Accounting software cost UK

How UK accounting software is priced

Cloud accounting software in the UK is sold on monthly or annual subscription contracts. Vendors publish prices in GBP and consistently exclude VAT from headline figures; the 20 per cent standard VAT rate is added at the point of purchase. VAT-registered businesses can reclaim VAT paid on software subscriptions as input tax. Annual billing typically produces a lower effective monthly cost than rolling monthly contracts, though it normally requires upfront or direct debit commitment for the full year.

Pricing tiers are broadly structured around business complexity rather than user count alone. Entry-level plans target sole traders and micro-businesses that need core invoicing, bank reconciliation, and VAT filing. Mid-range plans add payroll, multi-currency, purchase order management, and project profitability tracking. Top-tier plans extend to in-depth analytics, advanced payroll for larger teams, and multi-entity or multi-location features. Add-ons such as receipt capture, additional payroll employees, and premium integrations carry separate monthly fees on top of the base subscription.

A critical compliance dimension for UK buyers is Making Tax Digital (MTD). VAT-registered businesses must use HMRC-recognised software for digital record-keeping and VAT return submission. From April 2026, sole traders and landlords with business or property income above £50,000 must also use recognised software for MTD for Income Tax Self Assessment (MTD for ITSA), with further thresholds extending to those earning above £30,000 from April 2027 and above £20,000 from April 2028. Buyers should verify that any software under consideration appears on the HMRC compatible software list at gov.uk before subscribing.

The cluster anchor page Xero vs QuickBooks UK compares the two largest platforms in detail. For spend management software, see the Planergy UK review.

Published GBP monthly pricing: comparison table

The table below shows standard (non-promotional) monthly prices per plan for each of the three main vendors covered in this cluster. All prices exclude VAT. Cells marked UNVERIFIED indicate that the vendor pricing page was inaccessible during this research session; those figures are sourced from secondary sources and must be confirmed with the vendor before use.

*UNVERIFIED: vendor pricing pages were inaccessible during this session. Treat these figures as indicative only and confirm directly with the vendor before making any purchasing decision.

FreeAgent: pricing in detail

FreeAgent Central Ltd (Companies House number SC316774, registered at One Edinburgh Quay, 133 Fountainbridge, Edinburgh EH3 9QG) structures its pricing by business type rather than by feature tier. As of June 2026, the standard monthly rates (excluding VAT) confirmed from the vendor's own pricing page are: unincorporated landlords at £10/month, sole traders at £19/month, partnerships and LLPs at £27/month, and limited companies at £33/month. Annual billing lowers each effective monthly cost proportionately: for example, the limited company tier is £330/year, equivalent to £27.50/month.

Optional add-ons charged on top of the base subscription include Smart Capture Unlimited (automated receipt scanning) at £5/month and an Amazon integration at £6/month. These are not included in headline subscription pricing. All plans include MTD for VAT filing and, following HMRC recognition announced in September 2022, MTD for Income Tax Self Assessment capability. FreeAgent was acquired by NatWest Group in 2018 but remains available to businesses regardless of their banking relationship.

A promotional discount of 50 per cent off for the first six months (monthly billing) or first year (annual billing) was displayed on the FreeAgent pricing page in June 2026. Promotional terms change; confirm the current offer before subscribing.

Xero: pricing overview

Xero (UK) Limited (Companies House number 06071722, registered at 5th Floor, 100 Avebury Boulevard, Milton Keynes MK9 1FH) replaced its legacy Starter, Standard and Premium UK plans in September 2024 with a new tier structure: Ignite, Grow, Comprehensive and Ultimate, plus a Simple entry tier for very basic use. According to a secondary source published in May 2026, standard monthly prices (excluding VAT) following a September 2025 price adjustment are: Ignite approximately £16/month, Grow approximately £37/month, Comprehensive approximately £50/month, and Ultimate approximately £65/month. These figures are UNVERIFIED as the vendor's own pricing pages returned errors during this session.

Additional payroll employees beyond each plan's included headcount are charged at £1.50/month per person on Ignite, Grow and Comprehensive, and £1/month per person on Ultimate, up to a maximum of 200 employees. Multi-currency is available from Grow upwards. Xero states HMRC recognition for both MTD for VAT and MTD for Income Tax on its own website. Verify current pricing and plan features at xero.com/uk/pricing-plans.

QuickBooks: pricing overview

Intuit Limited (Companies House number 02679414, registered at 5th Floor Cardinal Place, 80 Victoria Street, London SW1E 5JL) offers QuickBooks Online in the UK across multiple tiers. A secondary source updated in March 2026 reports the following standard monthly prices (excluding VAT): Sole Trader Plus approximately £10/month, Simple Start approximately £16/month, Essentials approximately £38/month, Plus approximately £56/month, and Advanced approximately £123/month. These figures are UNVERIFIED. QuickBooks raised prices across UK plans in January 2026, with the Plus plan reported to have increased from approximately £34 to £56/month. A promotional discount of 90 per cent off for the first 12 months was reported as available in early 2026. Confirm all current pricing at quickbooks.intuit.com/uk/pricing.

