Xero Simple Review: The £7 Plan for Making Tax Digital Income Tax
Last updated: February 2026
Xero Simple costs £7 plus VAT per month and is built specifically for sole traders and landlords who need to comply with Making Tax Digital for Income Tax. It is the cheapest plan in Xero’s UK lineup, and it includes MTD ITSA quarterly filing, bank feeds, receipt capture through Hubdoc, and basic invoicing. But there are clear limits. This review covers exactly what you get, what you do not get, and whether it is the right choice for your situation.
What Xero Simple includes
Xero Simple replaced the old Xero Cashbook plan in April 2025. It was designed from the ground up for the next wave of MTD, targeting individuals with straightforward financial affairs who need HMRC-recognised software without the cost of a full accounting platform.
For £7 plus VAT per month (£8.40 including VAT), you get:
- MTD for Income Tax filing — submit quarterly updates and your Final Declaration directly to HMRC from within Xero. The software is HMRC-recognised for MTD ITSA.
- Bank feeds — automatic import of transactions from most UK banks. Xero connects directly to your bank so transactions flow in daily without manual entry.
- Bank reconciliation — match imported transactions to invoices, bills, or expense categories. This is the core of keeping digital records under MTD.
- Hubdoc receipt capture — photograph receipts on your phone and Hubdoc extracts the supplier, date, and amount. Included at no extra cost with all Xero plans.
- Invoicing — create and send professional invoices and quotes, up to 10 per month.
- Short-term cashflow snapshot — a basic view of money in and money out over the coming weeks.
- CIS features — if you are a subcontractor in the construction industry, Xero Simple handles Construction Industry Scheme deductions.
- Accountant access — invite your accountant or bookkeeper to view and work on your records at no additional cost. They see everything you see and can prepare your submissions.
Digital records under MTD must include the date, amount, and category of each transaction. Xero Simple handles all three through its bank feed and reconciliation workflow. You categorise each transaction as it comes in, and the software maintains a running record that feeds directly into your quarterly updates.
The 10-invoice limit: does it matter?
The most obvious restriction on Xero Simple is the cap of 10 invoices and quotes per month. If you send more than 10, you need to upgrade to Xero Ignite (currently £16 plus VAT per month) or higher.
For many sole traders and landlords, this limit is not a problem. Consider who typically falls within it:
- Landlords collecting rent from a handful of properties. If you have three buy-to-lets with monthly tenants, that is three invoices (or none, if rent is collected by standing order and you simply reconcile the bank feed).
- Sole traders with few clients — a freelance consultant billing two or three clients monthly, or a tradesperson invoicing a handful of jobs per month.
- Sole traders paid without invoices — if your income arrives as bank transfers, cash, or platform payouts (for example, from a marketplace or letting agent), you may not issue formal invoices at all. Your MTD records come from the bank feed, not from invoices.
If you regularly send more than 10 invoices a month, Xero Simple is not for you. There is no overage option — the limit is hard. But if your invoicing volume is low and your main need is digital record-keeping and MTD filing, the cap will not be a constraint.
What Xero Simple does not include
This is where the £7 price point shows its boundaries. Xero Simple strips out features that are standard on higher-tier plans:
- VAT returns — Xero Simple does not support MTD for VAT submissions. If you are VAT-registered (the current threshold is £90,000), you need at least the Ignite plan. Xero Simple is designed for non-VAT-registered sole traders and landlords.
- Payroll — there is no payroll function. If you employ staff, even one part-time employee, you need a higher plan or a separate payroll provider.
- Multi-currency — all transactions must be in pounds sterling. If you invoice overseas clients in dollars or euros, you need the Grow plan (£33 plus VAT per month) or above.
- Project tracking — no ability to track time or costs against specific projects. Freelancers who bill by the hour and want project-level reporting will find this limiting.
- Expense claims — the employee expense claim workflow is not available. You can still record your own business expenses through the bank feed and Hubdoc, but there is no formal claims process for a team.
- Purchase orders — not available on Simple. If you need to issue formal purchase orders to suppliers, you will need a higher plan.
- Unlimited invoicing — as discussed, the 10-per-month cap applies.
None of these exclusions are surprising at this price. The plan is not trying to be a full accounting suite. It is a focused MTD compliance tool with enough bookkeeping features to keep your records straight.
How MTD quarterly filing works in Xero Simple
From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must submit quarterly updates to HMRC through MTD-compatible software. Qualifying income means your total gross income from self-employment and UK property combined — not your profit.
The quarterly deadlines under MTD ITSA are fixed:
- Q1 (6 April to 5 July) — submit by 7 August
- Q2 (6 July to 5 October) — submit by 7 November
- Q3 (6 October to 5 January) — submit by 7 February
- Q4 (6 January to 5 April) — submit by 7 May
In Xero Simple, you prepare each quarterly update by reviewing your categorised transactions for the period. Xero pulls the totals into a summary that matches what HMRC expects: income and expenses broken down by category. You review the figures, and when satisfied, submit directly to HMRC from within Xero. No bridging software or separate portal is needed.
After all four quarters are submitted, you file a Final Declaration by 31 January following the end of the tax year. This replaces the traditional Self Assessment tax return for those within MTD. Xero Simple supports this filing as well.
Working with your accountant on Xero Simple
One of the strongest features across all Xero plans, including Simple, is the accountant collaboration model. You can invite your accountant or bookkeeper to your Xero organisation at no extra charge. They log in with their own credentials and see your full transaction history, bank feeds, and reports.
