FreeAgent and Xero are both excellent accounting platforms. Both handle Making Tax Digital. Both are HMRC-approved. Both have mobile apps. But they're designed for different types of user, and choosing the wrong one costs you time and money.
FreeAgent is built specifically for UK freelancers and sole traders. Xero is built for small businesses of all sizes. For a self-employed tradesperson, the differences matter more than you'd expect.
Here's the honest comparison.
Quick Comparison Table
| Feature | FreeAgent | Xero | |---|---|---| | Starting price | £14.50/month (NatWest/RBS free) | £10/month (Early) | | Free with bank account | Yes (NatWest, RBS, Mettle) | No | | MTD ITSA compliant | Yes | Yes | | VAT filing | Direct to HMRC | Direct to HMRC | | Self Assessment filing | Direct to HMRC | Via accountant/third party | | CIS support | Yes (contractor and subcontractor) | Yes (Growing plan, £25/month) | | Bank feeds | Open Banking | Open Banking | | Receipt capture | Photo scan (mobile) | Photo scan (mobile + Hubdoc) | | Mileage tracking | Built in (automatic) | Via add-on | | Time tracking | Built in | Via add-on | | Project tracking | Basic | Yes (Growing plan) | | Multi-currency | Limited | All plans | | Invoice limit | Unlimited | 20/month on Early plan | | Mobile app | Good | Very good | | Payroll | Built in (HMRC RTI filing) | Via add-on (Gusto, etc.) | | Number of users | Unlimited | 1 on Early, unlimited on Growing | | Accountant access | Yes (free) | Yes (free) | | UK focus | UK-only product | Global with UK version |
Pricing Breakdown (April 2026)
FreeAgent
| Option | Price | What you get | |---|---|---| | Standard | £14.50/month (or £29/month without discount) | Full accounting, invoicing, expenses, MTD, payroll | | NatWest/RBS customers | Free | Full FreeAgent included with business bank account | | Mettle customers | Free | Full FreeAgent included |
The NatWest/RBS deal is significant. If you bank with NatWest, RBS, or use Mettle (NatWest's digital business bank), you get FreeAgent completely free. No feature limitations. No time limits. Just free.
Xero
| Plan | Price | What you get | |---|---|---| | Early | £10/month | 20 invoices/month, 5 bills, bank feeds, MTD | | Growing | £25/month | Unlimited invoices, bills, CIS, projects, multi-currency | | Established | £50/month | Expenses, analytics, bulk reconciliation |
Pricing verdict
If you bank with NatWest or RBS, FreeAgent is free. Full stop. That's the best deal in UK accounting software. Even at its paid price of £14.50/month, FreeAgent includes features (payroll, mileage tracking, Self Assessment filing) that cost extra on Xero.
Xero's Early plan at £10/month is limited (20 invoices/month, no CIS). For a self-employed tradesperson who needs CIS and unlimited invoicing, you need the Growing plan at £25/month.
Like-for-like comparison: FreeAgent at £14.50/month vs Xero Growing at £25/month. FreeAgent includes more for less.
Self Assessment Tax Returns
This is FreeAgent's standout feature for self-employed tradespeople.
FreeAgent
- Calculates your Self Assessment tax return automatically from your records
- Shows estimated tax liability in real time throughout the year
- Files your Self Assessment directly with HMRC (no accountant needed for simple returns)
- Handles Class 2 and Class 4 National Insurance calculations
- Student loan repayment calculations included
- Tax timeline shows key dates and deadlines
Xero
- Prepares financial data for your accountant
- Does not file Self Assessment directly
- Tax liability estimates available via reports
- Your accountant uses the data to prepare and file your return
- No built-in Self Assessment filing
Self Assessment verdict
FreeAgent wins decisively. If you're a self-employed tradesperson with straightforward finances (sole trader, no complex investments or multiple income sources), FreeAgent can handle your entire Self Assessment without an accountant. That saves £200-500/year in accountant fees.
Xero requires your accountant to handle the final Self Assessment filing. It prepares the data beautifully, but you can't file directly.
CIS (Construction Industry Scheme)
If you work in construction as a subcontractor or contractor, CIS compliance is essential.
FreeAgent
- CIS deductions calculated on invoices
- CIS statements generated
- CIS monthly return filing with HMRC
- Contractor and subcontractor support
- Verification of subcontractors
- CIS suffered tracking (for reclaiming deductions)
- Included in all plans (including free NatWest version)
Xero
- CIS deductions on invoices and bills
- CIS monthly returns prepared
- Contractor and subcontractor tracking
- CIS reports and summaries
- Available on Growing plan only (£25/month)
CIS verdict
Both handle CIS well. FreeAgent includes CIS on all plans, including the free NatWest version. Xero requires the Growing plan at £25/month. For a self-employed subcontractor, FreeAgent's CIS-on-every-plan approach is better value.
