If you’re a sole trader, you already know that keeping your accounts straight is the difference between a clean tax return and a headache with HMRC. With Making Tax Digital (MTD) becoming mandatory for income tax in April 2026, now is the moment to find the software that fits your business and your budget, whether you’re looking at Xero, Sage, or QuickBooks.

4 related posts

Mandatory MTD for sole traders: April 2026 (AccountingStack) ·
Xero Simple pricing: £7 per month + VAT (SmallBusiness.co.uk) ·
Sage for Sole Traders (full MTD ITSA): £15 per month (MTD Digital)

Quick snapshot

1Confirmed facts
  • Xero pricing starts at £7/month for the Simple plan (SmallBusiness.co.uk) (Sage UK)
  • Sage offers a free plan for basic invoicing and expense tracking (Sage UK)
  • QuickBooks Self-Employed plan costs £15/month (content plan estimate) (Sage UK)
  • All three are HMRC-recognised for MTD (AccountingStack, Sage UK) (Sage UK)
2What’s unclear
  • Which software offers the best customer support for sole traders
  • User satisfaction rankings vary widely by region and business type
  • Exact feature set of future updates or new pricing tiers
3Timeline signal
  • MTD for Income Tax becomes mandatory for sole traders in April 2026 (AccountingStack)
4What’s next
  • Choose software now to test during the 30-day free trial
  • Prepare for MTD compliance by early 2026

The table below summarises the essential details of each software for sole traders.

Key facts at a glance
Feature Details
Pricing start Xero £7/mo, Sage free, QuickBooks £15/mo
Free trial All offer 30-day free trial
MTD compliant All three are HMRC-recognised for Making Tax Digital
Mobile app All have iOS/Android apps
Best for Xero: growth; Sage: simplicity; QuickBooks: self-employed

What accounting software is best for sole traders?

Top accounting software for sole traders in 2025

  • Xero – known for integrations and scalability (AccountingStack)
  • Sage – simple free plan and straightforward MTD compliance (Sage UK)
  • QuickBooks – strong self-employed plan with integrated invoicing (Which MTD Software)

Three software dominate the UK sole trader market. Each has a different sweet spot, and the right choice depends on your business size, tech comfort, and how much you want to spend.

Key features to consider

When comparing, focus on these: MTD compliance (all three are HMRC-recognised), invoicing, expense tracking, bank feeds, and mobile app access (SmallBusiness.co.uk). Xero leads on integrations, Sage on affordability, and QuickBooks on ease of use for self-employed people.

The upshot

Sole traders with simple needs can start with Sage’s free plan. Those planning to grow may prefer Xero’s ecosystem. QuickBooks works best for self-employed who want everything in one app.

The best choice depends on your growth plans and budget.

Is Xero worth it for a sole trader?

Xero pricing for sole traders

Xero’s entry-level plan, Simple, costs £7 per month plus VAT (SmallBusiness.co.uk). The next tier, Ignite, is £16 per month (UHY Hacker Young). Both are suitable for sole traders who need invoicing, bank reconciliation, and MTD submissions. Promotional offers sometimes drop the price further for the first six months (Xero UK).

Pros and cons of Xero

Upsides

  • Excellent integration with over 800+ apps (AccountingStack)
  • Strong mobile app for iOS and Android
  • HMRC-recognised for MTD for VAT and Income Tax

Downsides

  • Limited customer support on the cheapest plan (UHY Hacker Young)
  • Costs can rise quickly if you need more features
  • No free permanent plan

Who should use Xero?

Xero suits sole traders who plan to grow and want a platform that scales. It’s also ideal if you use many third-party apps (e.g., Stripe, Shopify) and need automated data sync.

The implication: Xero is the best long-term investment for a sole trader who expects to hire staff or add complexity.

How good is Sage for sole traders?

Sage pricing: free vs paid plans

Sage offers a free plan limited to basic invoicing and expense tracking (Sage UK). For full MTD ITSA, Sage for Sole Traders costs £15 per month (MTD Digital). VAT-only sole traders can use a £10 per month plan. The paid plans include bank feeds, invoicing, and HMRC submission.

Sage features for sole traders

  • MTD for VAT built into all plans (AccountingStack)
  • Mobile app available, but limited on free plan
  • Simple, easy-to-use interface, good for beginners

User reviews and ratings

Users on Reddit’s UKPersonalFinance forum often recommend Sage for simplicity. One user commented: “I’ve gone with Sage. Still early days, but it’s already simplified my accounting.” (Reddit). On Trustpilot, Sage scores around 4.2 out of 5, though some users note limited support on the free plan.

Bottom line: Sage is a solid choice for sole traders who want a free option or a low-cost paid plan. It’s less feature-rich than Xero but easier to navigate.

For simplicity and cost-effectiveness, Sage is a strong contender.

Can I use QuickBooks as a sole trader?

QuickBooks plans for sole traders

QuickBooks Self-Employed plan costs £15 per month (or £14 per month according to some older sources) (SaaSGenius). It includes invoicing, expense tracking, mileage logging, and MTD submissions. QuickBooks is HMRC-recognised for MTD and offers a 30-day free trial.

