FreeAgent vs Xero: which is better for MTD?
Quick answer
Pick FreeAgent if you bank with NatWest, RBS, Ulster Bank or Mettle, because it is free for you and includes VAT returns. Pick Xero if you would be paying full price, since Xero Simple is £7 a month against FreeAgent's £19, or if you need CIS or plan to grow and hire.
FreeAgent and Xero are two of the highest scoring MTD tools on our site. Both get 4.6 out of 5. Both keep digital records and send your quarterly updates to HMRC under Making Tax Digital (MTD) for Income Tax. So the choice usually comes down to one question: where do you bank? We compared them based on our review of features, pricing and user ratings, with prices checked in October 2026.
One thing to know up front. FreeAgent pays us nothing, while Xero pays us a commission if you sign up through our links. That has no effect on our verdict.
FreeAgent vs Xero at a glance
| Software | Price (checked October 2026) | MTD for Income Tax | Free tier | Landlord features | VAT returns | CIS | Bank feeds | App rating | Best for | Link |
|---|---|---|---|---|---|---|---|---|---|---|
| FreeAgent | From £10/month (Landlord) or £19/month (Sole trader). Free with NatWest, RBS, Ulster Bank or Mettle | Yes | Yes, with eligible bank | Yes | Yes | Not listed | Yes | 4.8 iOS / 4.7 Android | NatWest, RBS, Ulster Bank and Mettle customers (free) | Visit site |
| Xero | From £7/month (Simple) | Yes | No (1 month free trial) | Yes | Yes (not on Simple) | Yes | Yes | 4.8 iOS / 4.5 Android | Sole traders who expect to grow, register for VAT or hire | Visit site |
Prices exclude VAT unless stated and were checked on each provider's website in October 2026. Introductory offers change often, so always confirm the live price. App ratings are from the UK App Store and Google Play in October 2026.
FreeAgent vs Xero head to head
| Feature | FreeAgent | Xero | Winner |
|---|---|---|---|
| Price | £19 a month (Sole trader), £10 (Landlord) | From £7 a month (Simple) | Xero at full price |
| Free option | Yes, with NatWest, RBS, Ulster Bank or Mettle | No, 1 month free trial | FreeAgent |
| MTD for Income Tax | Yes | Yes | Tie |
| Landlords | Yes (Landlord plan) | Yes | Tie |
| VAT returns | Yes | Yes, but not on Simple | FreeAgent |
| CIS | Not listed | Yes | Xero |
| Bank feeds | Yes | Yes | Tie |
| Mobile app rating | 4.8 iOS / 4.7 Android | 4.8 iOS / 4.5 Android | FreeAgent (just) |
| Accountant familiarity | Well known | Very widely known | Xero |
| Our score | 4.6/5 | 4.6/5 | Tie |
Prices are monthly, ex VAT, checked in October 2026. Accountant familiarity is our general view, not survey data.
Is FreeAgent cheaper than Xero?
Only if you bank with the right provider. FreeAgent is free with an eligible NatWest, RBS or Ulster Bank business account. It is also free with Mettle if you make at least one transaction a month. For those customers, nothing else in this price range comes close.
Without that deal, Xero is far cheaper to start. Xero Simple is £7 a month, while FreeAgent's sole trader plan is £19. Over a year that is £84 against £228, ex VAT.
- FreeAgent: Landlord £10, Sole trader £19, Partnership £27 a month, ex VAT. Free with an eligible NatWest, RBS or Ulster Bank business account, or Mettle with at least one transaction a month.
- Xero: Simple £7, Ignite £18, Grow £39, Comprehensive £55, Ultimate £70 a month, all ex VAT. Promotional discounts often run for new customers.
There is a catch with Xero Simple. It does not do VAT returns, so a VAT-registered sole trader would need Ignite at £18. That narrows the gap with FreeAgent's £19 plan, which includes VAT. Xero often runs offers for new customers, so check the live price.
