Xero vs QuickBooks for UK Small Businesses (2026)

2 Software

October 8, 2026

For most UK small businesses that want payroll and unlimited invoicing under one bill, Xero is the safer pick on the evidence we could verify: its plans publish clear invoice, bill and payroll limits, and every plan is listed as ready for Making Tax Digital (MTD) for Income Tax and able to submit VAT returns to HMRC. QuickBooks is the better fit if you want a lower entry point for a single user and need your accountant on the system from day one, but its UK pricing page did not display prices when we checked, so you must confirm the monthly cost yourself.

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Quick verdict

Choose Xero if you employ people, send a lot of invoices, or want to know exactly what each plan includes before you sign up.
Choose QuickBooks if you are a sole trader or small team that wants a tiered range from 1 to 25 users, accountant access on every plan, and a payroll add-on you can switch on later.
Check the price first with either. Xero lists prices excluding VAT and discounts the first six months for new UK customers. QuickBooks prices were not visible to us.

Side-by-side comparison

The table below uses each vendor’s own UK pricing page, checked on 8 October 2026. Xero prices are in pounds sterling and exclude VAT, as the page states. The QuickBooks page showed “Loading live prices…” instead of amounts, so we have not quoted any.

Plan	Monthly price (checked 8 Oct 2026)	Users and limits	Invoices and bills	MTD and VAT
Xero Ignite	£1.80 for the first 6 months, then £18 (excl. VAT)	Expense and mileage users excluded; payroll £1.50 per person	Quotes plus 20 invoices; 10 bills	MTD for Income Tax ready; VAT returns to HMRC
Xero Grow	£3.90 for 6 months, then £39 (excl. VAT)	1 payroll person and 1 expense user included	Invoices, quotes and bills included	MTD for Income Tax ready; VAT returns to HMRC
Xero Comprehensive	£5.50 for 6 months, then £55 (excl. VAT)	5 payroll people and 5 expense users included	Invoices, quotes and bills included	MTD for Income Tax ready; VAT returns to HMRC
Xero Ultimate	£7 for 6 months, then £70 (excl. VAT)	10 payroll people and 10 expense users included	Invoices, quotes and bills included	MTD for Income Tax ready; VAT returns to HMRC
QuickBooks Sole Trader Plus	Not shown on the page	1 user; accountant access	No numeric limit stated	MTD for Income Tax ready; no VAT submission
QuickBooks Simple Start	Not shown on the page	1 user; accountant access	No numeric limit stated	MTD for Income Tax ready; VAT submission to HMRC
QuickBooks Essentials	Not shown on the page	3 users; accountant access	No numeric limit stated; recurring invoices and bill management listed	MTD for Income Tax ready; VAT submission to HMRC
QuickBooks Plus	Not shown on the page	5 users; accountant access	No numeric limit stated	MTD for Income Tax ready; VAT submission to HMRC
QuickBooks Advanced	Not shown on the page; sold via “Book a demo”	25 users; accountant access	No numeric limit stated; batch invoices and expenses	MTD for Income Tax ready; VAT submission to HMRC

Xero also states that Starter, Standard and Premium “will no longer be sold” from 12 September 2024, so older reviews that quote those plans are out of date.

Key differences

Pricing transparency

Xero shows a clear ladder of four plans, a six-month introductory price for new UK customers using the code on the page, and the full price afterwards. The introductory discount applies to the base subscription only, not to add-ons, usage or payment fees, and Xero can change or cancel it. QuickBooks advertises a limited-time discount, but its figures did not render properly and it states you cannot combine its 30-day free trial with the discount.

How the plans scale

Xero scales mainly by what you send and who you pay. The cheapest plan caps you at 20 invoices and 10 bills, while the other three remove those caps and add payroll allowances. QuickBooks scales by headcount instead, from one user on Sole Trader Plus and Simple Start up to 25 on Advanced.

VAT and Making Tax Digital

Both products are built for MTD. Xero lists MTD for Income Tax readiness and VAT returns on every plan. QuickBooks is described on its own site as HMRC-recognised software for MTD, but the entry-level Sole Trader Plus plan has no VAT error checker or direct VAT submission. If you are VAT registered, you need Simple Start or above.

The rules behind this are not optional for many firms. GOV.UK states that all VAT-registered businesses should now be signed up for MTD for VAT. For Income Tax, sole traders and landlords with qualifying income over £50,000 must use MTD for Income Tax from 6 April 2026, according to GOV.UK.

Payroll

Xero builds payroll into the plan: 1, 5 or 10 people are included on Grow, Comprehensive and Ultimate, with extra people at £1 to £1.50 each. QuickBooks sells payroll as a separate add-on in Core, Premium and Elite tiers, and the price was not visible to us.

Winner by use case

Sole trader

It depends on VAT. A non-VAT-registered sole trader with light invoicing can use Xero Ignite at £18 a month after the introduction period, provided 20 invoices and 10 bills a month is enough. A sole trader who needs VAT submission cannot use QuickBooks Sole Trader Plus, so would need Simple Start. Our pick for the lightest use is Xero Ignite, but only if you stay inside its caps.

