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Which accounting software should my business use?
If you are choosing accounting software, here is what to check first, what the law needs it to do, and what four providers' own pricing pages showed.
The short answer
Ask your accountant which software they use before you choose. If you are VAT registered, GOV.UK says you must send your VAT Return using software compatible with Making Tax Digital. If you are a sole trader or landlord, Making Tax Digital for Income Tax applies from 6 April 2026 if your qualifying income was over £50,000 in the 2024 to 2025 tax year, then over £30,000 in 2025 to 2026 (from 6 April 2027) and over £20,000 in 2026 to 2027 (from 6 April 2028). Compare prices on each provider's own website.
Ask your accountant first
This part is our suggestion, not a rule. If you have an accountant or bookkeeper, ask which software they use and whether they would charge less, or more, if you used something else. If you both use the same product, they may be able to work in your records directly instead of you sending them spreadsheets or paperwork. If you do not have an accountant yet, you can ask any firm you speak to the same question.
What Making Tax Digital means for your software
VAT. GOV.UK says all VAT-registered businesses should now be signed up for Making Tax Digital for VAT,1 and that you must submit your VAT Return using accounting software that is compatible with Making Tax Digital, unless you have an exemption.2 This applies to limited companies and sole traders alike.
Income Tax. Making Tax Digital for Income Tax is for sole traders and landlords registered for Self Assessment. GOV.UK says you need to use it if your qualifying income is more than the threshold for the tax year:3
| If your qualifying income is over | In the tax year | You need to use it from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
GOV.UK says partnerships will also need to use it in the future, with a timeline to come.3 A limited company's own tax is Corporation Tax, which is not part of Making Tax Digital for Income Tax. Our Making Tax Digital guide covers qualifying income, exemptions and what you send each quarter.
HMRC has a software finder for products that have passed its recognition process. GOV.UK says HMRC does not recommend any product or software provider.4
Four products compared
This table covers four products: FreeAgent, QuickBooks, Sage and Xero. It is not a ranking or a recommendation, and other products exist. Prices are each provider's standard monthly price as shown on its own pricing page, without introductory offers, and exclude VAT. Prices change, so check the provider's page before you buy.
| Product | Standard monthly price (excluding VAT) | Making Tax Digital (what the provider says) | Payroll | Source | Checked |
|---|---|---|---|---|---|
| FreeAgent | Limited company £33; partnership or LLP £27; sole trader £19; landlord £10. Free with a NatWest, Royal Bank of Scotland or Ulster Bank business current account, or a Mettle account used at least once a month. A 50% introductory discount was also shown. | Generates MTD-compatible VAT returns. The sole trader and landlord plans include quarterly updates for MTD for Income Tax. | Listed as a feature. FreeAgent says payroll is not included if a sole trader or partnership chooses the cash basis. | FreeAgent pricing | 26 October 2026 |
| QuickBooks | Not shown here. QuickBooks' pricing page lists its plans and features, but the prices load separately in the browser and we could not read them on 26 October 2026. | Lists its plans as "MTD for Income Tax ready". VAT submission is on Simple Start and above, not on Sole Trader Plus. | Not included. QuickBooks says payroll can be added to Simple Start, Essentials, Plus or Advanced at extra cost. | QuickBooks pricing | 26 October 2026 |
| Sage | Not shown here. Sage's pricing page did not let us read it on 26 October 2026. | Not checked. | Not checked. | Sage pricing | Could not read, 26 October 2026 |
| Xero | Ignite £18; Grow £39; Comprehensive £55; Ultimate £70. An introductory discount was also shown. | Lists every plan as "MTD for Income Tax ready" and including VAT return submission to HMRC. | Ignite: an add-on at £1.50 per person. Grow includes 1 person, Comprehensive 5 and Ultimate 10, then £1.50 per extra person (£1 on Ultimate). | Xero pricing | 26 October 2026 |
The plans are not like for like: each provider splits features differently, for example by number of invoices, users or payroll staff. Check the limits on the plan you are looking at.
Limited company or sole trader: what to look for
A limited company must keep accounting records, including all money received and spent and the company's assets, and keep them for 6 years from the end of the last financial year they relate to, or longer in some cases.5 Its records also need to support the annual accounts and Company Tax Return. Ask whether the software, or your accountant, prepares and files those. If you pay staff, including directors through payroll, check the payroll limits.
A sole trader or landlord must keep records for at least 5 years after the 31 January submission deadline of the tax year they relate to.6 If Making Tax Digital for Income Tax applies to you, the software must be able to send HMRC your quarterly updates. Check that the plan you choose does this.
Switching software
This part is our suggestion, not a rule.
- Pick a clean point. The start of a new financial year or VAT quarter means fewer periods split across two systems.
- Export before you cancel. Download your reports, invoices and transaction history first. You still have to keep your records for the periods above after you leave.
- Tell your accountant. They may need to set up access to the new system, and they may have a preferred way to move the data across.
- Check what moves across. Opening balances, unpaid invoices and bank rules may not transfer automatically. Ask the new provider what its import covers.
Questions
Do I have to use the same software as my accountant?
No law says so. It is a practical question: ask your accountant whether a different product would change how they work or what they charge.
Can I use a spreadsheet instead?
For VAT returns, GOV.UK says you must use software compatible with Making Tax Digital unless you are exempt.2 If you keep your records in a spreadsheet, ask your accountant how your returns would be sent, or check HMRC's software finder, which lists products that have passed its recognition process.4 Our profit and loss template is for seeing your figures, not for filing.
Does HMRC recommend a product?
No. GOV.UK says HMRC does not recommend any product or software provider.4
Sources
- GOV.UK, "Charge, reclaim and record VAT" (Making Tax Digital for VAT). gov.uk/vat-record-keeping/making-tax-digital-for-vat. Checked 26 October 2026.
- GOV.UK, "Sending a VAT Return: How to send your VAT Return". gov.uk/submit-vat-return/how-to-send-vat-return. Checked 26 October 2026.
- GOV.UK, "Find out if and when you need to use Making Tax Digital for Income Tax" (last updated 26 March 2026). gov.uk. Checked 26 October 2026.
- GOV.UK, "Find software that's compatible with Making Tax Digital for Income Tax" (last updated 13 July 2026). gov.uk. Checked 26 October 2026.
- GOV.UK, "Running a limited company: Company and accounting records". gov.uk/running-a-limited-company/company-and-accounting-records. Checked 26 October 2026.
- GOV.UK, "Business records if you're self-employed: How long to keep your records". gov.uk/self-employed-records/how-long-to-keep-your-records. Checked 26 October 2026.