The actual CIS features are comparable. Both calculate deductions, generate statements, and support monthly returns. Neither is significantly better at the mechanics.
Expense Tracking
You buy materials at Screwfix. You fill up the van. You pay for parking at a job site. Tracking these expenses reduces your tax bill.
FreeAgent
- Photo capture of receipts via mobile app
- Automatic categorisation (learns from your habits)
- Mileage tracking with automatic HMRC rate calculation
- Recurring expenses (van insurance, phone contract, etc.)
- Expense categories aligned with Self Assessment tax return boxes
- Bank feed matching
Xero
- Photo capture via mobile app and Hubdoc (included free)
- Automatic categorisation
- Hubdoc extracts data from receipts and invoices automatically
- Bank feed matching and reconciliation
- Expense claims for teams
- More detailed categorisation options
Expense tracking verdict
Xero's Hubdoc integration gives it an edge for receipt management. Hubdoc automatically reads and extracts data from photographed receipts and supplier invoices. You snap a photo of your Screwfix receipt, and Hubdoc pulls out the supplier name, amount, date, and VAT without manual entry.
FreeAgent's built-in mileage tracking is better for tradespeople who drive between jobs. It calculates your allowable mileage deduction at HMRC's approved rates automatically.
For a self-employed tradesperson: FreeAgent's mileage tracking is more practically useful day-to-day. Xero's Hubdoc is better for heavy receipt volumes.
Bank Feeds and Reconciliation
Both platforms connect to UK banks via Open Banking.
FreeAgent
- Connects to most UK banks
- Automatic transaction import
- Smart suggestions for categorisation
- Explains transactions in plain English
- Reconciliation is straightforward
- Bank feed notifications
Xero
- Connects to most UK banks
- Automatic transaction import
- AI-powered categorisation suggestions
- Bank rules (set once, auto-categorise forever)
- Bulk reconciliation
- More advanced reconciliation for complex transactions
Bank feeds verdict
Xero's bank rules and bulk reconciliation are more powerful. If you have 50+ transactions per month, Xero's automation saves noticeable time. FreeAgent's reconciliation is simpler and more approachable. For a sole trader with moderate transaction volume, both work well.
Invoicing
FreeAgent
- Unlimited invoices on all plans
- Professional templates with customisation
- Automatic payment reminders
- Online payment collection (Stripe, GoCardless, PayPal)
- Recurring invoices
- Quote-to-invoice conversion
- Time-based invoicing (for day-rate work)
- CIS deductions shown on invoices
Xero
- 20 invoices/month on Early plan, unlimited on Growing
- Highly customisable templates
- Automatic payment reminders
- Online payment (Stripe, GoCardless, PayPal)
- Recurring invoices
- Quote-to-invoice conversion
- Better design customisation than FreeAgent
- Batch invoicing
Invoicing verdict
Xero's invoices look more professional and offer deeper customisation. FreeAgent gives you unlimited invoicing on every plan, including the free NatWest version. For a self-employed tradesperson, FreeAgent's unlimited invoicing and CIS integration on the free plan is the better value proposition.
Mobile App
You're on a job site, not at a desk.
FreeAgent mobile
- Create and send invoices
- Photograph receipts
- Track mileage (start/stop journey tracking)
- View bank transactions
- Check profit and tax estimates
- iOS and Android
- Functional, slightly dated design
Xero mobile
- Create and send invoices
- Photograph receipts (feeds into Hubdoc)
- Bank reconciliation
- Cash flow dashboard
- Approve bills
- iOS and Android
- Modern, polished design
Mobile verdict
Xero's mobile app is more polished and better designed. FreeAgent's mobile app is functional but feels slightly older. However, FreeAgent's mileage tracking feature on mobile (tap to start a journey, tap to end, automatically calculates the deduction) is uniquely useful for tradespeople. Most self-employed trades will use the mileage feature daily.
Payroll (If You Hire Help)
If you occasionally hire labourers or have part-time employees, payroll matters.
