Best accounting software for UK small businesses (2026)

Prices compared

The cheapest plan from each vendor, as listed on 27 October 2026:

Xero, Sage and FreeAgent prices exclude VAT and Zoho Books prices exclude local taxes. QuickBooks didn’t say either way, so check at checkout.

Higher plans, full price a month:

• Xero: Grow £39, Comprehensive £55, Ultimate £70.
• QuickBooks: Essentials £38, Plus £56, Advanced £123.
• FreeAgent: landlord £10, partnership or LLP £27, limited company £33. Paying yearly costs 10 times the monthly price, so you get 2 months free.
• Sage Accounting: Standard £43, Plus £59.
• Zoho Books: Standard £12, Professional £24, Premium £30 a month, or £10, £20 and £25 a month billed annually.

For businesses that aren’t VAT-registered, Xero Simple is £7 a month. It covers up to 10 invoices and doesn’t submit VAT returns. Sage sells a separate product for these businesses: Sage Sole Trader's UK pricing page lists Sage Sole Trader Free at £0 with limits, and Sage Sole Trader at £7 a month excluding VAT.

Free accounting software that is actually free

Two options cost nothing, and each has a catch.

Zoho Books Free. Zoho says the Free plan “is applicable for all business types”. It includes:

• MTD for Income Tax: quarterly updates and the final tax return
• Self Assessment (SA100) filing
• VAT tracking and MTD VAT returns
• Up to 1,000 invoices and 1,000 expenses a year
• 50 receipt autoscans a month
• 1 user plus your accountant

The catch: Free doesn’t support add-ons, apart from CT600 and Final Accounts filing, which is listed at £5 a year. Bank feeds for more than one bank account start on Standard.

FreeAgent through your bank. FreeAgent is free with a NatWest, Royal Bank of Scotland or Ulster Bank business current account, for as long as you keep the account. For sole traders, limited companies and landlords, it’s also free with Mettle if you make at least one transaction a month. FreeAgent’s Mettle page says Mettle’s eligibility rules don’t cover partnerships. Some optional add-ons still cost money. Unlimited receipt capture, for example, is £5 a month excluding VAT (10 captures a month are standard). FreeAgent says it is on HMRC’s list for MTD for VAT and MTD for Income Tax.

GOV.UK says free products are available for people with simple tax affairs, but they may have limits, such as a set number of transactions.

If you’re a sole trader or landlord

GOV.UK says you need software for MTD for Income Tax if you’re a sole trader or landlord registered for Self Assessment and your qualifying income is over:

• £50,000 for 2024 to 2025: you should have started from 6 April 2026
• £30,000 for 2025 to 2026: you start from 6 April 2027
• £20,000 for 2026 to 2027: you start from 6 April 2028

Your software must keep digital records of your self-employment and property income and expenses. It must also send quarterly updates and submit your tax return by 31 January after the tax year ends. If you’d rather keep a spreadsheet, you can use “bridging” software that connects to it.

What the vendors list for MTD for Income Tax:

• Zoho Books Free: quarterly updates and the final return.
• FreeAgent: quarterly updates and the final declaration on the sole trader and landlord plans.
• QuickBooks: “MTD for Income Tax ready” on every plan, including Sole Trader Plus at £10.
• Xero: “MTD for Income Tax ready” on Ignite.
• Sage Accounting: its page says “Making Tax Digital ready” but doesn’t say whether that covers Income Tax. Check Sage’s site.

Before you sign up, confirm the product in HMRC’s software finder, linked from GOV.UK's guide to choosing software for MTD for Income Tax.

If you’re VAT-registered

GOV.UK says all VAT-registered businesses must use compatible software to keep VAT records and file VAT returns. Spreadsheets are only fine with bridging software.

Plans that submit VAT returns, cheapest first:

• Zoho Books Free: £0, files MTD VAT returns.
• Zoho Books Standard: £12 a month, or £10 a month billed annually. Everything in Free, plus bank feeds for multiple accounts and 3 users.
• QuickBooks Simple Start: £16. Sole Trader Plus can’t submit VAT returns.
• Xero Ignite: £18, but Xero lists it with only 20 invoices and 10 bills.
• FreeAgent: VAT returns on every plan, from £19 for a sole trader.
• Sage Start: £20. Sage describes it as for VAT-registered sole traders or small businesses.

If Ignite’s 20 invoices and 10 bills won’t be enough, Xero Grow (£39) lists invoices and bills with no number attached and includes auto-reconcile, which is a £3.50 a month extra on Ignite. For a closer look at these two, read Xero vs QuickBooks.

If you run a small limited company

MTD for Income Tax doesn’t cover limited companies, so the choice comes down to VAT, payroll and year end.

• FreeAgent limited company, £33 a month: generates the data for your Final Accounts and Corporation Tax return, and files them from FreeAgent. Payroll is included.
• Zoho Books Standard, £12 a month (£10 a month billed annually): includes CT600 and Final Accounts filing, bank feeds for multiple accounts and 3 users.
• Xero: company accounts and tax is an optional extra at £120 a year excluding VAT. Payroll is £1.50 a person a month on Ignite and included for 1 person on Grow.
• Sage Start, £20 a month: payroll for 1 employee included, then £1.85 an employee a month.
• QuickBooks: payroll costs extra on every plan from Simple Start.

If an accountant already does your year end, the filing features matter less. Ask which software they use before you pick.

Extras that change the real cost

Add-on prices here exclude VAT for Xero, Sage and FreeAgent. Zoho Books’ add-on list doesn’t say either way.

• Payroll. Included on FreeAgent (sole traders and partnerships lose it if they choose cash basis) and on all Sage plans (1 employee on Start and Standard, 5 on Plus, then £1.85 an employee a month). Xero includes it for 1 person on Grow, 5 on Comprehensive and 10 on Ultimate, and charges £1.50 a person a month on Ignite. QuickBooks charges extra.
• Users. Xero says it has no per-user licence fees, but expenses and projects cost extra for each user above the number included. QuickBooks allows 1 user on its two cheapest plans, then 3, 5 and 25. Sage allows 1, 3 or unlimited. Zoho Books charges £2.50 a month for each extra user, or £2 a month billed annually.
• Receipt capture. Sage Start doesn’t include it. Standard includes 30 captures and Plus 100, then £0.20 per extra approved capture. FreeAgent includes 10 a month, or unlimited for £5 a month. Zoho Books Free includes 50 autoscans a month.
• CIS. QuickBooks lists CIS calculation and submission on every plan. Xero’s own pages disagree: Xero's Simple plan page lists automated CIS calculations and reports, while Xero's CIS returns page says CIS is available from Ignite. On Xero, filing CIS returns costs an extra £5 a month. If you’re a CIS contractor, check with Xero before choosing Simple. Sage describes Standard as the plan for CIS. Zoho Books submits CIS returns from Professional.
• Intro offers end. The 90% and 50% discounts last 6 months, so budget for the full price.

When an automation agency is worth it

Setting up any of these for a small business doesn’t usually need outside help. An agency earns its fee when you want your accounts connected to other systems: invoices created from your CRM or job system, supplier bills and receipts read automatically, or payments synced from your shop.

If invoices are the bottleneck, start with how to automate invoices and bookkeeping with AI. If you already use Xero, see how to create Xero invoices with Make and get UK VAT right.

In the UK, workflow automation is mentioned by 231 agencies and document processing by 45 agencies. Browse workflow automation agencies, or use Get matched and we’ll suggest suitable agencies at no cost.