Xero vs FreeAgent for Sole Traders: Which Should You Pick?

Quick answer

Most sole traders should choose FreeAgent. It’s simpler, built specifically for UK freelancers, and can file your Self Assessment directly to HMRC.

Choose Xero if you plan to grow, hire staff, or need advanced features and integrations.

Key differences (quick comparison)

Feature	FreeAgent	Xero
Best for	Sole traders & freelancers	Growing businesses
Self Assessment filing	✅ Yes (direct to HMRC)	❌ No
Tax estimates	✅ Real-time	❌ No
Ease of use	✅ Very simple	⚠️ Moderate
Integrations	⚠️ Limited (~100)	✅ Extensive (1,000+)
Price	£33/month (free via Mettle)	From £7/month

🥇 Why FreeAgent is better for most sole traders

Built for UK sole traders

FreeAgent is designed specifically for freelancers and sole traders. Everything is focused on what you actually need: tracking income, expenses, and tax.

It files your Self Assessment

👉 You can submit your tax return directly to HMRC from within FreeAgent

This removes the need for:

separate software
manual calculations
extra admin

Real-time tax visibility

FreeAgent shows a running estimate of:

Income Tax
National Insurance
payments on account

👉 You always know roughly what you owe.

Simple to use

You don’t need accounting knowledge.

The interface is:

guided
clearly labelled
designed for non-accountants

💰 FreeAgent can be completely free

If you open a Mettle business account, you get FreeAgent included at no cost.

That means:

£0/month banking + £0/month accounting software

👉 For most sole traders, this is the easiest and most cost-effective setup.

If you haven’t chosen a bank account yet, compare your options here:
Best Business Bank Accounts for Sole Traders

⚙️ When Xero is the better choice

You’re planning to grow

Choose Xero if you expect to:
	-	hire employees
	-	manage inventory
	-	run a more complex business

You need integrations

Xero connects to:
	-	Stripe
	-	Shopify
	-	HubSpot
	-	hundreds of other tools

👉 If your business relies on multiple systems, Xero is stronger here.

You already have an accountant

Many UK accountants prefer Xero.

If you’re working closely with one, it may be easier to use what they already know.

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Setup comparison

| Task              | FreeAgent        | Xero               |
|------------------|------------------|--------------------|
| Setup time       | ~30 minutes      | ~45–60 minutes     |
| Ease of setup    | Very easy        | Moderate           |
| Weekly bookkeeping | Simple        | Slightly more involved |
| Tax return       | Built-in         | Requires external step |

Which should you choose?

Use this simple rule:
	•	Want simplest setup → FreeAgent
	•	Want free accounting → FreeAgent via Mettle
	•	Planning to grow → Xero
	•	Working with an accountant → Xero

⸻

Final recommendation

For most sole traders:

👉 Use FreeAgent

If you expect your business to grow or need more advanced features:

👉 Use Xero

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*Last updated: March 2026. Features may change. Always check provider websites for the latest details.*