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Self-Employed6 providers Updated Jun 2026

Best Accounting Software for Small Business UK 2026

Quick answer - our pick

FreeAgent

Best for: Sole traders and freelancers, especially anyone banking with NatWest Group or Mettle

For most UK sole traders and freelancers, the smart money move is not picking the cheapest plan - it is paying nothing at all. FreeAgent is free for life if you hold a business account with NatWest, Royal Bank of Scotland or Ulster Bank, and free with a Mettle account as long as you make at least one transaction a month. That turns a roughly £228-a-year software cost into £0 simply by choosing the right [business bank account](/compare/business-bank-accounts), and FreeAgent still handles MTD for Income Tax and Self Assessment filing directly to HMRC. If your bank does not bundle it, Xero is the safest choice for a growing business that wants the widest integrations and accountant familiarity, while QuickBooks Sole Trader Plus (£9/mo + VAT standard) is the cheapest big-name plan. But check the free-via-bank route first: there is no good reason to pay £19 a month for software you could have for nothing.

Visit FreeAgent See full comparison
Accounting software for a UK small business does three jobs: it keeps your records straight, it chases your invoices, and from April 2026 it files your numbers with HMRC under Making Tax Digital for Income Tax. The headline prices look similar across the big names - roughly £16 to £33 a month before VAT - which makes the choice feel like a coin toss. It is not a coin toss. The single biggest saving on this page has nothing to do with picking the cheapest plan: FreeAgent is free for life if you bank with NatWest, Royal Bank of Scotland or Ulster Bank, or hold a Mettle account. That nets a £228-a-year software cost to zero by choosing the right [business bank account](/compare/business-bank-accounts) - which is why we lead with it. We rank the main UK packages on the entry monthly price, whether they are ready for Making Tax Digital for Income Tax, whether there is a genuinely free route, and who each one actually suits. If you are a sole trader still under the VAT and MTD thresholds, the honest answer might be that you do not need paid software yet - no vendor will tell you that, so we will.

Entry monthly price (standard, excluding VAT)

Entry plan (standard £/mo)

FreeAgent ★

£19/mo (£0 via bank)

Xero

£16/mo

QuickBooks

£9/mo

Sage (Business Cloud Accounting)

£18/mo

FreshBooks

£16/mo

Coconut

£16.99/mo

Annual cost (standard £/yr)

FreeAgent ★

£228/yr (£0 via bank)

Xero

£192/yr

QuickBooks

£108/yr

Sage (Business Cloud Accounting)

£216/yr

FreshBooks

£192/yr

Coconut

~£204/yr

Standard recurring price the entry plan renews to after any introductory discount, excluding 20% VAT. The FreeAgent figure assumes you do NOT bank with an eligible bank; via NatWest, RBS, Ulster or Mettle it is £0. Higher tiers and add-ons (payroll, extra users) cost more. Provider names link to each platform's published fee schedule.

Full comparison

Provider Entry price (from)MTD for Income Tax ready Best for
FreeAgent£19/mo (Sole Trader) - or FREE via bankYesSole traders and freelancers, especially anyone banking with NatWest Group or Mettle
Xero£16/mo (Ignite)YesGrowing small businesses and limited companies that value the integration ecosystem
QuickBooks£9/mo (Sole Trader Plus)YesSole traders wanting the lowest big-name price, and VAT-registered small businesses
Sage (Business Cloud Accounting)£18/mo (Accounting Start)YesEstablished small businesses already inside the Sage ecosystem or wanting bundled payroll
FreshBooks£16/mo (Lite)Partial (MTD VAT)Service freelancers whose priority is invoicing and chasing late payers
Coconut£16.99/mo (Bookkeeping)Yes (MTD filing plan)Sole traders wanting a lightweight, MTD-ready app rather than full accounting software

Provider details

FreeAgent

Sole traders and freelancers, especially anyone banking with NatWest Group or Mettle

Entry price (from)£19/mo (Sole Trader) - or FREE via bank
MTD for Income Tax readyYes
Free optionFree for life with NatWest, RBS, Ulster or Mettle
Best forSole traders and freelancers, especially NatWest Group customers

Pros

  • Free for life with a NatWest, Royal Bank of Scotland or Ulster Bank business account, or a Mettle account with at least one transaction a month
  • End-to-end MTD for Income Tax: quarterly updates and the final declaration filed straight to HMRC
  • Files Self Assessment directly and shows a running estimate of the tax you owe