Which is better for MTD and landlords?
Both are fully set up for MTD for Income Tax. Quarterly updates are due by 7 August, 7 November, 7 February and 7 May, and your tax return is still due by 31 January (GOV.UK).
For landlords, FreeAgent has a dedicated Landlord plan at £10 a month. Xero Simple at £7 covers rental income too, alongside any self-employment.
An example. Tom (an illustration, not a real customer) is a self-employed plumber with a NatWest business account. In 2025 to 2026 he invoices £36,000 before expenses. That is over £30,000, so he must use MTD from 6 April 2027 (GOV.UK). Because of his bank, FreeAgent costs him nothing, including VAT returns if he registers later. If Tom banked elsewhere, Xero Simple at £7 would be the cheaper start.
See our best landlord software guide if your income is mainly rent.
Is FreeAgent or Xero easier to use?
We judge this on features and ratings, not hands-on testing. Both apps are rated 4.8 on iOS. On Android, FreeAgent scores 4.7 and Xero 4.5.
FreeAgent shows a running tax estimate, so you always know roughly what you will owe. That is reassuring if a tax bill makes you nervous. Xero's Simple plan is designed for sole traders and landlords, and you can move up to plans with payroll and CIS without changing software. On Xero's cheapest plans, automatic bank reconciliation is a paid add-on.
Choose FreeAgent if
- you have an eligible NatWest, RBS, Ulster Bank or Mettle account
- you want a running estimate of your tax bill
- you are VAT registered and want VAT on your main plan
- you are a landlord happy with a £10 dedicated plan
Read our full FreeAgent review.
Choose Xero if
- you bank elsewhere and want the cheapest start (£7 a month)
- you are a CIS subcontractor
- you plan to grow, hire or move to a limited company
- your accountant already uses Xero
Read our full Xero review.
Who should choose neither?
Who should not choose FreeAgent or Xero
- People who want a free plan without switching bank. Clear Books and Sage Sole Trader have free MTD plans. See our free MTD software guide.
- Drivers and tradespeople who mainly want mileage tracking. Compare Xero vs QuickBooks.
- Anyone whose qualifying income is £20,000 or less, who is currently exempt (GOV.UK).
Frequently asked questions
Is FreeAgent better than Xero?
It depends on your bank. FreeAgent is free with an eligible NatWest, RBS, Ulster Bank or Mettle account, which makes it hard to beat. If you would pay full price, Xero Simple at £7 a month is much cheaper than FreeAgent's £19 sole trader plan. We score both 4.6 out of 5.
Is FreeAgent really free with NatWest?
Yes, with an eligible NatWest, RBS or Ulster Bank business account. It is also free with Mettle if you make at least one transaction a month. Check the bank's current terms before you rely on it. Read our FreeAgent review for details.
Does FreeAgent do CIS?
CIS is not listed as a feature on FreeAgent's plans when we checked. If you are a CIS subcontractor, Xero or QuickBooks list CIS support. Your software should record CIS deductions, so check with the provider, HMRC or an accountant before you choose.
Which is better for landlords, FreeAgent or Xero?
Both cover rental income for MTD. FreeAgent has a dedicated Landlord plan at £10 a month. Xero Simple at £7 a month covers both self-employment and property income. If you have both kinds of income, check which FreeAgent plan covers you before signing up.
Why does Tax Software Compared recommend FreeAgent when it pays you nothing?
Because it is very good, and free for many people. FreeAgent has no affiliate programme, so we earn nothing if you choose it. Our scores are based on features, price and ratings, not commission. See how we test.
Do I need MTD software yet?
You need it from 6 April 2027 if your qualifying income in 2025 to 2026 is over £30,000. The threshold falls to £20,000 from 6 April 2028. Use our Do I need MTD? checker to see your date.
This page is general information, not personal tax, legal or financial advice. Tax rules can change and your situation may differ. For advice on your own affairs, speak to a qualified accountant or tax adviser, or check GOV.UK.