FreeAgent or Xero for a new limited company?
You've just set up a company and need to pick accounting software. Here's how the two most common UK choices compare on price, fit and what happens as you grow.
The short answer
- If you bank with NatWest, RBS, Ulster Bank or Mettle, FreeAgent is usually the sensible start — it can cost you nothing.
- If you expect staff, stock, multiple currencies or lots of connected apps soon, Xero's higher tiers scale further, at a monthly cost.
- Both are fine for Making Tax Digital for VAT. The bigger risk is setting either one up badly, not picking the "wrong" one.
- You can switch later, but it's work — choose for the next two to three years, not forever.
Price comparison (UK, October 2026, excluding VAT)
| FreeAgent | Xero | |
|---|---|---|
| Standard price (limited company) | £33/month | Ignite £18, Grow £39, Comprehensive £55, Ultimate £70 a month |
| Free option | Free with a NatWest, RBS or Ulster Bank business current account, or Mettle (one transaction a month) | No free plan |
| New-customer offer | 30-day trial, then 50% off for six months | Introductory discounts for the first months |
| Plan tiers | One full plan per business type, plus optional add-ons | Several tiers — features and limits rise with price |
| MTD for VAT returns | Yes | Yes (on plans that include VAT returns) |
| Built for | Small owner-managed companies, contractors, freelancers | Growing companies, more staff, stock, more add-on apps |
Sources: FreeAgent pricing and Xero UK price update (from 1 September 2026). Xero also lists a £7 "Simple" plan, aimed at businesses that aren't VAT registered.
When FreeAgent is the better fit
FreeAgent suits a new company run by one or two directors: a consultant, contractor, tradesperson or small agency. Its limited-company account includes the things you deal with every year — invoicing, bank feeds, expenses, director's payroll and a running view of what tax is coming.
The deciding factor for many directors is the bank. FreeAgent is owned by NatWest Group, so it's free with an eligible NatWest, RBS, Ulster Bank or Mettle business account. If you're opening a business bank account anyway, that's worth knowing before you choose. We cover the Mettle conditions in FreeAgent free with Mettle.
When Xero is the better fit
Xero makes sense when you expect the company to get more complex quickly: several staff on payroll, stock, foreign currency, project costing, or a stack of connected apps (e-commerce, bill capture, payment platforms). Its marketplace of integrations is larger, and higher tiers add features like multi-currency and longer cash-flow forecasting.
The trade-off is cost. Xero has no free plan, and the cheapest plans have usage limits, so check the plan you need — not the entry price.
Three questions that usually decide it
- Where will you bank? NatWest Group (including Mettle) points to FreeAgent.
- Will you have more than a couple of employees, or hold stock, in the next two years? That points to Xero.
- Which apps must it connect to? Check your shop, till or payment platform supports your choice.
Still not sure which suits your company?
We set up and run both, so we can tell you which one fits your company in a short call. See our FreeAgent accountant and Xero accountant services.
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Common Questions
Is FreeAgent or Xero cheaper for a limited company?
FreeAgent lists £33 a month for a limited company, or free with an eligible NatWest, RBS, Ulster Bank or Mettle account. Xero's UK plans range from £18 to £70 a month from 1 September 2026. All prices exclude VAT.
Can I switch from FreeAgent to Xero later?
Yes. Opening balances and history need moving across, and it's simplest at a year end. Most directors who choose carefully at the start never need to.
Do both work with Making Tax Digital for VAT?
Yes. Both can submit VAT returns to HMRC under Making Tax Digital. On Xero, check that your plan includes VAT returns.
Will my accountant work with either?
Most UK accountants support both. We work in FreeAgent and Xero every day, and we can be added as a user at no extra software cost.
Last reviewed October 2026. Software prices are taken from FreeAgent's and Xero's own UK pricing pages, exclude VAT and can change at any time — check the provider's site before you buy. General guidance for UK limited companies, not advice on your specific circumstances.