Cons

  • Standard price of £19/mo + VAT (sole trader) is mid-table if you are not with an eligible bank
  • Fewer third-party integrations than Xero
  • Partnership (£27/mo) and limited company (£33/mo) tiers cost more before VAT
FreeAgent pricing page Visit FreeAgent

Xero

Growing small businesses and limited companies that value the integration ecosystem

Entry price (from)£16/mo (Ignite)
MTD for Income Tax readyYes
Free optionNo (30-day trial only)
Best forGrowing small businesses wanting the widest integrations

Pros

  • The de facto small-business standard, with the broadest app marketplace and the most accountants who know it
  • Ignite plan is "MTD for Income Tax ready" and submits VAT returns to HMRC
  • Clean bank reconciliation and strong reporting as you scale up tiers

Cons

  • No free tier - the headline "80% off for 6 months" reverts to £16/mo + VAT (Ignite)
  • Entry Ignite plan caps invoices and bills; most growing firms need Grow (£37/mo) or higher
  • Prices rising from 1 September 2026 per Xero's own notice
Xero UK pricing page Visit Xero

QuickBooks

Sole traders wanting the lowest big-name price, and VAT-registered small businesses

Entry price (from)£9/mo (Sole Trader Plus)
MTD for Income Tax readyYes
Free optionNo (30-day trial only)
Best forSole traders wanting the cheapest big-name plan, and VAT-registered firms

Pros

  • Cheapest entry plan of the big three: Sole Trader Plus at £108/year (£9/mo) + VAT, standard price
  • HMRC recognised for Making Tax Digital; Sole Trader Plus is MTD for Income Tax ready
  • Simple Start (£172/year, ~£14.33/mo + VAT) adds MTD for VAT for VAT-registered businesses

Cons

  • The "90% off for the first year" hook reverts to the full annual price - treat the discount as a renewal trap, not the real cost
  • Sole Trader Plus is a single user; collaboration tiers jump in price
  • Heavy AI feature marketing can clutter the experience for a simple sole trader
QuickBooks UK pricing page Visit QuickBooks

Sage (Business Cloud Accounting)

Established small businesses already inside the Sage ecosystem or wanting bundled payroll

Entry price (from)£18/mo (Accounting Start)
MTD for Income Tax readyYes
Free optionFree Sage Sole Trader for non-VAT sole traders
Best forEstablished firms already in the Sage ecosystem

Pros

  • Long-established UK incumbent with telephone support on every plan
  • Accounting Start is Making Tax Digital ready and includes payroll for one employee plus Sage Copilot
  • Separate free Sage Sole Trader product for non-VAT-registered sole traders with simple needs

Cons

  • Accounting Start standard price of £18/mo + VAT (after 3 free months) is the priciest entry tier of the mainstream cloud options
  • Interface feels heavier than FreeAgent or QuickBooks for a one-person business
  • Stronger fit for firms already using Sage payroll or Sage 50 than for a fresh start
Sage Accounting pricing page Visit Sage (Business Cloud Accounting)

FreshBooks

Service freelancers whose priority is invoicing and chasing late payers

Entry price (from)£16/mo (Lite)
MTD for Income Tax readyPartial (MTD VAT)
Free optionNo (free trial only)
Best forFreelancers focused on invoicing and getting paid

Pros

  • Best-in-class invoicing and late-payment chasing, built for service freelancers
  • Submits MTD-compliant VAT returns to HMRC on every plan including Lite
  • Clean, friendly interface that non-accountants find easy

Cons

  • Lite standard price £16/mo (after a 50% off 3-month intro) and caps billable clients
  • Geared to invoicing rather than full UK MTD for Income Tax filing - confirm your specific need before relying on it
  • Fewer UK-specific tax features than FreeAgent or Sage
FreshBooks UK pricing page Visit FreshBooks

Coconut

Sole traders wanting a lightweight, MTD-ready app rather than full accounting software

Entry price (from)£16.99/mo (Bookkeeping)
MTD for Income Tax readyYes (MTD filing plan)
Free optionNo (14-day trial only)
Best forSole traders wanting a simple, MTD-focused mobile app

