Key takeaways
- FreeAgent charges by business type: £19 a month for sole traders, £27 for partnerships and £33 for limited companies, plus VAT, checked on 6 November 2026.
- FreeAgent is free while you keep a NatWest, Royal Bank of Scotland or Ulster Bank business current account; sole traders can also qualify through Mettle.
- Xero charges by plan: Simple at £7 a month for non-VAT-registered sole traders and landlords, then Ignite £18, Grow £39, Comprehensive £55 and Ultimate £70, plus VAT.
- FreeAgent lets sole traders and limited company directors file Self Assessment returns direct to HMRC from the software.
- Both FreeAgent and Xero support Making Tax Digital for VAT and Income Tax for sole traders.
- Xero includes Hubdoc receipt capture on its plans; FreeAgent sells unlimited Smart Capture for £5 a month.
- FreeAgent was founded in Edinburgh in 2007 and has been owned by NatWest Group since early 2018.
FreeAgent and Xero are both cloud accounting packages that UK freelancers use for invoicing, bank feeds, VAT and Making Tax Digital. FreeAgent prices by business type, from £19 a month for a sole trader, and is free with a NatWest, RBS or Ulster Bank business account; Xero prices by plan, from £7 a month for its Simple plan (all excluding VAT, checked 6 November 2026). Neither is better for everyone, so this page sets out the facts and who each suits.
How do FreeAgent and Xero compare at a glance?
The table uses each provider’s own pages, checked on 6 November 2026. Prices are regular monthly prices excluding VAT, without introductory offers.
| FreeAgent | Xero | |
|---|---|---|
| Sole trader price | £19 | £7 (Simple) or £18 (Ignite) |
| Limited company price | £33 | £18 to £70 by plan |
| Free option | With NatWest, RBS, Ulster or Mettle | No |
| Self Assessment filing | Yes, direct to HMRC | Check with Xero |
| MTD for Income Tax | Yes | Yes |
| Receipt capture | Smart Capture, £5 a month unlimited | Hubdoc included |
| Payroll | Included | 1 to 10 people by plan |
How much does each cost?
FreeAgent charges one price per business type, with every feature included. Xero charges by plan, and features and limits rise with the price.
FreeAgent lists these regular prices on its pricing page:
- Unincorporated landlord: £10 a month
- Sole trader: £19 a month, or £190 a year
- Partnership or LLP: £27 a month
- Limited company: £33 a month, or £330 a year
New customers get 50% off for the first six months on monthly billing, or the first year on annual billing.
Xero lists Ignite at £18, Grow at £39, Comprehensive at £55 and Ultimate at £70 a month on its UK pricing page. Xero Simple costs £7 a month after an introductory £0.70 for 6 months. It is for non-VAT-registered businesses and is meant for up to 10 invoices. Our Xero pricing guide covers add-ons.
When is FreeAgent free?
FreeAgent is free while you keep a business current account with NatWest, Royal Bank of Scotland or Ulster Bank. Sole traders and unincorporated landlords can also get it free with a Mettle account that has at least one transaction a month. FreeAgent has been owned by NatWest Group since early 2018, according to FreeAgent’s company page, which explains the bank link. Our Mettle review covers that account.
How do the features differ for freelancers?
Both packages cover the basics: invoices, bank feeds, expenses, mileage and VAT returns. The differences are in tax filing and limits.
- Self Assessment. FreeAgent’s features page says most of your Self Assessment return is pre-filled and you can file it direct to HMRC. Xero’s plan pages we checked did not say whether individuals can file the final return themselves, so ask Xero before relying on it.
- Tax estimate. FreeAgent shows a real-time view of the tax you owe and when it is due.
- Invoice limits. Xero Simple is meant for up to 10 invoices and Ignite allows 20. FreeAgent sets no invoice limit on its pricing page.
- Receipts. Xero includes Hubdoc. FreeAgent sells Smart Capture Unlimited for £5 a month.
- Year-end for companies. FreeAgent’s features page lists final accounts and Corporation Tax filing. Xero sells company accounts and tax for £120 a year plus VAT.
- Accountant links. Both have large accountant networks; ask yours which they use.
Making Tax Digital support
Both packages support MTD for VAT and MTD for Income Tax. MTD for Income Tax applies from 6 April 2026 to sole traders and landlords with qualifying income over £50,000, and from 6 April 2027 to those over £30,000. Check any product in HMRC’s software finder, linked from its compatible software guidance. Our MTD checker shows when you join.
Which suits you?
Use this list to match your situation to the software. It is a guide to fit, not a verdict.
- If you bank with NatWest, RBS or Ulster Bank: FreeAgent costs nothing while you keep the account.
- If you are a non-VAT-registered sole trader with few invoices: Xero Simple at £7 a month is the lowest regular paid price of the two.
- If you want to file your own Self Assessment from your software: FreeAgent says it files direct to HMRC.
- If you run a limited company and want room to grow: compare FreeAgent at £33 with Xero Grow at £39 or Comprehensive at £55, which adds multi-currency.
- If your accountant prefers one package: follow their lead, as it may lower your fees.
- If you want to compare more options: see Xero alternatives and best accounting software for sole traders.
How to choose
- List what you need: invoices a month, VAT, payroll, receipts, Self Assessment.
- Check whether your bank account makes FreeAgent free.
- Price the Xero plan that covers your invoice volume.
- Start a free trial of each; FreeAgent offers 30 days and Xero one month.
- Check your choice in HMRC’s software finder before your first MTD quarter.
Frequently asked questions
Is FreeAgent cheaper than Xero for sole traders?
It depends on your bank and plan. FreeAgent is £19 a month or free with NatWest, RBS or Ulster Bank, while Xero Simple is £7 and Ignite £18 a month, all plus VAT.
Is FreeAgent free with NatWest?
Yes. FreeAgent is free while you keep a NatWest, Royal Bank of Scotland or Ulster Bank business current account.
Can I file my Self Assessment with FreeAgent?
Yes. FreeAgent says it pre-fills most of the return and lets you file direct to HMRC.
Do FreeAgent and Xero work with MTD for Income Tax?
Yes. Both support MTD for Income Tax quarterly updates for sole traders and landlords.
Who owns FreeAgent?
NatWest Group acquired FreeAgent in early 2018. FreeAgent says it remains operationally independent of the group.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.