Software & services

Best accounting software for UK small businesses

Six cloud accounting packages that UK small businesses use for invoicing, VAT and Making Tax Digital, with starting prices from each provider's own pricing page.

Updated 27 October 2026 · Researched from official and published sources

If your business is VAT-registered, HMRC requires you to keep VAT records and file VAT Returns using compatible software. From April 2026, sole traders and landlords with qualifying income over £50,000 also have to use Making Tax Digital for Income Tax, with the threshold falling to £30,000 from April 2027 and £20,000 from April 2028. So most small businesses now need proper accounting software, not a spreadsheet.

We compared six well-known packages available to UK businesses using their own websites and pricing pages, checked on 27 October 2026. We have not tested them hands-on. Prices change often and introductory discounts are common, so check the live price before you commit.

At a glance

#	Pick	Price guide
1	Best all-rounder for growing businesses Xero	From £18 a month ex VAT (Ignite plan, after any introductory offer), checked 27 Oct 2026
2	Best for choice of plan sizes QuickBooks Online	Check live rates (the UK pricing page loads prices dynamically, so we could not confirm them on 27 Oct 2026)
3	Best for limited companies and freelancers FreeAgent	From £19 a month ex VAT (sole trader) or £33 a month ex VAT (limited company), standard price; free with an eligible NatWest, RBS, Ulster Bank or Mettle business account. Checked 27 Oct 2026
4	Best for UK-based support and brand familiarity Sage Accounting	Check live rates (Sage's pricing page could not be opened on 27 Oct 2026)
5	Best value, including a free plan Zoho Books	Free plan; paid plans from £12 a month, or £10 a month billed annually, exclusive of local taxes. Checked 27 Oct 2026
6	Best for service businesses that invoice clients FreshBooks	From £16 a month (Lite, standard price), checked 27 Oct 2026; the page does not say whether VAT is included

1 · Best all-rounder for growing businesses

Xero

Cloud accounting, UK plans in GBP

Xero offers four UK plans, Ignite, Grow, Comprehensive and Ultimate. Higher plans include payroll for a set number of people, expense claim users and longer cash flow forecasts, and Comprehensive adds multiple currencies. Its large app marketplace and wide use by UK accountants make it a common choice for businesses that expect to grow.

Payroll included from the Grow plan
Expense users included on higher plans
Multi-currency on Comprehensive and above

Watch out: The entry Ignite plan caps you at 20 invoices and 10 bills, and payroll on Ignite is charged at £1.50 per person.

From £18 a month ex VAT (Ignite plan, after any introductory offer), checked 27 Oct 2026Visit official site

2 · Best for choice of plan sizes

QuickBooks Online

Cloud accounting, UK plans

Intuit's UK range runs from Sole Trader Plus and Simple Start for one user, through Essentials (3 users) and Plus (5 users), to Advanced for up to 25 users. Mileage tracking, receipt capture, invoicing and reports are included. That spread makes it easy to start small and move up a tier as the team grows.

Five UK tiers
Receipt capture and mileage tracking included
Plans for 1 to 25 users

Watch out: Payroll is an extra cost on top of the plan, and the Sole Trader Plus plan does not include direct VAT submission to HMRC.

Check live rates (the UK pricing page loads prices dynamically, so we could not confirm them on 27 Oct 2026)Visit official site

3 · Best for limited companies and freelancers

FreeAgent

Cloud accounting, UK

FreeAgent is built around UK tax. The limited company plan includes invoicing, expenses, time tracking, payroll, VAT, Self Assessment and end-of-year filing, and the sole trader plan covers Making Tax Digital for Income Tax. It is a popular pick for contractors and small companies who want their tax deadlines in one place.

Payroll included on business plans
Tax Timeline for UK deadlines
Free with eligible NatWest Group or Mettle accounts

Watch out: The free offer depends on keeping an eligible bank account, and Mettle customers need at least one transaction a month.

From £19 a month ex VAT (sole trader) or £33 a month ex VAT (limited company), standard price; free with an eligible NatWest, RBS, Ulster Bank or Mettle business account. Checked 27 Oct 2026Visit official site

4 · Best for UK-based support and brand familiarity

Sage Accounting

Cloud accounting, UK

Sage is a long-established UK accounting software company and its cloud product, Sage Accounting, has a dedicated UK edition and UK help centre. Many bookkeepers and accountants already know it, which can make handover easier.

Dedicated UK edition
Familiar to many UK accountants
Tiered plans for different business sizes

Watch out: We could not open Sage's pricing page to confirm current prices or plan limits, so compare them carefully on Sage's site before you buy.