Pros

  • Built specifically for sole traders and the self-employed, simple by design
  • HMRC recognised for MTD; the MTD filing plan (£21.99/mo) sends quarterly updates and the year-end return
  • Mobile-first: categorise income and expenses as they happen

Cons

  • No free tier - bookkeeping from £16.99/mo, MTD filing from £21.99/mo
  • Fewer features than the full-fat packages (no payroll, limited integrations)
  • Best for very small, simple businesses rather than growing limited companies
Coconut pricing page Visit Coconut

Honourable mentions

Xero

Runner-up

Best for: Growing small businesses and limited companies that value the integration ecosystem

If your bank does not bundle FreeAgent and you want the broadest integration ecosystem and the accountant most likely to already know your software, Xero is the dependable choice. Just price it on the standard renewal (£16/mo + VAT for Ignite), not the six-month intro discount.

Visit Xero

QuickBooks

Runner-up

Best for: Sole traders wanting the lowest big-name price, and VAT-registered small businesses

The cheapest entry plan of the big three at £9/mo + VAT (Sole Trader Plus, standard price) and HMRC recognised for MTD. Ignore the "90% off the first year" hook and budget for the renewal price, which is what you actually pay long term.

Visit QuickBooks

Coconut

Runner-up

Best for: Sole traders wanting a lightweight, MTD-ready app rather than full accounting software

For a sole trader who wants something simpler than full accounting software, Coconut is a clean, MTD-ready mobile app. There is no free tier, so if you bank with NatWest Group, FreeAgent beats it on price.

Visit Coconut

How we picked

Entry-tier prices and MTD for Income Tax status verified directly from each vendor's UK pricing page in June 2026. All prices are the standard recurring price excluding VAT; where a provider runs an introductory discount (Xero's 80% off six months, QuickBooks' 90% off the first year, Sage and FreshBooks' free months) we quote the standard price the discount renews to, because the renewal is what you actually pay long term. 'Free option' means a genuinely free path to using the software, not a free trial. We do not earn commission on any provider listed here, and the lead recommendation is the route that costs the reader the least, not the one that pays the most. Next review scheduled September 2026.

Background

How to get FreeAgent free for life

FreeAgent is owned by NatWest Group, and the group hands it to its business banking customers at no charge. The deal, in FreeAgent's own words, is that the software is free "if you have a business current account with NatWest, Royal Bank of Scotland, Ulster Bank, for as long as you retain the account - or have a Mettle bank account and make at least one transaction a month." That is the single biggest saving on this page. FreeAgent's standard sole-trader price is £19 a month plus VAT, or around £228 a year. Open or switch to an eligible business account and that cost drops to zero, for as long as you keep the account active. You still get the full product: bank feeds, invoicing, expense tracking, MTD for Income Tax quarterly updates, and Self Assessment filing straight to HMRC. The practical move is to treat the software and the bank account as a single decision. If you are choosing or reviewing a business account anyway, an eligible NatWest Group or Mettle account effectively bundles £228 of free software into the deal. Our business bank accounts comparison covers the account side; the two pages are designed to be read together. The honest caveat: do not switch to a worse bank account purely to chase free software. If an eligible account suits your business on its own merits, the free FreeAgent is a genuine bonus. If it does not, paying £9 to £19 a month elsewhere is the better call.

MTD for Income Tax: what "compatible" actually means (and the HMRC free-software myth)

A search for "HMRC free accounting software" or "HMRC approved accounting software" turns up a lot of confusion, so let us kill the myth plainly: HMRC does not build or sell a free accounting product. There is no official HMRC software. What HMRC publishes is a list of MTD-compatible software - third-party products that have been recognised to talk to HMRC's systems. "HMRC recognised" or "HMRC approved" means the software can file correctly, not that HMRC made it or that it is free. Making Tax Digital for Income Tax began rolling out from April 2026. Sole traders and landlords with qualifying income over the threshold are required to keep digital records and send quarterly updates to HMRC through compatible software, replacing the old once-a-year Self Assessment return for that income. The deadline is the reason this purchase is no longer optional for many people - it is what turns "nice to have" software into a legal requirement. "Compatible" or "ready" on a vendor's page means the product can submit those quarterly updates and the year-end declaration to HMRC. Every paid package in the table above is MTD for Income Tax ready or recognised for MTD; FreshBooks is geared more to MTD for VAT, so confirm it covers your specific Income Tax filing need before relying on it. Two honest points the vendors gloss over. First, "free" in this market almost always means free via a bank bundle (FreeAgent) or a stripped-back free product for non-VAT sole traders (Sage Sole Trader) - not a free version of the full paid software. Second, if your income is below the MTD threshold and you are not VAT registered, you may not legally need any of this yet; a well-kept spreadsheet can still be enough until you cross a threshold. See our self-employed tax guide and how to register as a sole trader to work out where you stand.

