Xero vs Sage: which is better for UK sole traders?
Quick answer
Sage Sole Trader is the better choice if you are not VAT registered and want to pay little or nothing, thanks to its free plan. Xero (from £7 a month) is better if you expect to grow, register for VAT, work under CIS or hire staff, because you can move up its plans without changing software.
Xero and Sage are both household names in UK accounting, and both work with Making Tax Digital (MTD) for Income Tax. For sole traders and landlords, the most relevant Sage product is Sage Sole Trader. It is simple and has a free plan. Xero is a fuller package that grows with your business. We compared them based on our review of features, pricing and user ratings, with prices checked in October 2026.
Where VAT or CIS comes up, we also mention Sage Accounting, Sage's separate range for businesses that need more.
Xero vs Sage 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 |
|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
| Sage Sole Trader | Free plan, or £7/month | Yes | Yes (with limits) | Yes (Sage Sole Trader and Landlord) | On Sage Accounting plans | Sage Accounting Standard | Yes | 4.7 iOS / 4.7 Android | Non-VAT sole traders who want a free, well-known brand | 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.
Xero vs Sage head to head
| Feature | Xero | Sage Sole Trader | Winner |
|---|---|---|---|
| Price | From £7 a month (Simple) | Free, or £7 a month | Sage |
| Free option | No, 1 month free trial | Yes, with limits | Sage |
| MTD for Income Tax | Yes | Yes | Tie |
| Landlords | Yes | Yes | Tie |
| VAT returns | From Ignite (£18) | Sage Accounting only (from £20) | Xero |
| CIS | Yes | Sage Accounting Standard (£43) | Xero |
| Bank feeds | Yes | Yes | Tie |
| Mobile app rating | 4.8 iOS / 4.5 Android | 4.7 iOS / 4.8 Android | Tie |
| Accountant familiarity | Very widely known | Widely known brand | Tie |
| Our score | 4.6/5 | 4.4/5 | Xero |
Prices are monthly, ex VAT, checked in October 2026. Accountant familiarity is our general view, not survey data.
Is Xero or Sage cheaper?
Sage is cheaper to start, because Sage Sole Trader has a free plan. Its paid plan costs £7 a month, the same as Xero Simple.
- Xero: Simple £7, Ignite £18, Grow £39, Comprehensive £55, Ultimate £70 a month, all ex VAT. Promotional discounts often run for new customers.
- Sage: Sage Sole Trader Free £0 (limits on invoices and auto-categorised transactions), Sage Sole Trader £7 a month. Sage Accounting Start £20, Standard £43 a month ex VAT.
Sage's free plan limits how many invoices you can send and how many transactions it sorts automatically each month. If you invoice a lot, plan on the £7 plan.
Costs change once you need more. For VAT returns, Xero Ignite is £18 a month and Sage Accounting Start is £20. For CIS, Xero lists support, while Sage puts it on Sage Accounting Standard at £43 a month. Both run offers for new customers, so check live prices before you buy.
Which is better for MTD and landlords?
Both are on HMRC's list of compatible software, and both send the quarterly updates HMRC needs. These are due by 7 August, 7 November, 7 February and 7 May (GOV.UK).
Both also suit landlords. Sage Sole Trader covers property income on its free and paid plans. Xero Simple covers it from £7 a month.
An example. Ben (an illustration, not a real customer) is a self-employed personal trainer. In 2025 to 2026 he earns £27,000 from training and £6,000 in rent from a flat he owns. His qualifying income is £33,000, so he joins MTD from 6 April 2027 (GOV.UK). Ben is not VAT registered and does not plan to hire. Sage Sole Trader would cover him for free or £7. If he planned to open a gym and take on staff, Xero would be the better long-term home.
See our MTD for landlords guide for how rental income is counted.
Is Xero or Sage easier to use?
We judge this on features and ratings, not hands-on testing. Both apps are well rated. Xero scores 4.8 on iOS and 4.5 on Android. Sage's Sole Trader app scores 4.7 and 4.8.
Sage Sole Trader is built to be simple. It focuses on recording income and expenses and filing with HMRC. Xero has more features, including paths to VAT, payroll and CIS on higher plans. More features can mean more to learn, but you will not need to switch software as you grow. Bank feeds (your transactions flow in automatically) are included with both.
Choose Xero if
- you expect to register for VAT, hire or grow
- you work under CIS
- your accountant already uses Xero
- you want one product that can grow with you
Read our full Xero review.
Choose Sage if
- you are not VAT registered
- you want a free plan from a big brand
- you want a simple app focused on MTD
- you are a landlord with a straightforward setup
Read our full Sage review.
Who should choose neither?
Who should not choose Xero or Sage
- NatWest, RBS, Ulster Bank or Mettle customers, who can use FreeAgent for free. See FreeAgent vs Xero.
- People who drive a lot and want GPS mileage tracking, who may prefer QuickBooks. See Xero vs QuickBooks.
- Spreadsheet users who would rather keep their spreadsheet and add bridging software.
- Anyone with qualifying income of £20,000 or less, who is currently exempt (GOV.UK).
Frequently asked questions
Is Xero better than Sage?
For growing businesses, usually yes. Xero scores 4.6 out of 5 on our site against 4.4 for Sage Sole Trader, and it covers VAT and CIS on higher plans of the same product. For a simple non-VAT sole trader, Sage Sole Trader's free plan is better value.
Is Sage cheaper than Xero?
On the entry plans, yes. Sage Sole Trader has a free plan, and its paid plan is £7 a month, the same as Xero Simple. Once you need VAT returns, Xero Ignite (£18) is slightly cheaper than Sage Accounting Start (£20). Prices were checked in October 2026.
Which is better for landlords, Xero or Sage?
Both cover rental income for MTD. Sage Sole Trader handles landlords on its free and paid plans, while Xero covers them from £7 a month. If your income is mostly rent from several properties, also look at dedicated landlord tools in our landlord software guide.
Does Sage do CIS?
Yes, but not on Sage Sole Trader. CIS is on Sage Accounting Standard, which costs £43 a month ex VAT. Xero lists CIS support. Your software should record CIS deductions, so check details with the provider, HMRC or an accountant.
Can I move from Sage to Xero later?
Yes. Many people switch software as their business changes. The tidiest time is the start of a tax year or quarter, so each period's records sit in one place. Keep a copy of your old records.
Do I need MTD software if I earn £25,000?
Not yet, if £25,000 is your total gross self-employment and property income. The £30,000 threshold applies from 6 April 2027. From 6 April 2028, anyone over £20,000 must join. Use our Do I need MTD? checker.
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.