FreeAgent
- Built-in payroll (included in all plans)
- HMRC RTI (Real Time Information) filing
- Automatic tax and NI calculations
- Payslip generation
- Year-end P60s
- Handles up to a reasonable number of employees
Xero
- No built-in payroll
- Integrates with Gusto (from £30/month) or other payroll add-ons
- Payroll data syncs with accounts
Payroll verdict
FreeAgent wins clearly. Built-in payroll with HMRC filing is included at no extra cost. With Xero, you need a third-party payroll add-on (£30+/month). If you employ anyone, even occasionally, FreeAgent saves you £360+/year on payroll software alone.
Accountant Compatibility
Your accountant's preference matters. It affects how much they charge you.
FreeAgent
- Free accountant access
- Accountant dashboard for managing clients
- Growing UK accountant adoption
- Approximately 15-20% of UK accountants actively support FreeAgent
- Particularly popular with sole trader-focused accountants
Xero
- Free accountant access
- Advanced accountant portal (Practice Manager)
- Market-leading UK accountant adoption
- Approximately 60-65% of UK accountants prefer or recommend Xero
- The default recommendation from most practices
Accountant verdict
Xero wins on accountant compatibility. Most UK accountants know Xero. Fewer know FreeAgent. If your accountant charges £150/hour and spends an extra hour per quarter because they're less familiar with FreeAgent, that costs you £600/year.
Action: Ask your accountant which they prefer before choosing. If they're equally comfortable with both, FreeAgent's Self Assessment filing and lower cost make it the better choice.
When FreeAgent Is Better
FreeAgent is the better choice for self-employed tradespeople when:
- You bank with NatWest, RBS, or Mettle. FreeAgent is free. No competition.
- You file your own Self Assessment. FreeAgent files directly with HMRC. Xero does not.
- You drive between jobs. Built-in mileage tracking at HMRC rates.
- You need payroll. Built in, no extra cost.
- You're a CIS subcontractor on a budget. CIS included on all plans.
- You want one tool that does everything. Accounting, invoicing, payroll, tax filing, mileage, all in one platform.
When Xero Is Better
Xero is the better choice for self-employed tradespeople when:
- Your accountant strongly prefers Xero. Their efficiency affects your costs.
- You're growing towards a limited company. Xero scales better beyond sole trader.
- You have high receipt volumes. Hubdoc's automatic extraction saves time.
- You need advanced reporting. Xero's analytics are more detailed.
- You work with international suppliers. Multi-currency on all plans.
- You plan to hire a team. Xero's multi-user and permissions are more robust.
The NatWest Factor
This cannot be overstated. If you bank with NatWest or RBS (or open a free Mettle business account), you get FreeAgent completely free. Not a trial. Not a limited version. The full product.
NatWest is one of the UK's largest business banks. If you're a self-employed tradesperson setting up a business bank account, opening with NatWest/RBS/Mettle and getting free FreeAgent is one of the best financial decisions you can make.
The value: FreeAgent normally costs £14.50-29/month (£174-348/year). You get accounting, invoicing, payroll, CIS, Self Assessment filing, mileage tracking, and MTD compliance for free.
Even if your current accountant prefers Xero, the savings from free FreeAgent (plus not needing an accountant for basic Self Assessment) can exceed £500-1,000/year.
Verdict: FreeAgent vs Xero for Self-Employed Tradespeople
Choose FreeAgent if:
- You bank with NatWest/RBS/Mettle (it's free)
- You're a self-employed sole trader
- You want to file Self Assessment yourself
- You need built-in payroll
- You drive between jobs (mileage tracking)
- Budget is a priority
Choose Xero if:
- Your accountant strongly prefers it
- You're planning to grow beyond sole trader
- You need advanced reporting and analytics
- You have high receipt volumes
- You work with international clients or suppliers
- You prioritise the best mobile app experience
The honest answer for most self-employed tradespeople: FreeAgent is the better value. It includes more features at a lower price (or free with NatWest). The Self Assessment filing alone saves most sole traders £200-500/year in accountant fees. The built-in payroll saves another £360+/year if you employ anyone.
Xero is the better product for growing businesses. If you plan to become a limited company, hire a team, and need your accountant deeply involved, Xero scales further.
For a self-employed plumber, electrician, or builder earning £30k-80k/year and working as a sole trader, FreeAgent is the smarter financial choice. Start there. Switch to Xero if and when you outgrow it.
Related Guides
- QuickBooks vs Xero for Tradespeople - Head-to-head comparison of the two biggest accounting platforms
- Best Accountancy Software for UK Sole Traders - Full breakdown of all accounting options
- Best Invoicing Software UK 2026 - Invoicing-focused comparison including free options
- Making Tax Digital Phase 2 - MTD ITSA compliance explained
- Tradify vs ServiceM8 vs Jobber - Job management software to pair with your accounting platform