Frequently asked questions

Is there free accounting software for a small business in the UK?
Yes, but "free" usually comes with a condition. The standout route is FreeAgent, which is free for life if you hold a business account with NatWest, Royal Bank of Scotland or Ulster Bank, or a Mettle account with at least one transaction a month. Sage also offers a separate free Sage Sole Trader product for non-VAT-registered sole traders with simple needs. Beyond those, the big names (Xero, QuickBooks, FreshBooks) offer only free trials, not free plans. There is no permanently free version of the full paid software from the major vendors.
What accounting software is recommended or approved by HMRC?
HMRC does not recommend a single product, and it does not publish a "free HMRC software" package - that is a common myth. What HMRC publishes is a list of MTD-compatible software: third-party products recognised to file correctly with its systems. FreeAgent, Xero, QuickBooks, Sage and Coconut are all HMRC recognised for Making Tax Digital. "HMRC recognised" or "HMRC approved" means the software can submit your figures correctly, not that HMRC built it or that it is free.
Is QuickBooks free, and is there a cheaper alternative?
No, QuickBooks is not free - it offers a 30-day trial, then the standard price applies. Its cheapest plan is Sole Trader Plus at £108 a year (£9 a month) plus VAT. The "90% off the first year" promotion reverts to the full annual price, so budget for the renewal. The cheapest genuine alternative is FreeAgent free via a NatWest Group or Mettle bank account, which costs nothing if you bank with an eligible provider. Coconut (from £16.99/mo) is a simpler sole-trader option.
What is the best accounting software for sole traders?
For most sole traders, FreeAgent is the best value because it is free for life with a NatWest, Royal Bank of Scotland, Ulster Bank or Mettle account, and it handles MTD for Income Tax and Self Assessment filing directly. If your bank does not bundle it, QuickBooks Sole Trader Plus is the cheapest big-name plan at £9 a month plus VAT, and Coconut is a clean, MTD-ready mobile app from £16.99 a month. Pick on price and your bank first, features second.
Do I actually need accounting software for my small business?
Not always. If you are a sole trader below the VAT registration threshold and below the Making Tax Digital for Income Tax threshold, a well-kept spreadsheet can still be enough, and no vendor will tell you that. But once your qualifying income crosses the MTD for Income Tax threshold (rolling out from April 2026), or you register for VAT, you are legally required to keep digital records and file through MTD-compatible software. At that point the software stops being optional. Our self-employed tax guide explains where the thresholds bite.
Which software is MTD for Income Tax compatible?
All the paid packages in our table are MTD for Income Tax ready or HMRC recognised for MTD: FreeAgent, Xero, QuickBooks, Sage and Coconut all submit quarterly updates and the year-end declaration to HMRC. FreshBooks is geared more towards MTD for VAT, so confirm it covers your specific Income Tax filing need first. The full official list of compatible products is published by HMRC on gov.uk - the vendor marketing pages mirror it.
What is the easiest accounting software for a small business?
For a one-person business, FreeAgent and QuickBooks Sole Trader Plus are the most approachable, and Coconut is the simplest of all if you mainly want to track income and expenses on your phone and file MTD. FreshBooks is the easiest for invoicing-led freelancers. Xero and Sage are more powerful but feel heavier for a simple sole trader; they make more sense once you are a growing limited company or already work with an accountant who uses them.
Should I pick the software or the bank account first?
For a UK small business, look at the bank account and the software together. Because FreeAgent is free for life with a NatWest Group or Mettle business account, the cheapest overall stack is often an eligible bank account plus the free software bundled with it - around £228 a year saved versus paying for Xero or Sage separately. Just do not switch to a worse bank purely for free software; if the account suits you on its own merits, the free FreeAgent is a genuine bonus. See our business bank accounts comparison.

Disclosure: Some links on this page may be affiliate links, which means we receive a small commission if you sign up. This never affects the rankings or which platforms we recommend. We only feature platforms that meet our editorial standards.