FreeAgent suits UK sole traders, freelancers and small limited companies who want accounting, payroll and tax filing in one plan, and it's free with a NatWest, RBS, Ulster Bank or qualifying Mettle account. Xero suits growing UK businesses that want more users, more apps and plans that scale by invoices and payroll headcount. If you bank with NatWest, check FreeAgent before anything else.
Both of these are HMRC-ready and both handle Making Tax Digital, so the choice comes down to how each one is set up for a business like yours. I read FreeAgent's plans page and Xero's UK plans page, and the facts here come from those pages.
How the UK plans compare
| FreeAgent | Xero (UK) | |
|---|---|---|
| How plans are set | By business type: limited company, partnership or LLP, sole trader, landlord | By plan: Ignite, Grow, Comprehensive, Ultimate |
| Free option | Free with a NatWest, RBS or Ulster Bank business account, or Mettle with one transaction a month | Not listed; one month free to try |
| Trial | 30-day free trial | One month free to try |
| Invoices on entry plan | Invoicing and estimates included | 20 invoices and 10 bills on Ignite |
| Payroll | Included, with PAYE and NI filing to HMRC | From Grow (1 person), Comprehensive (5), Ultimate (10) |
| Making Tax Digital | MTD VAT returns filed to HMRC | MTD for Income Tax ready, VAT returns to HMRC |
| Self Assessment | File your return from FreeAgent | Not covered on the plans page |
| Year-end | Final Accounts and Corporation Tax data | Not covered on the plans page |
| Support | UK-based support accountants | Free expert setup help |
FreeAgent's all-in approach
FreeAgent sets its plans by the kind of business you run, then includes the essentials in each: a dashboard, mobile app, invoicing and estimates, expenses, projects and time tracking, payroll with PAYE and National Insurance filed to HMRC, MTD VAT returns, Self Assessment filing, and Final Accounts and Corporation Tax data for limited companies. Bank feeds and a cashflow forecast are in there too, and support comes from UK-based accountants.
Smart Capture handles 10 receipts and bills a month as standard, which suits most sole traders. If you snap more than that, there's an add-on.
Xero's plan ladder
Xero's UK plans climb by what you need. Ignite sends 20 invoices and enters 10 bills, submits VAT returns, handles CIS and is ready for Making Tax Digital for Income Tax. Grow adds payroll for 1 person, Comprehensive adds payroll for 5 and multiple currencies, and Ultimate covers payroll for 10. Xero has no per-user licence charges and connects to more than 1,000 apps, which matters once your accountant, bookkeeper and team all need access.
The bank account clause that changes everything
FreeAgent's plans page says it's free if you have a business current account with NatWest, Royal Bank of Scotland or Ulster Bank, for as long as you keep the account, or a Mettle account with at least one transaction a month. Plenty of UK sole traders already bank with one of those and don't know this. If that's you, you get FreeAgent's full plan for your business type without a monthly bill, which makes the comparison with Xero very different.
Who each one suits
FreeAgent fits sole traders, freelancers, landlords and small limited companies who want their tax return, VAT and payroll handled in one place with UK support on the phone. Xero fits businesses that are growing a team, invoicing in other currencies or relying on lots of connected apps. If you're a sole trader, my guide on invoicing correctly as a sole trader is a good companion, and this round-up of bookkeeping software for small businesses covers other options.
My advice for UK freelancers and small firms
Check your bank first. If FreeAgent comes free with your account, start there unless you already know you need Xero's apps or invoicing in other currencies. If it doesn't, compare FreeAgent's plan for your business type against Xero's Ignite or Grow, and look hard at payroll: FreeAgent includes it, while Xero adds it from Grow. Then ask your accountant which one they work in, because that counts for a lot.
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Frequently asked questions
Is FreeAgent free with NatWest?
Yes. FreeAgent says it's free with a NatWest, Royal Bank of Scotland or Ulster Bank business current account for as long as you keep it, or with a Mettle account that makes at least one transaction a month.
Does Xero include payroll in the UK?
From Grow upward. Grow covers payroll for 1 person, Comprehensive for 5 and Ultimate for 10.
Can FreeAgent file my Self Assessment?
Yes. FreeAgent lists Self Assessment filing directly to HMRC.
Are both ready for Making Tax Digital?
Yes. FreeAgent files MTD VAT returns to HMRC, and Xero lists MTD for Income Tax readiness and VAT returns to HMRC.