VAT-registered small business

Xero Grow is the cleaner starting point because VAT returns and uncapped invoices and bills sit in a single £39 plan, excluding VAT. QuickBooks Simple Start also supports VAT submission, though without a visible price we cannot call it cheaper or dearer.

Growing team with payroll

Xero wins on what we could verify. Comprehensive includes payroll for 5 people and Ultimate for 10, and the per-person charge beyond that is published. QuickBooks offers a stronger user ladder, up to 25 users, but payroll is an extra-cost add-on whose price we could not confirm.

Accountant collaboration

QuickBooks has the edge on documented evidence: its page lists accountant access as available on every plan. Xero’s pricing page did not state accountant access, so we cannot compare it. Most UK accountants have a preference, so ask yours before you buy.

Pricing difference and add-ons

Xero’s headline prices exclude VAT, so a VAT-registered business that cannot reclaim the charge should budget accordingly. The page offers a VAT registered or non-VAT registered toggle but shows no VAT-inclusive prices. Add-ons on Xero that the page lists include:

Payroll beyond the included people: £1 per extra person on Ultimate and £1.50 on Comprehensive and Grow.
Extra expense users: £2.50 each.
Contractor CIS returns: an optional £5 a month.
Company accounts and tax: optional, £120 excluding VAT billed annually.
Auto-reconcile on Ignite: optional, £3.50 a month.

Online invoice payments carry payment fees tied to Stripe pricing. Xero also says most customers get direct bank feeds at no extra cost, though some UK banks pass on fees. For QuickBooks, the only verified add-on fact is that payroll costs extra, with Core, Premium and Elite tiers.

Limitations

Xero Ignite is capped at 20 invoices and 10 bills, and its payroll is pay-per-person.
Xero’s payroll, expense and payment allowances can trigger extra charges if exceeded, including by invited users.
Xero’s discount is for new UK customers only and covers the base subscription only.
QuickBooks Sole Trader Plus cannot submit VAT returns.
QuickBooks does not publish invoice or bill limits on the page we checked, and mileage tracking is available only on iOS and Android.
This comparison is based on vendor pages, not hands-on testing. We have not used either product for this article.

Best for Xero

Xero suits businesses that employ staff, issue many invoices, or want published limits and published payroll costs. It is also the clearer choice if you want a predictable monthly bill on a single ladder from £18 to £70, excluding VAT, after the introductory period.

Best for QuickBooks

QuickBooks suits teams that expect to add users, from one to 25, and businesses where the accountant needs access on day one. It also appeals to anyone who prefers to add payroll later instead of paying for allowances they do not use. Confirm the live price before you commit.

Alternatives to consider

Sage Accounting is the one alternative whose official UK page we could open. It offers three plans: Start for 1 user at £2 for 6 months then £20, Standard for 3 users at £4.30 then £43, and Plus with unlimited users at £5.90 then £59. These exclude VAT, include payroll at £1.85 per employee per month according to the page, and carry a Making Tax Digital Compatible badge. Sage also states a 30-day free trial of Standard.

FreeAgent is often shortlisted too, but its official page returned US-dollar pricing and no UK details when we checked, so we have left it out rather than guess. If you are still weighing options, see our guide to choosing business software across finance and productivity, our piece on why AI bookkeeping still needs a human checkpoint, and our AI tools for business guide.

Frequently asked questions

Do I need Making Tax Digital software?

If you are VAT registered, GOV.UK says you should already be signed up for MTD for VAT. If you are a sole trader or landlord with qualifying income over £50,000, MTD for Income Tax applies from 6 April 2026. Below that, check the current GOV.UK guidance for your start date.

Can Xero submit VAT returns to HMRC?

Yes. Xero’s pricing page states that VAT returns are submitted to HMRC on all plans and that every plan is MTD for Income Tax ready.

Can QuickBooks submit VAT returns to HMRC?

Yes, on Simple Start and above. QuickBooks states that direct VAT submission is not available on Sole Trader Plus.

Is payroll included?

In Xero, payroll for 1, 5 or 10 people is included on Grow, Comprehensive and Ultimate respectively, and Ignite is pay-per-person. In QuickBooks, payroll is a paid add-on.

Do the prices include VAT?

Xero states its prices exclude VAT. The QuickBooks page did not show prices, so we cannot say. Always check the final checkout total.

Final recommendation

Start with Xero Grow if you are VAT registered and have, or will soon have, an employee. The reason is simple: it is the only option here where we can see the price, the invoice and bill allowance, the payroll allowance and the VAT capability on one official page. Pick QuickBooks if your accountant already uses it or you need several users, but open the live pricing page in your own browser and confirm the monthly cost and payroll add-on price before you commit. Whichever you choose, use the free trial or introductory period to run one real month of invoices and a VAT return before the discount ends.

Related reading: Best Small Business Accounting Software.