.
Can I try before committing? All three offer 30-day free trials. If you’re unsure between Xero and QuickBooks, it’s worth running your real transactions through a trial of each before committing.
Frequently asked questions
For MTD for VAT, bridging software that connects a spreadsheet to HMRC’s API is still accepted. For MTD for Income Tax, HMRC requires proper MTD-compatible accounting software. Spreadsheets alone don’t qualify for ITSA.
All three platforms support mixed income sources. Under MTD, trading income and property income are treated as separate businesses and need separate quarterly submissions. The initial setup to configure this takes a few minutes. Check with your accountant on how they want it structured before you start.
Your historical self-assessment returns are held by HMRC, not the software. What you’d need to migrate is your ongoing accounting data, transactions, bank reconciliation history, open invoices. Most platforms export this in a standard format. Switching at the start of a new tax year keeps things cleaner.
Ignite works for sole traders who send fewer than 20 invoices and enter fewer than 10 bills per month. If you regularly exceed those numbers, you’ll need Grow. Check your last few months of activity before deciding, the limit is easy to underestimate if you send a lot of small invoices.
For a broader comparison including Sage and Zoho Books, see our guide to the best MTD software for small businesses UK. For background on how the quarterly submission process works, see our Making Tax Digital complete guide
