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.
This guide compares FreeAgent vs Xero for sole traders in the UK so you can choose the right accounting software based on your needs.
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.
If you’re not sure what counts as a business expense, see our full guide:
Sole trader expenses list UK
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
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.
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 |
Before choosing software, it helps to understand what you’ll actually be tracking:
Sole trader expenses list UK
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
Related guides
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Last updated: March 2026. Features may change. Always check provider websites for the latest details.