Xero review: is it the right MTD software for you?

Xero is one of the best-known names in UK accounting software. It's popular with accountants, and it now offers a cheap plan made for sole traders and landlords who must follow Making Tax Digital (MTD) for Income Tax. In this review we look at what it costs, how well it handles MTD, and who it suits. We checked every price on Xero's own website in October 2026.

If you're not sure whether MTD applies to you yet, our Do I need MTD? checker will tell you your start date in about 30 seconds.

Price: how much does Xero cost?

Simple £7, Ignite £18, Grow £39, Comprehensive £55, Ultimate £70 a month, all ex VAT. Promotional discounts often run for new customers.

Prices checked on Xero's website in October 2026, ex VAT. Xero often runs discounts for new customers, and these change, so always confirm the live price.

Most sole traders and landlords will only need Simple at £7 a month. The big jump comes if you are VAT registered, because VAT returns start on Ignite. Note that Ignite recently went up to £18 a month, so older reviews may show a lower price. There is no free plan, but you get a one-month free trial.

Is Xero good for MTD for Income Tax?

Yes. Xero supports MTD for Income Tax for both self-employment and UK property income. It keeps your digital records and sends your quarterly updates to HMRC. Those 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).

Here's an illustration. Priya is a self-employed graphic designer. Her turnover in 2025 to 2026 was £38,000, so she must use MTD from 6 April 2027, because the threshold for that year is £30,000 (GOV.UK). She isn't VAT registered, so Xero Simple at £7 a month covers what she needs. If her business grows and she registers for VAT, she can move to Ignite and keep all her records in one place.

A small reassurance: HMRC won't give penalty points for late quarterly updates in the 2026 to 2027 tax year. That gives new users time to settle in. Our MTD guide for sole traders explains the rules step by step.

Is Xero good for landlords?

Yes, on paper it's a solid choice. Xero supports property income for MTD, and the Simple plan is aimed at landlords as well as sole traders. It suits landlords who also run a business, because you can track both types of income in one place.

That said, Xero is general accounting software. It doesn't focus on tenancies, rent schedules or safety certificates. If you have several properties and want those extras, software built for landlords may suit you better. See our best landlord software guide for options such as Hammock and Landlord Vision.

Is Xero easy to use?

Based on its features and user ratings, Xero is one of the easier options for beginners. The dashboard shows your bank balance, money owed to you and bills to pay. The app lets you check figures and add receipts on the go. Its high app ratings suggest most users get on well with it.

There is still a learning curve if you have never used accounting software. The first few weeks are about setting up categories and connecting your bank. After that, most of the work is checking that each transaction is sorted correctly. If you already have an accountant, ask whether they use Xero, because many do and they can help you set it up.

Xero key features

• Bank feeds: yes. Bank feeds mean your bank transactions flow into Xero automatically, so you don't type them in.
• Invoicing: you can create and send invoices to customers and see when they're paid.
• Receipts: you can snap receipts on your phone and attach them to expenses.
• VAT returns: yes, but not on Simple. VAT starts on Ignite.
• CIS: yes. CIS (the Construction Industry Scheme) is the system where contractors take tax off subcontractors' pay. Your software should record CIS deductions, but check the details with HMRC or an accountant.
• Mobile app: rated 4.8 on the UK App Store and 4.5 on Google Play in October 2026.
• Accountant access: many UK accountants already use Xero, which can make working with one easier.

Xero pros and cons

Xero compared with alternatives

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.

QuickBooks costs a little more at £10 a month, but its phone app is strong for receipts and mileage. Read our QuickBooks review or the head-to-head Xero vs QuickBooks.

FreeAgent scores the same as Xero, and it's free with some bank accounts. See FreeAgent vs Xero. Sage Sole Trader has a free plan with limits, which may be enough if your affairs are simple. See Xero vs Sage for the details.

How we reviewed Xero

This is a desk review. We looked at Xero's features and plans as the provider describes them, and checked every price on Xero's UK website in October 2026. We confirmed Xero appears on HMRC's list of software for MTD for Income Tax (GOV.UK). We also checked its ratings on the UK App Store and Google Play. We have not done hands-on testing, so our view is based on features, pricing and user ratings. Xero pays us a commission if you sign up through our links, but this does not affect our score. Read how we test.

Final verdict: is Xero worth it?

For most sole traders, yes. Xero gives you MTD for Income Tax from £7 a month, a well-rated app and plenty of room to grow. Watch the jump in price if you need VAT returns. If you bank with NatWest, RBS, Ulster Bank or Mettle, check FreeAgent first, because it may cost you nothing. Otherwise, Xero is one of the safest choices you can make. It scores 4.6 out of 5.

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