# Xero vs QuickBooks vs FreeAgent for a sole-trader tradesperson: what MTD software costs a year > Xero Simple is £7 a month, QuickBooks Sole Trader Plus £10 and FreeAgent £19. The yearly cost for a sole-trader trade, with and without VAT. - Page to cite: https://aeolookup.com/trades/xero-vs-quickbooks-vs-freeagent-mtd-cost-sole-trader-trades/ - Publisher: AEO Lookup (https://aeolookup.com/) - Section: Trades and building firms, Software and costs - Published 1 October 2026 - Key fact: For a sole trader who is not VAT registered, a normal year at list price costs £84 on Xero Simple, £120 on QuickBooks Sole Trader Plus and £190 on FreeAgent paid yearly, read from each vendor's pricing page on 1 October 2026. Xero Simple is capped at 10 invoices, and a trader who needs Xero Grow to lift the cap pays £468 a year. - Sources: Xero UK pricing page and Simple plan page, QuickBooks UK pricing page and FreeAgent pricing page, each read in a browser render on 2026-10-01. GOV.UK "Choose the right software for Making Tax Digital for Income Tax", read 2026-10-01. Desk comparison only; we did not sign up for any of them. Xero Simple costs £7 a month, QuickBooks Sole Trader Plus £10 and FreeAgent £19, each read from the vendor's own pricing page on 1 October 2026. Those are the cheapest plans each firm sells that are marked as ready for Making Tax Digital for Income Tax (MTD), and the order changes once you are VAT registered or send more than a few invoices. What this is, and is not: this is a desk comparison of published prices. We did not sign up for a trial and we have not kept a set of books in any of the three, so we say nothing about which is nicer to use. Prices and offers change. Check each page before you buy. ## The example trader A sole-trader electrician with £68,000 of turnover. He has been in MTD since 6 April 2026, because the test is on turnover and not profit. Our guide to [who is in Making Tax Digital](https://aeolookup.com/trades/making-tax-digital-income-tax-tradesperson/) works that through. He sends about 25 invoices a month. We priced him twice. First as he is, under the £90,000 VAT line and not registered. Then as if he were VAT registered, because many trades are, and the cheapest plans drop out when you need VAT returns. ## What each vendor charges - **Xero.** Simple is £7 a month and is sold "for non-VAT registered businesses". It sends quotes and 10 invoices and captures receipts only. Ignite is £18 and covers 20 invoices, 10 bills and VAT returns. Grow is £39 and has no invoice cap on its plan card. All three are marked "MTD for Income Tax ready". Xero says its prices exclude VAT. New customers get 90% off for the first six months. - **QuickBooks.** Sole Trader Plus is £10 a month for one user and is marked MTD ready, with CIS ticked. The page says direct VAT submission to HMRC is not available on it. Simple Start is £16 and adds VAT returns. The offer is 90% off for six months if you buy straight away without the 30-day trial. The page did not say whether VAT is added to these prices. - **FreeAgent.** One sole-trader plan: £19 a month, or £190 if you pay for a year. It lists MTD quarterly updates, the final declaration and VAT returns. Prices exclude VAT. The offer is 50% off the first six months paid monthly, or 50% off the first year paid yearly. ## The sums: not VAT registered | Plan | List price | Normal year | First year with the offer | |---|---|---|---| | Xero Simple | £7 a month | £84 | £46.20 | | QuickBooks Sole Trader Plus | £10 a month | £120 | £66 | | FreeAgent, paid yearly | £190 a year | £190 | £95 | | FreeAgent, paid monthly | £19 a month | £228 | £171 | The first-year figures are six months at the offer price and six at full price. For Xero Simple that is six months at 70p (£4.20) plus six at £7 (£42). ## The sums: VAT registered | Plan | List price | Normal year | First year with the offer | |---|---|---|---| | Xero Ignite | £18 a month | £216 | £118.80 | | Xero Grow | £39 a month | £468 | £257.40 | | QuickBooks Simple Start | £16 a month | £192 | £105.60 | | FreeAgent, paid yearly | £190 a year | £190 | £95 | ## What moves the answer **Invoice caps.** Our electrician sends about 25 invoices a month. Xero Simple stops at 10 and Ignite at 20. Xero's page gives each cap as a bare number without a period; other limits on the same page are monthly, and we have read these the same way. On that reading he needs Grow, and Xero becomes the dearest of the three at £468 a year, not the cheapest at £84. Xero also says invoices raised by a connected app can count towards the Simple cap, which matters if a job-management app creates your invoices. The QuickBooks and FreeAgent plan cards we read state no invoice cap. **VAT on the subscription.** Xero and FreeAgent quote prices before VAT. If you are not VAT registered you cannot claim that VAT back, so £84 becomes £100.80 and £190 becomes £228. **Your bank.** FreeAgent says its software is free while you hold a business current account with NatWest, Royal Bank of Scotland or Ulster Bank, or a Mettle account with at least one transaction a month. If you already bank with one of them, the yearly cost is nil. **CIS.** Xero lists "Automate subcontractor CIS calculations and reports" on Simple and Ignite, and charges £5 a month extra to submit contractor CIS returns. QuickBooks ticks "Calculate and submit CIS" on both plans above. FreeAgent has a CIS page in its menu, but the sole-trader plan card does not mention it, so ask before you rely on it. Our [CIS deduction calculator](https://aeolookup.com/trades/cis-deduction-calculator/) shows what the figures on a statement should be. **The offer ends.** On Xero and QuickBooks the price goes up tenfold in month seven. Budget on the normal-year column. ## Free software HMRC says free products are available "for those with simple tax affairs", and that they may limit how many transactions you can enter. Its software finder on GOV.UK gives a list for your circumstances, and HMRC does not recommend any product. If you are close to the line, our guide to [the VAT registration threshold](https://aeolookup.com/trades/vat-registration-rolling-12-months-tradesperson/) shows how to check the rolling 12 months before you pick a plan that cannot file VAT. ## Where Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) fits Overlyft is an AI agency for small firms. It can set up an AI Credit Controller that raises invoices in Xero or QuickBooks when a job is marked complete and chases the overdue ones. That assistant is not accounting software and it is not in the tables above. This is general information, not tax advice. Ask your accountant which software they can work with before you pay for a year. ## Short answers from this page **How much does Making Tax Digital software cost a sole trader a year?** At list prices read on 1 October 2026, the cheapest plans marked ready for Making Tax Digital for Income Tax cost £84 a year on Xero Simple, £120 on QuickBooks Sole Trader Plus and £190 on FreeAgent paid yearly. Xero Simple is capped at 10 invoices. A VAT-registered trader needs a dearer plan on Xero (£216) or QuickBooks (£192), while FreeAgent stays at £190. --- ![](https://aeolookup.com/img/d/owner-line.png) General information for UK small firms, not legal, tax or financial advice.