QuickBooks vs Xero for Making Tax Digital: An Honest Comparison
Last updated: February 2026
Full disclosure before we start: Jack Ross is a Xero Gold Partner. I use Xero for my own clients, and I genuinely prefer it. But I have also helped businesses running QuickBooks, and I would rather you pick the right tool for your situation than the one that benefits my practice. This comparison of software for Making Tax Digital is as honest as I can make it.
Both QuickBooks and Xero are cloud-based, HMRC-recognised compatible software for Making Tax Digital. Both will handle your quarterly updates and Final Declaration. The Xero vs QuickBooks question comes down to which one suits you better — and I will walk you through that decision feature by feature.
Quick verdict
Choose Xero if you want bank-feed-driven automation, strong multi-currency support, or access to the widest library of third-party app integrations. Xero also has significantly larger adoption among UK accountants, which means your accountant is more likely to already know it.
Choose QuickBooks if you want a lower entry price for simple invoicing and expense tracking, or you are a sole trader who needs a straightforward, no-frills package. The QuickBooks Sole Trader plan at £10 per month is hard to beat on price.
Choose neither — go free instead — if you bank with NatWest, RBS, or Mettle. FreeAgent is available at no cost through those banks and is fully MTD-compatible. See our guide to getting FreeAgent free via NatWest and Mettle.
Neither platform is a wrong choice. Both are HMRC-recognised for MTD for VAT and MTD for Income Tax. What matters most is that you are using something compatible before 6 April 2026.
MTD compatibility compared
This is the bit that actually matters. If a platform cannot handle your UK tax obligations under MTD, nothing else is relevant.
| Feature | Xero | QuickBooks |
|---|---|---|
| MTD for VAT | Yes — HMRC-recognised, direct filing | Yes — HMRC-recognised, direct filing |
| MTD for Income Tax (ITSA) | Yes — in HMRC pilot, ready for April 2026 | Yes — in HMRC pilot, ready for April 2026 |
| Quarterly updates to HMRC | Yes — submit directly from Xero | Yes — submit directly from QuickBooks |
| Final Declaration | Yes — replaces the old Self Assessment tax return return | Yes — replaces the old Self Assessment tax return |
| Digital links (no manual re-keying) | Yes — bank feeds, receipt scanning, API links | Yes — bank feeds, receipt scanning, API links |
| Bank feeds | Yes — over 21,000 bank connections | Yes — all major UK banks connected |
| Bridging software needed? | No | No |
On pure MTD compliance, there is nothing between them. Both are fully MTD-compatible software that connects directly to HMRC, maintains digital links end-to-end, and handles quarterly updates without bridging software. You can check both platforms against the full HMRC-recognised software list using our software comparison tool.
Pricing compared (February 2026)
All prices below exclude VAT. Both platforms offer discounted introductory rates — I have listed the standard prices you will pay after any promotional period ends.
Xero pricing
Xero restructured its plans in 2024. The old Starter, Standard, and Premium tiers no longer exist for new customers. The current plans are:
| Plan | Monthly price | Best for |
|---|---|---|
| Ignite | £16/month | New businesses with basic invoicing needs |
| Grow | £37/month | Growing businesses needing multi-currency and projects |
| Comprehensive | £50/month | Established businesses wanting analytics and reporting |
| Ultimate | £65/month | Larger businesses needing full feature access |
For most sole traders needing MTD compliance, the Ignite plan at £16 per month covers the essentials: invoicing, bank reconciliation, and MTD-compliant submissions. You do not need the most expensive plan to meet your MTD obligations.
QuickBooks pricing
| Plan | Monthly price | Best for |
|---|---|---|
| Sole Trader | £10/month | Self-employed individuals not VAT-registered |
| Simple Start | £16/month | VAT-registered sole traders and freelancers |
| Essentials | £33/month | Small businesses needing multi-user access (up to 3 users) |
| Plus | £47/month | Businesses needing project tracking and inventory (up to 5 users) |
QuickBooks frequently runs promotions offering 50% off for the first six months. The Sole Trader plan at £10 per month is genuinely the cheapest entry point of any major MTD-compatible platform — though the feature set is deliberately limited.
Free alternative: FreeAgent via NatWest or Mettle
If cost is your primary concern, FreeAgent is available completely free through NatWest, RBS, and Mettle bank accounts. It is fully HMRC-recognised for MTD and includes features comparable to mid-tier Xero or QuickBooks plans. Worth checking before committing to a paid subscription.