Check live rates (Sage's pricing page could not be opened on 27 Oct 2026)Visit official site

5 · Best value, including a free plan

Zoho Books

Cloud accounting, UK plans in GBP

Zoho Books has a genuinely usable free plan for one user plus an accountant, with up to 1,000 invoices and 1,000 bills a year. Paid plans run from Standard to Ultimate. It suits very small businesses that want to keep costs down, or firms already using other Zoho apps.

Free plan for one user plus accountant
Low-cost paid tiers
Fits with other Zoho business apps

Watch out: The free plan does not support add-ons (apart from CT600 and final accounts) and has email-only support.

Free plan; paid plans from £12 a month, or £10 a month billed annually, exclusive of local taxes. Checked 27 Oct 2026Visit official site

6 · Best for service businesses that invoice clients

FreshBooks

Cloud accounting and invoicing, UK plans in GBP

FreshBooks is built around invoicing, which suits consultants, agencies and other service firms that bill clients regularly. Plans are priced by the number of clients you bill: Lite allows up to 5, Plus up to 50 and Premium unlimited.

Strong invoicing focus
Simple plan structure
Half-price offer for the first 3 months at the time of checking

Watch out: Client limits count archived clients too, so the Lite plan can fill up quickly.

From £16 a month (Lite, standard price), checked 27 Oct 2026; the page does not say whether VAT is includedVisit official site

What to look for

Making Tax Digital: check the package is HMRC-recognised for VAT, and for Income Tax if you are a sole trader or landlord.
Payroll: some plans include it, others charge per employee. Count the full monthly cost.
Users: PAs and office managers often need their own logins. Check how many users each plan includes.
Bank feeds and receipt capture: these save the most time day to day.
Your accountant: ask which package they prefer. Many firms work faster in the software they know.

Making Tax Digital for Income Tax: who needs software and when

Sole traders and landlords are being brought into Making Tax Digital for Income Tax in stages, based on their qualifying income from self-employment and property. HMRC's dates, checked on 27 October 2026, are below.

Over £50,000 in the 2024 to 2025 tax year: should have started from 6 April 2026
Over £30,000 in the 2025 to 2026 tax year: from 6 April 2027
Over £20,000 in the 2026 to 2027 tax year: from 6 April 2028
Quarterly updates are due by 7 August, 7 November, 7 February and 7 May
HMRC will not apply penalty points for late quarterly updates in the 2026 to 2027 tax year, but late tax returns are still penalised

Switching packages without losing your records

Most guides compare features but say little about moving. Plan the switch around a natural break, such as the end of a VAT quarter or the financial year, so one period sits wholly in one system.

Export reports, ledgers and attachments from the old package before you cancel it
Keep the old data for the legal period: 6 years from the end of the financial year for a company, at least 5 years after the 31 January deadline for the self-employed, and generally 6 years for VAT
Check the new package is HMRC-recognised for VAT and, if needed, Making Tax Digital for Income Tax
Move payroll between pay runs: HMRC says the Full Payment Submission must be sent on or before payday
Reconnect bank feeds and check opening balances against your last bank reconciliation
Give your accountant and any bookkeeper their own login rather than sharing one

Questions people ask

Do I have to use accounting software in the UK?

If you are VAT-registered, yes: HMRC says you must use compatible software to keep VAT records and file VAT Returns. Sole traders and landlords over the Making Tax Digital for Income Tax threshold (£50,000 from April 2026, £30,000 from April 2027) must also use compatible software.

What is the cheapest accounting software for a UK small business?

Zoho Books has a free plan for one user, and FreeAgent is free with an eligible NatWest, RBS, Ulster Bank or Mettle business account. Xero, QuickBooks and FreshBooks often run introductory discounts, but compare the standard price you will pay afterwards.

Is Xero or QuickBooks better for a small business?

Both are widely used in the UK and cover invoicing, bank feeds and VAT. Xero includes payroll from its Grow plan, while QuickBooks charges for payroll separately. The best choice often depends on which one your accountant uses.

Are accounting software prices quoted with or without VAT?

Xero, FreeAgent and Zoho quote UK prices excluding VAT or local taxes, so add 20% if you are not VAT-registered. Always check the provider's own pricing page.

When do sole traders have to use Making Tax Digital?

From 6 April 2026 if qualifying income was over £50,000 in 2024 to 2025, from 6 April 2027 if over £30,000 in 2025 to 2026, and from 6 April 2028 if over £20,000 in 2026 to 2027. You need HMRC-compatible software to send quarterly updates.

Can I switch accounting software part way through the year?

Yes, but it is easier at the end of a VAT quarter or financial year. Export your old records first and keep them for the legal period, at least 6 years for a company.

HMRC day-rate (per diem) checkerThe tax-free meal and room allowance for UK and overseas trips, converted to pounds.Mileage claim calculator 2026/2755p then 25p a mile, plus passengers. Works out the tax-free amount.