QuickBooks is described as HMRC-recognised for Making Tax Digital for VAT, with MTD features available across Simple Start, Essentials, Plus and Advanced plans. MTD for Income Tax support is also stated on the vendor's website as available for sole traders and landlords ahead of the April 2026 mandate. Verify recognition status independently via the HMRC compatible software list at gov.uk.

What drives the cost of UK accounting software

Payroll is the most common driver of cost escalation. Adding payroll functionality typically requires moving from entry to mid-tier plans, and per-employee monthly charges compound as headcount grows. Businesses should calculate total payroll costs before comparing headline plan prices.

Multi-currency is another common trigger for plan upgrades. Businesses with overseas customers or suppliers that need to invoice in foreign currencies or reconcile foreign bank accounts generally cannot use entry-level plans that restrict operations to GBP only. This particularly affects e-commerce businesses, exporters, and firms with European or international operations.

User seat limits are a further consideration. Entry plans often restrict the number of concurrent users or administrators. Growing businesses may find themselves upgrading primarily to accommodate more team members rather than for the additional features on higher tiers. Total cost of ownership should account for current headcount and projected growth over the contract term.

Annual versus monthly billing is a controllable variable. Most vendors offer effective discounts of roughly 15 to 20 per cent for annual commitment. Businesses confident in their software choice can use annual billing to reduce costs, at the cost of flexibility to switch mid-year without penalty. For sole traders or micro-businesses testing a platform, monthly billing avoids lock-in during the evaluation period.

For a tax-filing-specific software option with a different cost model, see the Quicko UK review. The 123 Sheets UK review covers a spreadsheet-based MTD bridging tool at a lower price point.

Annual versus monthly billing: a worked example

The table below illustrates billing mode cost differences using FreeAgent's confirmed June 2026 pricing. The structure and magnitude of annual discounts at Xero and QuickBooks should be confirmed directly with those vendors.

Source: freeagent.com/pricing, June 2026. All prices exclude VAT. Annual billing saves approximately 17 per cent compared with monthly rolling plans on FreeAgent.

Disclaimer: The information on this page is for editorial and informational purposes only. Accounting software pricing, features, and promotional offers change frequently and without notice. Promotions referenced may no longer be available. Confirm current GBP pricing and MTD/HMRC-recognised status directly with each vendor and via gov.uk before making any subscription or purchasing decision. This page does not constitute financial, legal, or professional advice.

Frequently asked questions

Is UK accounting software subject to VAT?

Yes. Cloud accounting software subscriptions sold to UK businesses are subject to VAT at the standard rate of 20 per cent. Vendors typically publish prices excluding VAT; the VAT element is added at checkout or on the invoice. VAT-registered businesses can reclaim this VAT as input tax through their normal VAT return.

Which accounting software is cheapest for a UK sole trader?

FreeAgent's sole trader plan is published at £19/month on a rolling monthly basis as of June 2026, confirmed from the vendor's own pricing page. QuickBooks' Sole Trader Plus plan and Xero's Ignite plan are reported at approximately £10/month and £16/month respectively by secondary sources, but these are UNVERIFIED and must be confirmed with the respective vendors. First-year promotional discounts across all three vendors can substantially reduce costs initially.

Do all UK accounting software plans include MTD for VAT filing?

No. MTD-compatible VAT filing is typically included from a certain tier upward. FreeAgent includes MTD for VAT across all its plans. QuickBooks includes MTD for VAT from Simple Start upwards. Xero includes MTD for VAT from the Ignite plan. Buyers should confirm that their chosen plan tier includes MTD-compatible filing before subscribing, especially if they are VAT-registered.

Can accounting software costs be claimed as a business expense?

UK businesses can generally claim accounting software subscription costs as allowable business expenses, reducing taxable profit. Sole traders claim this through the self-assessment return; limited companies claim through the corporation tax return. Software costs are not capital expenditure and are typically treated as revenue expenditure in the year incurred. Independent tax advice should be sought for specific circumstances.

What is the difference between monthly and annual billing for UK accounting software?

Monthly billing provides flexibility to cancel without penalty at the end of each billing period. Annual billing commits the business to 12 months but typically reduces the effective monthly cost by around 15 to 20 per cent. Most vendors do not refund unused months on annual plans if a business cancels early, though terms vary. Confirm the cancellation and refund policy of each vendor before choosing a billing mode.