Feature-by-feature comparison
Bank feeds and reconciliation
Both platforms connect to UK banks and pull in transactions automatically. In my experience, Xero’s bank reconciliation is marginally faster — its matching suggestions improve over time and learn from your categorisation patterns. QuickBooks handles the basics well, but Xero’s reconciliation workflow feels more polished.
For MTD purposes, bank feeds are not optional. You must keep digital records of your income and expenses, and bank feeds form a key part of your digital record-keeping chain. They form part of the digital links chain that HMRC requires. Both platforms satisfy this requirement fully.
Invoicing
QuickBooks Online has a slight edge for simple invoicing. The interface is more straightforward, and you can create and send a professional invoice in fewer clicks. Xero’s invoicing is more customisable — you get better template control, more payment options (Stripe, GoCardless), and stronger recurring invoice features.
If you send fewer than 20 invoices a month and want simplicity, QuickBooks wins. If you need recurring invoices, multiple payment gateways, or heavy customisation, Xero is stronger.
Expense tracking
Both offer receipt scanning via mobile app. Xero uses Hubdoc (included free) for document capture and automatic data extraction. QuickBooks has built-in receipt capture that works well for simple expense logging.
For sole traders tracking mileage, home office costs, and business expenses, both platforms handle the job. Xero’s Hubdoc integration is the more powerful option for anyone processing a high volume of receipts.
VAT returns
Both file MTD for VAT returns directly to HMRC. Both calculate VAT automatically from coded transactions. Both support the flat rate scheme, cash accounting, and standard VAT. If your turnover exceeds the £90,000 VAT threshold, either platform will handle your MTD for VAT obligations without issue.
Payroll
Xero includes basic payroll for one employee on all plans, with additional employees costing extra. QuickBooks charges payroll as a separate add-on across all plans. Neither platform’s built-in payroll is as comprehensive as a dedicated payroll provider, but both handle RTI submissions to HMRC.
If payroll is a significant part of your needs, factor in the add-on cost for both platforms — it can add £5 to £15 per month depending on employee count.
Mobile app
Both have iOS and Android apps. QuickBooks’ mobile app is generally rated slightly higher for ease of use — it is better optimised for quick tasks like sending invoices and photographing receipts on the go. Xero’s app covers more features but can feel cluttered on smaller screens.
If you do most of your bookkeeping from a phone, QuickBooks has a small advantage here.
Integrations and add-ons
Xero wins this category decisively. The Xero App Store has over 1,000 integrations covering everything from inventory management to CRM to time tracking. QuickBooks has a respectable app marketplace, but the volume and variety of Xero integrations is significantly larger, particularly in the UK market.
If you rely on third-party tools — Stripe, Shopify, GoCardless, Dext, or industry-specific software — check the integration list before choosing. Xero is more likely to have what you need.
Which is better for sole traders?
For sole traders with qualifying income above £50,000 who need MTD compliance from 6 April 2026, both platforms work. The decision comes down to budget and complexity.
QuickBooks Sole Trader at £10 per month is the cheapest route to MTD compliance from a major provider. If you are a sole trader with straightforward income and expenses — no VAT, no employees, no multi-currency — it does what you need.
Xero Ignite at £16 per month costs £6 more but gives you better bank reconciliation, Hubdoc for receipt scanning, and access to the full Xero ecosystem. If you plan to grow or your accountant uses Xero, the extra £72 per year is worth it.
Remember: the £50,000 threshold refers to gross income, not profit. If your self-employment turnover plus any UK property income exceeds £50,000, you must comply from April 2026. The threshold drops to £30,000 from April 2027 and £20,000 or more from April 2028. Check whether you are affected using our guide to free MTD software options or the HMRC criteria.
Which is better for landlords?
Landlords have specific needs: tracking rental income across multiple properties, managing maintenance expenses, and handling deposits. Neither platform was designed specifically for property management, but both can handle landlord bookkeeping.
Xero’s tracking categories let you separate income and expenses by property without needing multiple accounts. QuickBooks uses classes and locations for similar functionality, but it requires the Plus plan (£47 per month) — which makes it significantly more expensive than Xero Ignite for this use case.
