If you are a sole trader, freelancer or contractor, FreeAgent is the natural pick: payroll, CIS preparation, project tracking and Self Assessment filing are all in the one price, and with a NatWest, RBS or Ulster business current account, or a Mettle account you transact on monthly, that price is nothing. Pick Xero if your business has, or is heading towards, stock, overseas customers or a stack of connected apps, because its ladder of plans adds multi-currency, basic inventory and a wide app marketplace as you climb, at the cost of per-employee payroll charges and an add-on to file contractor CIS returns. Both file direct to HMRC, so the choice is about fit and how far you expect to grow.
Plans and pricing checked October 2026, and every figure below is read live from our pricing database, the same data as the table and calculator above.
Xero vs FreeAgent pricing: plans against business types
Xero's entry plan is £18/mo (Ignite), its mid plan £39/mo (Grow) and its top plan £70/mo (Ultimate), all billed monthly with no contract. There is also a cheaper plan for businesses not registered for VAT, which cannot file VAT returns, and the entry plan caps the number of invoices you can send each month, so a busier business moves up a rung sooner than the headline suggests.
FreeAgent prices by what kind of business you are rather than by feature tier. Sole traders pay £19/mo (Sole Trader), partnerships £27/mo (Partnership) and limited companies £33/mo (Limited Company), again monthly with no contract. What you get differs by type: the sole trader plan files your Self Assessment, and the Limited Company plan files Final Accounts and Corporation Tax data to HMRC and Companies House from inside FreeAgent. The two ladders do not line up: Xero's upper plans exist to sell features FreeAgent does not offer at all, so compare the FreeAgent tier for your business type with the Xero plan that has what you need.
Both give you unlimited users. The comparison table on this page shows the current prices, and the calculator above folds your invoices, users and employees into one estimated monthly figure for each.
Is FreeAgent really free with NatWest, RBS or Mettle?
Yes, and it is the first thing to check. FreeAgent is owned by NatWest Group, and the full product is free while you keep a NatWest, RBS or Ulster business current account. Mettle customers get it free as well, provided they make at least one transaction a month. Xero has no free plan. If you already bank with one of those brands, the cost question is settled, and the rest of this page is about whether FreeAgent's feature set covers your business.
Who is each one built for?
FreeAgent is built for sole traders, contractors and freelancers. The product is shaped around one person or a small partnership keeping their own books, with time tracking, project profitability, CIS preparation and invoicing with reminders all included, and its Limited Company plan keeps a one-director company inside the same tool for its annual accounts and Corporation Tax.
Xero serves sole traders through to established small businesses. Its entry plan can run a sole trader's books, but its strength is further up: a limited company with staff, stock to track, overseas customers to invoice, or other software to connect through Xero's app marketplace.
Which one handles MTD, VAT and Self Assessment?
Both file VAT returns direct to HMRC and both are set for Making Tax Digital. Xero lists MTD for Income Tax ready on every plan; FreeAgent files the Income Tax quarterly updates direct. Where they differ is the return at the end of the year.
- Self Assessment: Xero No, FreeAgent Yes
- CIS: Xero Yes (filing add-on), FreeAgent Yes
FreeAgent submits a sole trader's Self Assessment from the bookkeeping it already holds, and files Final Accounts and Corporation Tax data for a limited company. Xero does not list a Self Assessment return feature on its pricing page, though it sells an optional company accounts and tax add-on, so a sole trader doing their own return on Xero needs another tool or an accountant.
On CIS, read both carefully. Xero calculates and reports CIS on every plan; only submitting the contractor's monthly return is an optional add-on, so a subcontractor may need nothing extra. FreeAgent prepares CIS for contractors and subcontractors but does not file the monthly CIS300 contractor return itself: it is prepared in the app and filed through HMRC.
Xero vs FreeAgent payroll: what it costs
Both run PAYE and RTI from inside the product, but the pricing shape differs and it decides a lot of real bills. FreeAgent's payroll cost reads Included, so a director's salary or a couple of staff add nothing to the subscription.
Xero's payroll is built in, but it is not free: the entry plan charges per person from the first one, the higher plans each include a set number of people, and beyond those seats there is a per-person charge, from £1.50/emp/mo (£1 Ultimate) with a lower rate on the top plan. Put your real headcount into the calculator above and the per-employee line shows up in Xero's estimate and not in FreeAgent's.
How far does each one scale?
This is where Xero earns its higher plans. Inventory is not part of FreeAgent's pitch; project tracking cuts the other way, included on every FreeAgent plan and reserved for Xero's top plan, so a consultant who bills by the hour gets it at FreeAgent's price and only at Xero's top price.
- Multi-currency: Xero Yes (Comprehensive), FreeAgent Limited
- Inventory: Xero Limited
- Project tracking: Xero Yes (Ultimate), FreeAgent Yes
- Receipt capture: Xero Yes (Hubdoc), FreeAgent Yes (10/mo)
- Support: Xero 24/7 online, FreeAgent UK phone + email
Which one connects to AI assistants?
Xero publishes its own Model Context Protocol server, so an assistant that speaks MCP can be pointed straight at your Xero data; FreeAgent's route to an assistant runs through a third-party connector. On today's data Xero has the more direct path for anyone building AI workflows on their books.
- In-product AI: Xero Native (JAX), FreeAgent Native (Smart Capture, Radar)
- Agent route: Xero Native MCP (official), FreeAgent Via 3rd-party (Zapier)
Pros and cons for this matchup
FreeAgent wins on included payroll, CIS preparation on every plan, Self Assessment filed direct to HMRC for sole traders and Final Accounts and Corporation Tax for limited companies, project tracking on every plan, UK phone support, and a free tier for NatWest Group banking customers. Its limits are limited multi-currency, a capped receipt allowance, no filing of the CIS300 contractor return from the app, and nothing to grow into once you need more than a small business ledger.
Xero wins on reach: multi-currency and basic inventory on its higher plans, a wide app marketplace, round-the-clock online support, and an official MCP route for AI assistants. Its costs are the per-person payroll charge, the add-on to file contractor CIS returns, the invoice cap on its entry plan, and project tracking only on its top plan. Unlimited users is a draw: both include them.
The verdict
For a sole trader, contractor or freelancer, FreeAgent is the pick. It includes the things Xero charges extra for, it files your Self Assessment, and with a NatWest, RBS or Ulster business current account, or a Mettle account you transact on monthly, it costs nothing, which no Xero plan can answer. A small limited company is not automatically a Xero case either: a one-director company with no stock and UK-only customers can stay on FreeAgent's Limited Company plan and file its Final Accounts and Corporation Tax from there. Xero is the better ledger for a limited company that has stock, overseas invoicing or a web of connected apps, or expects to have them within a couple of years, and the per-person payroll charge is the price of that headroom. Run your invoices and headcount through the calculator on this page, then ask the one question that decides it: will the business still look like a one-person shop in two years?