Which accounting software should you use? —
Xero vs QuickBooks vs FreeAgent vs Sage

With Making Tax Digital for Income Tax now phasing in across 2026, 2027 and 2028, the choice of accounting software has stopped being a nice-to-have for sole traders and small limited companies — it is becoming the backbone of how you stay compliant. All four of the platforms covered here are MTD-compatible, so the real question is which one actually fits how you work, not which one ticks the compliance box.

We work across all of these platforms with clients, so this is a practical comparison rather than a sales pitch for any one of them.

The short version

Software	Typical starting price	Best suited to
Xero	From around £16/month	Growing businesses wanting the widest app ecosystem
QuickBooks	From around £10–14/month (check current offers)	Sole traders and small businesses wanting familiar, straightforward software
FreeAgent	Free with certain NatWest/RBS/Mettle business accounts, otherwise around £19/month	Freelancers, contractors and small Ltds wanting an all-in-one tool with Self Assessment built in
Sage	From around £12–15/month	Businesses that need strong payroll and inventory alongside bookkeeping

Xero

Xero is the platform most accountants are quickest to recommend for businesses with some complexity — multiple bank accounts, inventory, or a need for strong third-party app integrations (payment processors, CRM tools, inventory management, industry-specific add-ons). Its bank feed reconciliation is clean, its reporting is strong, and because so many UK accountants use it day to day, it tends to be the easiest platform for us to support you on directly.

The trade-off is cost and, for some people, a slightly steeper learning curve than QuickBooks — Xero is built with a bookkeeper's workflow in mind, which is a strength once you're used to it but can feel unfamiliar on day one.

QuickBooks

QuickBooks remains one of the most widely used platforms among UK sole traders and micro-businesses, largely because the interface is approachable and the mobile app is genuinely good for capturing receipts and mileage on the go. It covers everything most small businesses need — invoicing, expense tracking, VAT returns, and MTD submission.

One thing worth knowing: QuickBooks has a history of introducing new customers at a low promotional rate that steps up significantly after the first six to twelve months. Build that into your decision rather than being caught out later.

FreeAgent

FreeAgent is the one genuinely free route into proper accounting software for a specific group — sole traders, freelancers, contractors and small limited companies who hold a business current account with NatWest, Royal Bank of Scotland, Ulster Bank, or Mettle, which include FreeAgent at no extra cost. For anyone in that position, it is hard to beat on pure value.

Functionally, FreeAgent stands out for pulling personal tax into the same picture as business accounts — it will estimate your Self Assessment bill, track Corporation Tax, and handle VAT, all from one dashboard, which particularly suits sole traders and single-director companies who want one tool rather than separate business and personal-tax software.

Sage

Sage has the longest history in UK business software and it shows in its payroll and inventory capability, which tends to be more robust than the other three out of the box. If you employ several staff and want payroll handled natively rather than bolted on, or you manage physical stock, Sage is usually the strongest fit.

It is sometimes seen as less intuitive for day-to-day bookkeeping than Xero or QuickBooks, particularly for business owners doing their own data entry rather than leaving it to a bookkeeper — worth bearing in mind if you want to be hands-on with the books yourself.

What actually matters when choosing

• Is it MTD-ready for your situation? All four are, but confirm the specific plan tier you're looking at includes MTD for Income Tax or VAT as needed.
• Does your bank already include it free? If you bank with NatWest, RBS, Ulster Bank or Mettle, FreeAgent at no cost is very hard to beat purely on value.
• How much do you want to do yourself versus hand to us? If we're doing the bulk of your bookkeeping, Xero tends to be the smoothest for us to work in collaboratively. If you want to do more of the day-to-day entry yourself, QuickBooks or FreeAgent's simpler interfaces may suit you better.
• Do you need payroll or stock management built in? If yes, weight your decision toward Sage.
• What does switching cost you? Migrating historical data between platforms is possible but not always seamless — factor in the admin cost of switching later if you choose wrong now.

A word on spreadsheets and bridging software

If you currently keep records on a spreadsheet, you can in principle keep doing so under Making Tax Digital by using "bridging software" (typically £5–£25 a month) that simply submits your VAT or Income Tax figures to HMRC from your existing spreadsheet. This avoids a full software switch, but you lose the automatic bank feeds, reconciliation, and real-time reporting that come with a proper package — for most small businesses, the time saved by full accounting software outweighs the modest extra cost.

This article is for general information purposes only and does not constitute financial or software-purchasing advice. Pricing and plan details change frequently — always check current terms directly with each provider.