Sage 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. Sage shows its 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, both gave 90% off for the first 6 months. On Sage that made Start £2, Standard £4.30, Plus £5.90 and Sole Trader £0.70 a month. Sage also offered 1 month free as an alternative to the discount. To get Xero’s discount, use the code on its pricing page. That page also shows “get one month free”, but Xero's offer and trial terms say this offer is only for certain new customers in the United States and New Zealand.
• Extra captures. On Sage Standard and Plus, each receipt or invoice capture above the included number costs £0.20. Start doesn’t include receipt capture.
• Payroll limits. Sage says each Accounting plan limits how many employees you can add, so ask Sage what the limit is on yours.

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, extra captures and payment fees.

The Xero Ignite figures only work if you stay within 20 invoices and 10 bills. Xero also sells company accounts and tax as an option at £120 a year.

Making Tax Digital

MTD for VAT. GOV.UK's MTD for VAT software page says all VAT-registered businesses should now be signed up for MTD for VAT and must use compatible software to keep VAT records and file VAT returns. Sage lists “calculate and submit VAT” on every Accounting plan. Xero lists VAT returns from Ignite. Sage Sole Trader and Xero Simple are for businesses that aren’t VAT-registered.

MTD for Income Tax. Under it, sole traders and landlords keep digital records and send quarterly updates to HMRC. According to GOV.UK's guide to when you need MTD for Income Tax, you need to use it from 6 April 2026 if your qualifying income was over £50,000 in the 2024 to 2025 tax year. The date moves to 6 April 2027 if it was over £30,000 in 2025 to 2026, and to 6 April 2028 if it was over £20,000 in 2026 to 2027. You still send a Self Assessment return.

Sage’s Accounting pricing page lists “Making Tax Digital ready” on Start but doesn’t say whether that covers MTD for Income Tax. If you’re VAT-registered and also need MTD for Income Tax, ask Sage, or search for the product in the software finder linked from GOV.UK's guide to choosing MTD for Income Tax software. It’s worth doing the same for Xero before you rely on it.

Which one is right for you?

Go through these in order. The first line that fits is a good place to start.

1. Your accountant already uses one of them. Start there. It’s usually easier for them to check your books.
2. You’re not VAT-registered and send 5 invoices a month or fewer. Try Sage Sole Trader Free.
3. You’re not VAT-registered and send more. Sage Sole Trader and Xero Simple are both £7. Choose Xero Simple if you want MTD for Income Tax listed on the plan and send no more than 10 invoices. Choose Sage Sole Trader if you send more invoices.
4. You’re VAT-registered, work alone and send lots of invoices. Sage Start, at £20 with unlimited invoices.
5. You’re VAT-registered, work alone, and stay within 20 invoices and 10 bills. Xero Ignite, at £18.
6. 2 or more people need to log in. Compare Xero Grow (£39) with Sage Standard (£43, 3 users) or Sage Plus (£59, unlimited users).
7. You have 3 or more people on payroll. Work out the year cost with the table above. In our 5-person example, Xero Grow came out lowest at full price.
8. You trade in other currencies. Look at Sage Plus (£59) or Xero Comprehensive (£55). If you hold stock, Sage lists stock and inventory management only on Plus. Xero’s Simple plan page lists inventory among the features in every plan, so ask Xero what the limits are on your plan.
9. You need other apps connected. Check that your shop, CRM or payment tool connects to the one you pick before you sign up.

Switching from one to the other

1. Pick a clean start date, such as the start of a VAT quarter or your financial year, so each return sits in one system.
2. Check what you can move for free. Movemybooks moves data from Sage Accounting into Xero Grow, Comprehensive or Ultimate, and from Xero Grow, Comprehensive or Ultimate into Sage Accounting Standard or Plus. It says Xero and Sage pay for a standard conversion, which covers the current accounting year to date and all of the previous one. Extra years cost more. An assisted move costs an extra £245 plus VAT.
3. Know what won’t match exactly. Movemybooks says it can’t create an exact copy and you may need to tidy up afterwards, though it says balances should match.
4. Or import the basics yourself. Sage says you can import your chart of accounts, contacts, products and services and bank statements with CSV templates.
5. Reconnect your bank feeds and payroll. Check opening balances and payroll year-to-date figures with your accountant.
6. Keep your old records. Export what you need before you cancel. Sage says you can cancel at any time with no long-term contract. Xero renews monthly until you cancel.
7. Reconnect your apps and automations. Anything built on the old system stops working once you leave it.

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’re also looking at other tools, see FreeAgent vs Xero, Xero vs QuickBooks and our best accounting software for UK small businesses. If you pick Xero, see how to create Xero invoices with Make and get UK VAT right and connecting Shopify to Xero. For either one, see our guide to automating invoices and bookkeeping with AI.

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.