Accounted vs FreeAgent: Which Is Better for Sole Traders

Introduction

FreeAgent has been a trusted name in UK accounting software for well over a decade. It is particularly popular with freelancers and small businesses, and its acquisition by NatWest means many sole traders get it free with their business bank account. So how does Accounted compare?

In this article, we will give you an honest, side-by-side comparison of both platforms. We will acknowledge where FreeAgent excels and explain where Accounted offers something genuinely different for UK sole traders.

Pricing

FreeAgent's standard pricing starts at around £19 per month plus VAT for sole traders on its Sole Trader plan. However, if you bank with NatWest, Royal Bank of Scotland, or Ulster Bank, you can get FreeAgent completely free. That is a significant advantage and one we would be dishonest not to highlight.

Accounted starts at £14 per month on the Starter plan, with the Professional plan at £24 per month for those who need more features. You can see the full breakdown on our pricing page. While we cannot compete with free, we believe the time savings from AI-powered bookkeeping more than justify the cost for most sole traders.

MTD Compliance

Both platforms are fully HMRC-recognised for Making Tax Digital. FreeAgent supports MTD for VAT and is preparing for MTD for Income Tax Self Assessment (ITSA). Accounted also supports MTD for VAT and has built-in HMRC integration for Self Assessment submissions.

Where they differ is in the experience. FreeAgent offers a traditional workflow where you review transactions, categorise them, and then file. Accounted uses its AI bookkeeper, Penny, to handle categorisation automatically, meaning your records are more likely to be up to date when filing deadlines arrive.

The AI Difference

This is where the two platforms diverge most significantly. FreeAgent is a well-built traditional accounting tool. You log in, you do your bookkeeping, you file your returns. It works well, but it requires you to set aside time regularly to keep things current.

Accounted takes a fundamentally different approach. Penny, our AI bookkeeper, works through WhatsApp. When you buy something for your business, you photograph the receipt and send it via WhatsApp. Penny extracts the details using OCR, categorises the expense, and matches it to your bank transaction. No logging into a dashboard, no manual data entry.

Penny uses a three-tier reasoning system with confidence scoring. When she is 95% or more confident in a categorisation, she applies it automatically. Below that threshold, she asks you to confirm. And if she is genuinely uncertain about a tax matter, she escalates to your accountant rather than guessing.

Bank Connections

FreeAgent connects to most major UK banks through Open Banking and offers automatic bank feed imports. It handles this well and has had years to refine the experience.

Accounted also uses Open Banking via TrueLayer for automatic bank feeds, with the addition of bank feed health monitoring. If your bank connection drops or starts having issues, Accounted proactively alerts you rather than silently failing. This is a small but meaningful difference when you rely on automated transaction imports.

Receipt Management

FreeAgent allows you to upload receipts through its mobile app or web interface. You photograph a receipt, upload it, and then manually match it to a transaction.

Accounted handles receipts through WhatsApp, which is already on your phone and something you use daily. You snap a photo, send it to Penny, and she handles the rest. There is also Receipt Magnet, a dedicated email inbox where you can forward digital receipts. Both methods are designed around how people actually work, rather than requiring you to open a separate app.

Invoicing

FreeAgent has excellent invoicing capabilities. You can create professional invoices, set up recurring invoices, track payments, and send reminders. This is one of FreeAgent's genuine strengths and an area where they have years of polish.

Accounted's invoicing module is currently in development. If invoicing is your primary need right now, FreeAgent has the edge here. We are transparent about that.

Reporting

FreeAgent provides solid financial reporting including profit and loss, balance sheet, tax timeline, and various other reports. The reports are clear and well-presented.

Accounted offers profit and loss, balance sheet, and trial balance reports compliant with FRS 102 Section 1A, with PDF and Excel export. Where Accounted adds value is in proactive tax intelligence. Rather than just showing you reports, Penny actively monitors your tax position and alerts you to opportunities or risks, such as approaching the VAT threshold or available tax reliefs you might be missing.

CIS Support

If you work in construction, FreeAgent does not offer dedicated CIS support. You would need to handle CIS deductions manually or use a separate tool.

Accounted has a purpose-built CIS module covering contractor verification, deduction tracking, monthly returns, and integration with your Self Assessment. For subcontractors and contractors, this is a significant differentiator.

Mileage Tracking

FreeAgent allows you to log mileage manually within the platform. It is functional but requires you to remember to record trips.

Accounted lets you log mileage via WhatsApp. Tell Penny you drove to a client meeting and she will calculate the HMRC-approved rate (45p per mile for the first 10,000, 25p thereafter), ask if it was a return trip, and record everything. You can also set up recurring trips for regular journeys.

Who Should Choose FreeAgent

FreeAgent is an excellent choice if you bank with NatWest and can get it free, if you need mature invoicing features right now, if you prefer a traditional dashboard-based approach to bookkeeping, or if you have been using it for years and your workflows are already established.

Who Should Choose Accounted

Accounted is the better choice if you want AI to handle the bulk of your bookkeeping automatically, if you prefer WhatsApp over logging into dashboards, if you work in construction and need CIS support, if you want proactive tax alerts rather than just passive reports, or if you value having your bookkeeping done in the background rather than as a scheduled task.

The Bottom Line

FreeAgent is a mature, well-respected platform and we genuinely recommend it for certain use cases. But if you are a sole trader who wants bookkeeping to happen automatically rather than being another task on your to-do list, Accounted offers a genuinely different approach.

The question is not really which has more features. It is whether you want to do your bookkeeping or have your bookkeeping done for you.

Ready to try a different approach to bookkeeping? Sign up for Accounted and let Penny handle the numbers while you focus on your work.