For landlords with two or three properties and straightforward rental income, Xero Ignite at £16 per month is the better value. For a single property with minimal transactions, QuickBooks Sole Trader at £10 per month keeps costs low.
Which is better if you use an accountant?
This might be the most important section. If you work with an accountant — or plan to — their software preference matters.
In the UK, Xero has significantly larger adoption among accountants and bookkeeping firms. Xero was built as an accountant-first platform, and its multi-client dashboard (Xero HQ) is widely used across UK practices. QuickBooks has its own accountant tools (QuickBooks ProAdvisor), but fewer UK firms use it as their primary platform compared to Xero.
Ask your accountant which they prefer. If they use Xero, you benefit from smoother collaboration, faster year-end preparation, and potentially lower accounting fees because your accountant spends less time on your file. This is especially important if you have more than one income source.
At Jack Ross, we use Xero. I am transparent about that. But if your existing accountant works in QuickBooks and you are happy with them, switching software purely to match us would be disruptive and unnecessary.
The Jack Ross view
We are a Xero Gold Partner. We chose Xero for our practice because of its bank reconciliation speed, its accountant dashboard, and the breadth of its integration ecosystem. For sole traders and landlords and the majority of our clients — sole traders, landlords, and small businesses in Manchester and beyond — Xero covers everything they need for MTD compliance and day-to-day bookkeeping.
That said, QuickBooks is still a good choice in certain situations:
- If you are a sole trader on a tight budget, the £10 per month Sole Trader plan is genuinely good value
- If your existing accountant uses QuickBooks and you have years of data there, migrating creates unnecessary risk
- If you primarily need simple invoicing with minimal setup, QuickBooks’ interface is slightly more intuitive for first-time users
Both platforms are proven compatible software for Making Tax Digital, and what I care about most — and what you should care about — is that you are using HMRC-recognised software before the deadlines hit. The first quarterly update for anyone starting in April 2026 is due by 7 August 2026. After your four quarterly updates, you will file a Final Declaration that replaces your annual Self Assessment tax return. If you are still using spreadsheets or paper records, neither QuickBooks nor Xero matters until you actually sign up and start using one.
If you would like to see how Xero works in practice, read our detailed Xero guide. If you want to compare a wider range of MTD software, try our full software comparison tool.
Frequently asked questions
Can I switch from QuickBooks to Xero mid-year?
Yes. Both platforms support data import from the other. Xero has a built-in conversion tool that pulls across your chart of accounts, contacts, invoices, and historical transactions from QuickBooks. The best time to switch is at the start of a new tax year or VAT quarter to keep things clean, but mid-year migration is possible. Your accountant can help ensure nothing falls through the gaps.
Do I need the most expensive plan for MTD?
No. For MTD for Income Tax, Xero Ignite (£16 per month) and QuickBooks Sole Trader (£10 per month) or Simple Start (£16 per month) all include the core MTD features: digital record-keeping, quarterly updates, and Final Declaration submission. You only need higher-tier plans if you require advanced features like multi-currency, advanced reporting, or additional user access.
Which is easier to learn if I have never used accounting software?
QuickBooks has a slightly gentler learning curve for absolute beginners. The setup wizard walks you through the basics, and the dashboard is less cluttered. Xero is not difficult, but it has more features visible from the start, which can feel overwhelming initially. Both offer free trials — I would suggest trying both for a week and seeing which feels more natural before committing.
Can my accountant access both equally?
Yes. Both Xero and QuickBooks allow you to invite your accountant as a user with their own login. Your accountant gets access to your books without needing your password. The practical difference is that most UK accountants are more familiar with Xero’s interface, so they may work more efficiently in Xero — but any competent accountant can use either platform.
Is there a free trial for both?
Yes. Xero offers a 30-day free trial on all plans. QuickBooks Online also offers a 30-day free trial, and frequently runs promotions with 50% off for the first three or six months. Neither requires a credit card to start the trial, so you can test both before deciding.
Sources
- HMRC — Find software compatible with Making Tax Digital for Income Tax
- HMRC — Find software compatible with Making Tax Digital for VAT
- Xero UK — Pricing plans
- QuickBooks UK — Pricing and costs
- Xero UK — Making Tax Digital for Income Tax
- QuickBooks UK — Making Tax Digital for Income Tax
- GOV.UK — Use Making Tax Digital for Income Tax
