Is FreeAgent or Xero better for sole traders?

For most sole traders and freelancers, FreeAgent is the better fit — especially if you bank with NatWest or RBS. It's simpler, purpose-built for self-employed people, and includes self-assessment filing. Xero is better if you need more features, a larger integrations ecosystem, or plan to grow your business significantly.

Is FreeAgent really free?

FreeAgent is free for qualifying NatWest and RBS business account holders. This isn't a limited free plan — it's the full product, including MTD submissions and self-assessment filing. If you don't bank with NatWest/RBS, you pay £19/month for the sole trader plan.

Does Xero include self-assessment filing?

No. Xero doesn't file a Self Assessment tax return directly. Under MTD for Income Tax, quarterly updates and EOPS (submitted by Xero) replace the annual return for self-employment income. For other income types or a final declaration, most Xero users work with an accountant. FreeAgent is the exception — SA100 filing is included in its standard plans.

Which is better for invoicing — Xero or FreeAgent?

Xero has more advanced invoicing features — payment links, custom branding, automated reminders, and support for more currencies. FreeAgent has solid invoicing for most sole traders but is less flexible. If invoicing is a core part of your business, Xero has the edge.

Can I switch from Xero to FreeAgent (or vice versa)?

Yes. Both platforms support CSV data exports and imports. Migration is easiest at the start of a new tax year. If you switch mid-year, you may need to manually enter opening balances to ensure your quarterly MTD figures are accurate. FreeAgent has a dedicated migration support team that can help.

Affiliate disclosure: This page contains links to software products. If you purchase through these links, we may earn a small commission at no extra cost to you. This does not affect our editorial independence or the objectivity of our reviews. Read our full affiliate policy.

Xero vs FreeAgent for Sole Traders (2025): Which MTD Software Wins?

Last updated: 1 March 2025

Reviewed by SoleTraderGuide Editorial TeamMTD Software AnalystLast reviewed 1 March 2025

In a nutshell

Xero

More powerful — 800+ integrations, advanced invoicing
Best-in-class mobile app for on-the-go accounting
Better for growing businesses and those needing scale

FreeAgent

Purpose-built for freelancers and sole traders
Self-assessment filing included in every plan
Free for NatWest/RBS business account holders

Who Each Tool is Best For

Choose Xero if you...

→Invoice clients regularly and need advanced invoicing features
→Need a large integrations ecosystem (CRM, payments, e-commerce)
→Plan to grow your business and potentially hire staff
→Have a mix of income sources including property

Choose FreeAgent if you...

→Bank with NatWest or RBS (FreeAgent is free)
→Want self-assessment filing included without extra cost
→Are a freelancer, consultant, or contractor
→Want a simpler, less overwhelming platform

Full Feature Comparison

Feature	Xero	FreeAgentRecommended
MTD compatible HMRC-recognised for MTD Income Tax
Starting price	£16/month	£19/month
Free plan available		Via NatWest/RBS
Free trial	30 days	30 days
Supports sole traders
Supports landlords
Mobile app quality	Excellent	Good
Ease of use (1–5)	4 / 5	4.5 / 5
UK customer support	Chat + email	Chat + email
Integrations	800+ apps	20+ apps
Self-assessment filing	Via accountant	Included

Pros and Cons

Xero

What we like

HMRC-recognised MTD software
Strong mobile app
Extensive integrations (800+ apps)
Automatic bank feeds
Good UK support

Watch out for

No free plan
Can feel complex for very small businesses
Pricing increases with features

FreeAgent

What we like

Purpose-built for freelancers and sole traders
Free with NatWest, RBS, Ulster Bank, or Mettle business accounts
Self-assessment filing included in all plans
HMRC-recognised MTD software
Tax timeline dashboard keeps you on track

Watch out for

Higher monthly price if paying directly
Less suitable for more complex businesses
Limited multi-currency support

Key Differences Explained

The NatWest/RBS Factor

This is the most significant factor in the Xero vs FreeAgent decision for many sole traders. FreeAgent has a partnership with NatWest and RBS that gives qualifying business account holders full access to the platform for free. This includes MTD Income Tax submissions, self-assessment filing, invoicing, and expense tracking — everything. If you already bank with NatWest or RBS (or are willing to switch), FreeAgent at £0/month is an exceptional deal.

Check your eligibility

NatWest and RBS offer FreeAgent free to business account holders, but the account type matters. Check directly with your bank whether your specific account qualifies. Many standard business current accounts are eligible.

Self-Assessment Filing

FreeAgent includes self-assessment (SA100) filing in its standard plans. This is a genuine cost saving — many sole traders pay an accountant £100–£300 per year purely for this service. Xero does not file self-assessment directly; users either work with an accountant or rely on MTD submissions covering self-employment income.

Features and Integrations

Xero has a significantly larger integrations marketplace — over 800 third-party apps compared to FreeAgent's 20+. If you rely on specific tools (Stripe, Shopify, HubSpot, SquareSpace), Xero is more likely to have a native integration. For most sole traders and freelancers, FreeAgent's integrations are sufficient — but if you need to connect multiple platforms, Xero is the safer choice.

Simplicity vs Power

FreeAgent scores higher on ease of use. It was designed specifically for people who are not accountants — the tax timeline, simple dashboard, and guided workflows make it approachable. Xero is intuitive by accounting software standards, but it has more screens, more options, and more complexity. For most freelancers and sole traders, FreeAgent's simplicity is a feature, not a limitation.

The Verdict

For freelancers and NatWest/RBS customers: FreeAgent wins, and it's not close. If you can get it for free via your bank, there is almost no reason to pay £16/month for Xero instead. FreeAgent is simpler, purpose-built for your situation, and includes self-assessment filing.

For sole traders who invoice clients and need to grow: Xero is the better long-term platform. Its invoicing tools, mobile app, and integrations ecosystem make it easier to scale. If you anticipate taking on staff, expanding your client base significantly, or needing specialist software integrations, Xero is the right investment.

On price: FreeAgent at £19/month (or free via NatWest/RBS) is competitive with Xero at £16/month given that FreeAgent includes self-assessment filing. On a like-for-like basis, FreeAgent often works out cheaper once you factor in accountant fees saved.

Alternative Options

QuickBooks

More features than FreeAgent at comparable pricing. The Self-Employed plan at £8/month is the cheapest compliant MTD option.

Read review →

Sage

UK-native with UK-based phone support. Good for sole traders who prefer established UK brands.

Read review →

Frequently Asked Questions

Ready to choose between Xero and FreeAgent?

Both offer 30-day free trials. NatWest/RBS customers can activate FreeAgent for free right now.

Try FreeAgent free Try Xero free