FreeAgent vs Xero UK (2026): prices, payroll and MTD

UK prices compared

All prices are full prices per month, excluding VAT.

Notes on these figures:

• VAT. FreeAgent says “all prices excl. 20% VAT”. Xero says “all prices are in GBP per month and exclude VAT”. If you can’t reclaim VAT, add 20%.
• Intro offers. When we checked, FreeAgent gave 50% off for the first 6 months on monthly billing, or 50% off the first year on annual billing. Xero gave new UK customers 90% off the base plan for 6 months with the code on its pricing page. The Xero offer doesn’t apply to add-ons or usage fees.
• Free trials. FreeAgent offers a 30-day free trial and says no payment card is needed. Xero’s pricing page offers one month free; see its site for the terms.
• FreeAgent for free. FreeAgent is free with a NatWest, Royal Bank of Scotland or Ulster Bank business current account, for as long as you keep it. For sole traders, limited companies and landlords, it also lists Mettle accounts with at least one transaction a month. FreeAgent's Mettle page says Mettle’s eligibility rules don’t cover partnerships. Optional add-ons can still cost extra.
• How FreeAgent compares itself. FreeAgent’s own comparison page sets its plans against Xero Comprehensive (£55). Which Xero plan is the fair match depends on what you need, so below we compare by business type.

What a year costs at full price

These are full prices for 12 months, excluding VAT, from the pricing pages above. They leave out intro offers, add-ons and payment fees.

On Xero Ignite, a limited company with 1 person on payroll would pay £354 a year with company accounts and tax, but Ignite lists only 20 invoices and 10 bills. If your accountant already does your year-end filing, take £120 off the Xero figures.

Payroll

• FreeAgent. Its payroll page says you can add as many employees as you need at no extra cost. It runs monthly payroll, works out PAYE and National Insurance, and sends Real Time Information (RTI) to HMRC. Its pricing page says payroll and stock aren’t included if you choose the cash basis rather than the traditional (accruals) basis. According to FreeAgent's guide to choosing an accounting basis, the cash basis is an option only for sole traders, partnerships and unincorporated landlords, not for limited companies or LLPs.
• Xero. Payroll is £1.50 a person a month on Ignite. Grow includes 1 person, Comprehensive 5 and Ultimate 10. Each extra person costs £1.50 a month on Ignite, Grow and Comprehensive, and £1 on Ultimate.

If you pay yourself a director’s salary and have a few staff on payroll, this is where FreeAgent’s single price makes the biggest difference.

Making Tax Digital and tax returns

MTD for Income Tax means sole traders and landlords keep digital records and send quarterly updates to HMRC using recognised software. According to GOV.UK's Making Tax Digital for Income Tax guidance, you need to use it from 6 April 2026 if your qualifying income was over £50,000 in the 2024 to 2025 tax year, from 6 April 2027 if it was over £30,000 in 2025 to 2026, and from 6 April 2028 if it was over £20,000 in 2026 to 2027. GOV.UK says partnerships will also need to use it in the future and that it will set out the timeline later.

FreeAgent says it is on HMRC’s list of compatible software for both MTD for Income Tax and MTD for VAT. For Xero’s details, see Xero's Making Tax Digital page. Whichever you choose, confirm the product in HMRC’s software finder before you rely on it.

Bank feeds, receipts and automation

These are the features that cut down on typing. Here’s what each one lists:

• Bank feeds. FreeAgent includes bank feeds and smart categorisation, which explains new transactions based on ones you’ve explained before. Xero says its direct bank feeds cost nothing extra for most customers, but some UK banks charge fees that Xero passes on.
• Receipts and bills. FreeAgent’s Smart Capture handles 10 receipts and bills per calendar month, or unlimited for £5 a month excluding VAT. Xero includes smart document capture on every plan (receipts only on Simple), and Hubdoc on every plan. Ignite lists 10 bills, and Grow lists no bill number.
• Reconciling. Xero includes auto-reconcile from Grow. On Ignite it’s £3.50 a month extra.
• Getting paid. FreeAgent connects to Tyl by NatWest, Stripe, GoCardless and PayPal. Xero lists online invoice payments on every plan, with payment fees.
• Connecting other tools. Both have connectors on Zapier (Zapier's FreeAgent integrations, Zapier's Xero integrations) and Make (Make's FreeAgent app documentation, Make's Xero app documentation). Xero also has an n8n integration (n8n's Xero integration). To choose between them, see our n8n vs Make vs Zapier guide.

Projects, currencies, users and support

• Projects and time. FreeAgent lists projects and time tracking in its plans. On Xero, tracking time and costs for projects comes with Ultimate (£70), for 10 users.
• Multiple currencies. Xero includes them from Comprehensive (£55). FreeAgent’s comparison page lists multi-currency support for foreign currency bank transactions.
• Users. Xero says it has no per-user licence fees, although expenses and projects are priced per user above the included number. FreeAgent’s pricing page doesn’t give a user limit.
• Support. FreeAgent’s pricing page says its support accountants are UK-based and available online or by phone.
• CIS. 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. FreeAgent’s small business pricing page doesn’t list CIS. Its CIS page for accountants describes recording CIS income and viewing monthly CIS300 return information, so ask FreeAgent whether it covers what you need.

Switching from one to the other

• Pick a clean start date, such as the start of a VAT quarter or your financial year, so each return sits in one system.
• Check how each bills. FreeAgent says there’s no contract and you can cancel any time. Xero renews monthly until you cancel. If you upgrade, you can only move to a cheaper plan after 1 month.
• Move the basics first. Bring over customers, suppliers and opening balances, then reconnect your bank feeds. Check the balances with your accountant.
• Keep your old records. Export what you need before you close the old account.
• Reconnect your apps and automations. Anything built on the old system will stop working.

When to get help

You can set up either one yourself. Help is worth paying for if you want to move years of records, connect your accounts to your shop, CRM or job system, or automate invoices and bill capture. If you want orders or jobs to turn into invoices automatically, see how to create Xero invoices with Make and get UK VAT right and our guide to automating invoices and bookkeeping with AI. For more options, see our best accounting software for UK small businesses and Xero vs QuickBooks guides.

In our directory, Xero is mentioned by 28 agencies. In the UK, workflow automation is mentioned by 231 agencies and document processing, which covers reading invoices and receipts, by 45 agencies. Browse workflow automation agencies or document processing agencies, or use Get matched and we’ll suggest suitable agencies at no cost.