At a glance
| Feature | FreeAgent | Xero |
|---|---|---|
| Built for | UK sole traders, freelancers, small Ltds | Small and growing businesses globally |
| Tax focus | UK Self Assessment, VAT, Corporation Tax tools | VAT/GST; tax returns via accountant or add-ons |
| Bank feeds | Yes | Yes |
| Free via bank | Included with some UK business bank accounts — check current terms | No standard bank bundle |
| Price | Check current price | Check current price |
Where FreeAgent shines
FreeAgent focuses on UK tax: it helps sole traders prepare Self Assessment and supports VAT returns under Making Tax Digital, and helps limited company directors track dividends and Corporation Tax estimates. Its dashboard shows estimated tax owed, which many freelancers find reassuring. Some UK business bank accounts include FreeAgent at no extra cost — check current terms with the bank.
Where Xero shines
Xero suits businesses that are growing, have employees, hold stock or trade internationally. It has a very large integration marketplace and is widely used by UK accountants. Multi-currency, projects and inventory features (depending on plan) make it more flexible for complex businesses.
Freelancer vs growing business
If you are a one-person business invoicing clients and mainly need tax sorted, FreeAgent is purpose-built for you. If you expect to hire staff, sell products online or need many integrations, Xero may scale better. You can always switch later, though moving software takes effort.
Invoicing best practice
- Number invoices sequentially and include your business name, address and contact details.
- Show the invoice date, payment terms and due date clearly.
- Describe goods or services precisely, with quantities and unit prices.
- Show tax (such as VAT, GST or sales tax) separately where you are registered and required to do so.
- Include payment details and offer convenient payment methods to get paid faster.
Try our free invoice generator if you just need a professional PDF invoice today.
Tax estimates and deadlines
For sole traders and directors, one of the biggest worries is how much tax to put aside. FreeAgent displays estimated tax amounts and upcoming deadlines on its dashboard based on the records you keep. Xero focuses on accurate books and VAT returns, with tax returns typically handled by your accountant or through add-ons. Whichever you use, check estimates against official HMRC guidance.
Accountant access and support
Both products let you invite an accountant or bookkeeper. Xero has a very large UK accountant community, so it is easy to find someone who knows it well. FreeAgent is also widely supported by UK practices, especially those serving freelancers and contractors. Ask potential accountants which they prefer before you commit.
Mobile and day-to-day use
Freelancers often value quick tasks: logging time, raising an invoice from a phone, photographing receipts. Both offer mobile apps; try them during the trial for the tasks you do most often, as the better product on paper is not always the one you find quicker to use every day.
Next steps
Trial both with a month of real transactions. Ask your accountant which they support. Then compare current prices — use our cost calculator with real quotes. Also see Xero vs QuickBooks.
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Take our free chooser quiz, then estimate yearly costs with your own quotes in the cost calculator.
Take the quizFrequently asked questions
Is FreeAgent free?
FreeAgent is a paid subscription, but some UK business bank accounts include it. Check current terms.
Can FreeAgent file my Self Assessment?
FreeAgent supports Self Assessment for eligible users; check its website for current capabilities.
Is Xero good for sole traders?
Yes, many sole traders use Xero, though FreeAgent is more UK freelancer-focused.
Which is better for a limited company?
Both support UK limited companies; FreeAgent suits very small companies, Xero suits growing ones.
Do accountants support FreeAgent?
Many UK accountants support FreeAgent; ask yours.
Last reviewed: October 2026. General information only — check providers' official sites for current features and pricing.