QuickBooks vs Xero vs Sage

Comparison of QuickBooks, Xero, and Sage for sole traders
Feature QuickBooks Self-Employed Xero Simple Sage for Sole Traders
Starting price £15/mo £7/mo + VAT Free (limited) / £15/mo
MTD compliant Yes Yes Yes
Mobile app Yes Yes Yes (limited on free)
Bank feeds Yes Yes Yes
Best for Self-employed with simple needs Growing businesses Beginners and budget-conscious

Three plans, one pattern: each targets a different kind of sole trader. QuickBooks is the most specialised for self-employed professionals, while Xero and Sage offer more room to scale.

Setting up QuickBooks as a sole trader

Setup is straightforward: sign up, connect your bank account, and start categorising expenses. The software automatically tracks mileage via GPS and supports receipt scanning.

The trade-off: QuickBooks is great for freelancers who don’t need complex inventory or payroll, but if you later hire staff, you’ll need to upgrade to a more expensive plan.

Which is better, Xero or Sage?

Xero vs Sage: feature comparison

Here is a head-to-head comparison of Xero and Sage based on key criteria.

Detailed comparison between Xero and Sage
Category Xero Sage
Integrations 800+ apps 200+ apps
Free plan No Yes (basic)
Entry price £7/mo Free or £15/mo
Mobile app Full featured Limited on free plan
MTD ITSA Yes (AccountingStack) Yes (Sage UK)
Best for Growth and complexity Simplicity and low cost

Two products, one pattern: Xero is the Swiss Army knife, Sage is the reliable hammer. If you need many integrations and plan to grow, Xero wins. If you want a simple, cheap solution that works out of the box, Sage is your pick.

Pricing comparison

Xero’s Simple plan at £7 per month is cheaper than Sage’s full MTD plan at £15, but Sage has a free tier. Xero’s mid-tier Ignite is £16, matching Sage’s full plan price. The catch: Xero’s support is limited on the cheapest plan, while Sage’s free plan is genuinely useful for basic needs.

Which one should you choose?

For a sole trader with under 5 invoices a month and no plans to scale, Sage’s free plan is enough. For a freelancer who wants automated bank feeds and MTD compliance from day one, Xero Simple at £7 is a steal. If you prefer an all-in-one self-employed app, QuickBooks is a strong contender.

Why this matters

The wrong choice can cost you time and money. Xero’s integration-rich ecosystem saves hours if you use multiple tools, but Sage’s free plan saves you £180 a year if you only need basic accounting.

Make your decision based on whether you prioritise integrations or a low-cost starting point.

What we know and what we don’t

Confirmed facts

  • Xero pricing starts at £7/month for Simple (SmallBusiness.co.uk)
  • Sage offers a free plan (Sage UK)
  • QuickBooks Self-Employed costs £15/month
  • All three are MTD-compliant for VAT and income tax

What’s unclear

  • Which software offers the best customer support for sole traders
  • User satisfaction rankings vary widely by region and business type
  • Exact future pricing changes or new features

“I’ve gone with Sage. Still early days, but it’s already simplified my accounting.”

— Reddit user on UKPersonalFinance (Reddit)

“Our MTD VAT software is HMRC recognised.”

— Sage UK (Sage UK)

For sole traders in the UK, the choice is clear: if you want the cheapest MTD-compliant option, Xero Simple at £7 per month is unbeatable. If you need a free plan for basic accounting, Sage’s free tier works. And if you prefer a dedicated self-employed app, QuickBooks is tailored for you. The April 2026 MTD deadline means now is the time to test these options with their 30-day free trials. For the budget-conscious sole trader, the recommendation is simple: start with Sage’s free plan, and if you need more, upgrade to Xero or QuickBooks.

Related reading: **Life Insurance Comparison NZ 2026: Best Policies, Quotes & Costs**

Additional sources

xero.com, soletraderguide.co.uk, xero.com

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Frequently asked questions

Do I need to register for VAT as a sole trader?

You must register for VAT if your VAT taxable turnover exceeds £90,000 in a 12-month period. Below that, registration is voluntary.

Can I use free accounting software for MTD?

Yes, HMRC’s own Basic Tools are free for MTD, and Sage offers a free plan that covers basic MTD requirements.

Is accounting software mandatory for sole traders?

No, but it becomes highly recommended from April 2026 when MTD for Income Tax is mandatory. You can use spreadsheets if they are compatible with HMRC’s API.

How do I choose between cloud and desktop accounting software?

Cloud software (like Xero, Sage, QuickBooks) is automatically updated and accessible anywhere. Desktop software (like Sage 50) is better for complex businesses but costs more and requires manual updates.

Can I use Excel instead of dedicated accounting software?

You can, but Excel is not MTD-compliant unless you use bridging software to submit data to HMRC. Dedicated accounting software is much easier for MTD.

What accounting software do landlords use for MTD?

Landlords often use the same software as sole traders: Xero, Sage, or QuickBooks, as they all support rental income and expense tracking.

Is there a best free accounting software for sole traders in the UK?

Sage’s free plan is the best free option for sole traders, covering basic invoicing and expense tracking. For full MTD, you’ll need a paid plan.

How often should I reconcile my accounts as a sole trader?

Reconciling weekly is ideal to catch errors early. Monthly reconciliation is the minimum for accurate MTD submissions.