Best accounting software for sole traders
There is no single answer, because sole traders are not one group. VAT status is the fork. Below the VAT threshold, QuickBooks Sole Trader at £10 a month wins on price — £186 over 24 months — but it cannot file a VAT return. The day you register, you need Simple Start or Xero Ignite at £16, and the price gap between the two market leaders collapses to £9.60 across two years. Everything else on this page is about what you should decide on instead.
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The short answer
If you are not VAT-registered, start with a £0 tier and buy QuickBooks Sole Trader at £186 over 24 months when you outgrow it. If you are VAT-registered, it is QuickBooks Simple Start at £297.60 or Xero Ignite at £307.20 and the £9.60 between them should not decide it.
Two things override both of those. First, if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle, FreeAgent is £0 and beats everything here on price by definition — and we earn nothing when you take it. Second, if you want the software to file your Self Assessment return rather than just prepare the numbers, FreeAgent does that and Xero does not, which is worth more than £91.80 to a lot of people.
- Not VAT-registered
- £186QuickBooks Sole Trader, 24 months
- VAT-registered
- £297.60QuickBooks Simple Start, 24 months
- Gap to Xero Ignite
- £9.60Over 24 months. 40p a month
- With the right bank
- £0FreeAgent, NatWest / RBS / Ulster / Mettle
If you are not VAT-registered
Below the VAT threshold, the cheapest sensible route is £0 on Sage Sole Trader Free while you send five invoices a month or fewer, then QuickBooks Sole Trader at £186 over 24 months when you outgrow it.
This is the case where the market’s headline prices are most misleading, because the products built around VAT compliance cost more and you are not using the feature. Here is the ladder, cheapest first, all ex VAT over 24 months:
- 1FreeAgent via NatWest / RBS / Ulster / MettleFull product. Mettle needs one transaction a month. We earn nothing from this.£024 months
- 2Sage Sole Trader FreePermanently free. Capped at 5 invoices a month. Cannot handle VAT.£024 months
- 3Sage Sole Trader — £7+VAT/mo3 months free, then 21 paid months. £176.40 inc VAT. Cannot file VAT.£147ex VAT, 24 months
- 4QuickBooks Sole Trader — £10/mo£1 for 6 months, then £10. Cannot file VAT.£18624 months
- 5QuickBooks Simple Start — £16/mo£1.60 for 6 months, then £16. Files VAT.£297.6024 months
- 6Xero Ignite — £16/mo£3.20 for 6 months, then £16. Files VAT. 20 invoices a month.£307.2024 months
- 7FreeAgent Sole Trader — £19/mo£9.50 for 6 months, then £19. Files a complete Self Assessment return.£39924 months
Test the free tier against your busiest month
Sage’s five-invoice cap is monthly, not average. A gardener who sends four invoices in February and eleven in June is not a five-invoice business. Look at your worst month before you build a workflow on a tier you will break out of.
The trap: buying below VAT and registering next year
If you expect to cross the VAT threshold within two years, the £186 QuickBooks Sole Trader plan is a false economy. You will migrate to Simple Start anyway, and moving mid-year with a quarter of records already in the old plan is the part nobody warns you about. Price it from Simple Start at £297.60 and treat the £111.60 difference as insurance.
If you are VAT-registered
VAT registration removes the three cheapest options from the table — QuickBooks Sole Trader and both Sage Sole Trader tiers cannot file a VAT return — and leaves you with QuickBooks Simple Start at £297.60 and Xero Ignite at £307.20, which are £9.60 apart over two years.
Forty pence a month is not a decision. So decide on the things that will actually irritate you:
- Invoice volume. Xero Ignite caps you at 20 invoices a month. Cross it and you are on Xero Grow at £710.40 — a £403.20 jump. QuickBooks Simple Start has no invoice cap.
- Users. Simple Start allows one user. Every Xero plan, including Ignite, allows unlimited users, which matters the moment you want to give an accountant or a bookkeeper their own login rather than sharing yours.
- Your accountant’s preference. Not a soft factor. If they work in Xero all day, their fee for working in something else is real money and can dwarf £9.60.
- No invoice ceiling at all. Sage Accounting Start is £378 ex VAT (£453.60 inc VAT) — £70.80 more than Xero Ignite, with no invoice cap and one user. If you invoice heavily and work alone, that is worth checking.
Making Tax Digital does not break the tie either — all four platforms are on HMRC’s recognised list. See what MTD actually requires.
| Plan | List price | 24 months | Files VAT | Files Self Assessment | Invoice cap | Users |
|---|---|---|---|---|---|---|
| FreeAgent via NatWest / RBS / Ulster / Mettle | £0 | £0 | Yes | Yes | None | — |
| Sage Sole Trader Free | £0 | £0 | No | No | 5 / month | 1 |
| Sage Sole Trader | £7+VAT | £147 | No | No | Unlimited | 1 |
| QuickBooks Sole Trader | £10 | £186 | No | No | Unlimited | 1 |
| QuickBooks Simple Start | £16 | £297.60 | Yes | No | Unlimited | 1 |
| Xero Ignite | £16 | £307.20 | Yes | No | 20 / month | Unlimited |
| Sage Accounting Start | £18+VAT | £378 | Yes | No | Unlimited | 1 |
| FreeAgent Sole Trader | £19 | £399 | Yes | Yes | Unlimited | Unlimited |
All totals ex VAT over 24 months. Sage quotes +VAT: Sage Sole Trader is £176.40 inc VAT and Sage Accounting Start is £453.60 inc VAT over the same period. “Files Self Assessment” means the software submits a complete return to HMRC, not merely that it produces the figures.
