FreeAgent vs Xero vs Accounted: Which Wins?
Choosing accounting software is one of the most important decisions a sole trader makes. The tool you pick shapes how you manage your finances, how much time you spend on admin, and ultimately how much tax you pay. FreeAgent, Xero, and Accounted are three of the most popular options for UK sole traders, but they take very different approaches.
In this comprehensive comparison, we put all three head-to-head on pricing, features, ease of use, MTD compliance, and suitability for sole traders and freelancers. By the end, you will know exactly which one is right for your business.
Pricing Compared
Let us start with the numbers, because for most sole traders, cost matters.
FreeAgent costs £34 per month at full price, or £17 per month for the first six months with promotional pricing. However, NatWest, Royal Bank of Scotland, and Ulster Bank business account holders can access FreeAgent for free. This makes it effectively free for a significant number of sole traders — as long as you are happy banking with NatWest.
Xero offers three plans: Starter at £15 per month (limited to 20 invoices and 5 bills), Standard at £30 per month, and Premium at £42 per month. Most sole traders need at least the Standard plan, as the Starter plan's limitations are quickly outgrown. Add-ons like payroll, expenses, and projects increase the cost further.
Accounted is priced specifically for sole traders, with plans starting significantly below Xero and FreeAgent's full pricing. All features, including receipt scanning via Penny, MTD submissions, and self-assessment filing, are included. There are no feature gates or per-transaction limits. Visit our pricing page for current rates.
For sole traders paying full price, Accounted offers the best value. FreeAgent is hard to beat if you have a free NatWest deal, but you are locked into that banking relationship.
Features Comparison
Bank Feeds and Reconciliation
All three platforms connect to UK banks and import transactions automatically. The difference lies in how they handle reconciliation.
FreeAgent uses ML-powered categorisation to auto-match and categorise transactions, achieving around 93% accuracy. It learns from your corrections over time, though some initial setup and periodic review is still needed.
Xero has a powerful bank reconciliation engine with suggested matches and the ability to create rules. It is one of Xero's strongest features.
Accounted goes further by using Penny, the AI bookkeeper, to categorise and reconcile transactions. Penny learns your patterns and proactively categorises new transactions, asking you to confirm only when uncertain. Over time, this requires almost no manual input.
Receipt Scanning
FreeAgent offers receipt scanning through its mobile app. You photograph receipts, and FreeAgent extracts basic data. Its ML-powered auto-categorisation handles most transactions accurately, though you may still want to review edge cases.
Xero includes expense claims with receipt scanning on higher plans. The OCR is decent but not exceptional. Many Xero users add Dext or Hubdoc for better scanning.
Accounted uses Penny on WhatsApp for receipt scanning. Send a photo of your receipt, and Penny extracts the data, categorises it, and adds it to your accounts. No separate app needed, no manual categorisation required.
Tax Calculations and Filing
FreeAgent provides real-time tax estimates and supports self-assessment filing. It shows your estimated income tax and National Insurance liability, updated as you add income and expenses. The tax timeline feature is helpful for planning.
Xero calculates tax but does not file self-assessment returns natively. You need to export your figures and file through HMRC's website or use a third-party tool. This is a significant gap for sole traders.
Accounted provides real-time tax estimates and handles self-assessment filing directly. Penny can explain your tax position in plain language, helping you understand why you owe what you owe, not just the number.
MTD Compliance
All three platforms are MTD-compliant and can submit quarterly updates and VAT returns to HMRC. This is now a baseline requirement rather than a differentiator.
According to HMRC's MTD guidance, qualifying sole traders must submit quarterly updates from April 2026. Ensure whichever platform you choose supports this fully.
For a complete overview of MTD requirements, read our Making Tax Digital complete guide.
Invoicing
FreeAgent offers solid invoicing with customisable templates, automatic payment reminders, and support for multiple currencies.
Xero has powerful invoicing features including recurring invoices, online payment integration, and invoice tracking. On the Starter plan, you are limited to 20 invoices per month.
Accounted handles invoicing with a focus on simplicity. You can create and send professional invoices quickly, with automatic reminders for overdue payments. There are no limits on the number of invoices.
Ease of Use
This is where the three platforms diverge most significantly.
FreeAgent has a clean interface that is generally easy to navigate. The dashboard gives a clear overview of your finances, and the tax timeline is intuitive. However, some areas — particularly the project costing and time tracking features — add complexity that sole traders do not need.
Xero is powerful but has a steep learning curve. It is designed to be used by accountants as much as by business owners, and the interface reflects this. Settings are spread across multiple menus, and some features require several clicks to access. Once you know your way around, Xero is efficient. Getting there takes time.
Accounted is designed for people who do not want to think about accounting software. Penny handles the heavy lifting via WhatsApp, which means you interact with your accounts in the same way you send a message to a friend. There is no complex dashboard to learn, no settings to configure, and no terminology to decipher.
For sole traders who want to spend the least time possible on accounting, Accounted is the clear winner. For those who want more control and are willing to invest time in learning, Xero provides depth.
Support
FreeAgent offers email and phone support during business hours, with a comprehensive knowledge base. Support quality is generally good, though response times can vary.
Xero provides online support through a help centre and community forums. Phone support is only available on the Premium plan. Many users find the lack of direct support frustrating, particularly when dealing with urgent issues.
Accounted offers support through Penny, who is available around the clock. For complex issues, the Accounted team provides human support. The combination of AI-first support for routine questions and human support for complex ones works well.
Who Should Choose What
Choose FreeAgent if you have a NatWest business account and want free accounting software. The platform is solid for sole traders, and the price (free) is unbeatable. Just be aware that you are tied to NatWest, and if you switch banks, you will need to start paying £34 per month.
Choose Xero if you work closely with an accountant who prefers Xero, or if you run a limited company with employees and need advanced features. Xero's ecosystem is vast, and its integration with third-party apps is unmatched. For sole traders, however, much of this power goes unused.
Choose Accounted if you are a sole trader or freelancer who wants the simplest, most affordable accounting experience. Penny removes the friction from bookkeeping and tax, and the pricing reflects sole trader budgets. You do not need to be tech-savvy or financially literate to use Accounted effectively.
For related comparisons, see our Accounted vs Xero, Accounted vs FreeAgent, and best accounting software for sole traders 2026 guides.
The Verdict
All three platforms are capable tools, but they serve different audiences. Xero is built for accountants and growing businesses. FreeAgent is built for freelancers who bank with NatWest. Accounted is built for sole traders who want accounting to disappear into the background.
If you are a sole trader reading this, the question is not which platform has the most features. It is which platform you will actually use consistently. The software that gets used is the one that is easiest to use. And in 2026, that is Accounted.
As the Federation of Small Businesses notes, administrative burden is one of the top challenges for UK sole traders. Reducing that burden is not just convenient — it is essential for business survival.
Ready to try Accounted? Sign up today and let Penny show you what stress-free accounting looks like.
Useful Resources
See how Accounted compares to Xero, Sage, QuickBooks and more — and why sole traders are switching. See the full comparison →
Editorial & Research
The Accounted editorial team covers software comparisons, technology, and the tools UK sole traders need to run their businesses efficiently. All software comparisons are based on independent research and publicly available pricing.
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