Self Assessment filing: FreeAgent files it, Xero does not
This is the single most decision-relevant difference on the page and it is almost never in a comparison table, because it does not fit in one.
FreeAgent files a complete Self Assessment return to HMRC for sole traders. Xero does not — it prepares the figures and you, or your accountant, file them somewhere else.
Work out what that is worth to you before you compare monthly prices. If you already pay an accountant to do your books and your return, this changes little. If you pay an accountant a few hundred pounds a year mostly to submit a straightforward return, then FreeAgent’s £399 over 24 months — £91.80 more than Xero Ignite — can pay for itself in the first year and be cheaper in the second.
And if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle, FreeAgent is £0, which makes this comparison very short. We earn nothing from that route. See how the free routes work.
One caution. Filing your own return is not the same as knowing what belongs on it. Software will happily submit a wrong return quickly. If your affairs are anything other than simple, the accountant is not the line item to cut — and none of this is tax advice.
Free routes a sole trader should check first
Two products are genuinely free for sole traders rather than free for a trial period, and between them they cover a large share of the people reading this page.
- FreeAgent, free with NatWest, RBS, Ulster Bank or Mettle. The full product — VAT, Self Assessment, unlimited invoices — at £0 for as long as you hold the business account. Mettle requires at least one transaction a month to keep it active. Against £399 to buy it directly.
- Sage Sole Trader Free, £0 permanently. A product, not a trial. No card required. Capped at five invoices a month and it cannot handle VAT, so it suits a genuinely small non-VAT business and nobody else.
Free trials are a different category and a lesser one: Xero offers 30 days plus a month free, QuickBooks 30 days, Sage three months free on its paid tiers. Those reduce year one and change nothing about year two — which is exactly why we price at 24 months. The full guide to free options, including when free stops being enough.
Does Making Tax Digital change the answer?
No. Every product on this page is on HMRC’s recognised list for Making Tax Digital, including both free options, so MTD compatibility does not separate them.
What MTD changes is whether you need any of this yet. MTD for Income Tax has applied since 6 April 2026 to qualifying income over £50,000, applies from 6 April 2027 to qualifying income over £30,000 based on the 2025/26 tax year, and is planned to reach £20,000 in April 2028. Qualifying income is gross self-employment income plus gross property income — turnover, before expenses. Partnership income, dividends, savings interest, PAYE and pensions do not count.
If your combined gross figure is £20,000 or less you are outside MTD entirely, and a spreadsheet plus a Self Assessment return remains legitimate. Be wary of any vendor that markets MTD readiness as a premium feature in 2026.
This is general information, not tax advice. Confirm your position with HMRC or a qualified accountant.
Sole trader questions we get asked
Short answers, with the working linked.
What is the best accounting software for a sole trader who is not VAT-registered?
Start free: Sage Sole Trader Free at £0 if you send five invoices a month or fewer. Past that, Sage Sole Trader at £147 ex VAT or QuickBooks Sole Trader at £186 over 24 months for a fuller product. Neither files VAT.
Which software should a VAT-registered sole trader use?
QuickBooks Simple Start at £297.60 or Xero Ignite at £307.20 over 24 months. The £9.60 gap is 40p a month, so choose on invoice volume and users, not price. The full comparison.
Can QuickBooks Sole Trader file a VAT return?
No. VAT filing starts at Simple Start, £16 a month, £297.60 over 24 months. If you expect to register within two years, price from Simple Start and avoid the migration.
Which software files a complete Self Assessment return?
FreeAgent does. Xero does not. If you pay an accountant mainly to submit a simple return, FreeAgent’s £399 over 24 months — or £0 with the right bank — may be the cheaper total. Xero vs FreeAgent.
Do sole traders need software for Making Tax Digital?
If you are in scope, you need software HMRC recognises — and all of these qualify, including the free ones. Whether you are in scope depends on gross self-employment plus gross property income: over £50,000 you are already in, over £30,000 you join on 6 April 2027. Check your date.
Is free accounting software good enough for a sole trader?
Often yes. FreeAgent through a NatWest, RBS, Ulster or Mettle account is the full paid product at £0. Sage Sole Trader Free is more limited — five invoices a month, no VAT. Free stops being enough when you register for VAT, pass the cap, or need payroll. When free is not enough.
Keep reading
Up to the pillar, across to the sibling guides, or straight into a head-to-head.
Pillar
Best UK accounting software
The hub: all four platforms priced over 24 months, plus a router that gives a verdict by business type.
Sibling
Cheapest over 24 months
Every entry plan ranked on true two-year cost, with a calculator that marks the month your discount ends.
Sibling
Genuinely free software
The two real £0 routes, why trials are not the same thing, and when free stops being enough.
Head to head
Xero vs QuickBooks
The comparison that decides most VAT-registered sole traders. £9.60 apart at Simple Start level.
Head to head
Xero vs Sage
Sage’s free tier and its +VAT quoting, normalised so the two are actually comparable.
Context
Making Tax Digital
Why you are shopping in the first place. Thresholds, dates, and what qualifying income really means.
Where we lose money by being straight with you. QuickBooks is £121.20 cheaper than Xero over 24 months on entry plans. FreeAgent is free forever with NatWest, RBS, Ulster Bank or Mettle. Sage has a genuinely free tier for sole traders. All three cost us commission, and all three are on this page above the fold.