In practice, this means your accountant can:
- Review your quarterly figures before you submit them to HMRC
- Correct miscategorised transactions
- Prepare your Final Declaration
- Run reports to advise on tax planning
- Access your records year-round without waiting for you to send spreadsheets
For sole traders and landlords who work with an accountant, this is arguably the most valuable feature of Xero Simple. The £7 monthly cost gives both you and your accountant shared, real-time access to the same records. Many accountancy firms already use Xero as their preferred platform and can onboard you quickly.
Worked example: David, a landlord with two properties
David owns two rental properties in Greater Manchester. One generates £1,200 per month in rent, the other £950. His combined annual property income is £25,800 — above the £20,000 threshold that takes effect from April 2028, and currently below the £50,000 Phase 1 threshold.
David does not issue invoices to his tenants. Rent arrives by standing order. His expenses include mortgage interest (the allowable proportion), insurance, repairs, and letting agent fees. He pays no employees and is not VAT-registered.
David signs up for Xero Simple at £7 plus VAT per month. He connects his bank account and his transactions flow in automatically. Each month, he spends 15 minutes reconciling incoming rent and outgoing expenses, categorising each transaction. At the end of each quarter, he reviews the summary with his accountant through Xero and submits the quarterly update.
His annual cost for MTD-compatible software is £100.80 including VAT. He never hits the 10-invoice limit because he does not invoice at all. He does not need payroll, multi-currency, or project tracking. Xero Simple does exactly what he needs and nothing more.
How Xero Simple compares with other Xero plans
Xero currently offers four UK plans for businesses. Here is how Simple sits alongside them:
- Xero Simple (£7+VAT/month) — 10 invoices, bank feeds, Hubdoc, MTD ITSA filing, basic cashflow. No VAT, no payroll, no multi-currency.
- Xero Ignite (£16+VAT/month) — 20 invoices and 10 bills per month, VAT returns, bank feeds, Hubdoc. Adds MTD for VAT support and purchase bill entry.
- Xero Grow (£33+VAT/month) — unlimited invoices and bills, multi-currency, expense claims, basic payroll. The jump from Ignite to Grow is significant.
- Xero Comprehensive (£47+VAT/month) — everything in Grow plus advanced payroll, project tracking, and analytics.
The gap between Simple and Ignite is £9 per month. If you are VAT-registered or send more than 10 invoices, Ignite is the minimum. But if neither applies, Simple saves you £108 per year compared with Ignite.
How Xero Simple compares with competitors
At £7 plus VAT, Xero Simple is competitively priced against other MTD ITSA software aimed at sole traders and landlords:
- FreeAgent — £10 per month for landlords, £19 per month for sole traders. Free for NatWest, RBS, and Ulster Bank customers. More features than Xero Simple but at a higher cost for most users.
- Sage Accounting Start — has a limited free tier, but it restricts you to one bank feed with manual data entry for everything else. The paid tier with full bank feeds costs more than Xero Simple.
- QuickBooks Self-Employed — previously a budget option, but QuickBooks requires separate subscriptions for different income types. If you have both self-employment and property income, Xero handles both within a single organisation.
- HMRC free software — HMRC offers a basic free tool for MTD ITSA, but it lacks bank feeds, receipt capture, and accountant collaboration. For anything beyond the most basic record-keeping, paid software is a practical necessity.
Xero Simple’s advantage is that it sits on the full Xero platform. If your needs grow, you upgrade your plan and everything carries over. Your transaction history, bank connections, and accountant access all remain intact. There is no data migration or starting again.
Who Xero Simple suits
Xero Simple is a good fit if you match most of these criteria:
- You are a sole trader or landlord (not a limited company or partnership)
- You are not VAT-registered
- You send fewer than 10 invoices per month, or none at all
- You do not employ staff
- You operate in pounds sterling only
- You want your accountant to have direct access to your records
- You want to keep costs low while meeting MTD requirements
If you tick every box, Xero Simple at £7 plus VAT per month is difficult to beat. It does what MTD requires, integrates with your bank, and gives your accountant a window into your books.
Who should look elsewhere
Xero Simple is not the right plan if:
- You are VAT-registered — you need Ignite or higher for MTD for VAT
- You send more than 10 invoices per month — Ignite allows 20, Grow is unlimited
- You need payroll — Grow or Comprehensive
- You invoice in foreign currencies — multi-currency starts at Grow
- You run a limited company — Xero Simple is only available to sole traders and landlords
- You want detailed project tracking — Comprehensive plan
If you are unsure whether your needs will stay within Simple’s limits, consider starting with it and upgrading later. Xero makes plan upgrades straightforward, and your data carries across.
Need help choosing the right Xero plan for MTD?
Jack Ross Chartered Accountants are a Xero Gold Partner and can set up Xero Simple, connect your bank feeds, and manage your quarterly MTD submissions from day one. Whether you are a sole trader or landlord, we will make sure you are compliant before the April 2026 deadline. Book a free consultation to get started.
Is Xero free MTD software?
Xero is not free MTD software, but its Simple plan at £7 per month is one of the most affordable full accounting software options for Making Tax Digital for Income Tax. For genuinely free MTD software alternatives, see our separate guide.
Sources
- GOV.UK: Use Making Tax Digital for Income Tax
- GOV.UK: Find software compatible with Making Tax Digital for Income Tax
- Xero UK: Simple Pricing Plan Details
- Xero Blog: Introducing Xero Simple
- GOV.UK: Making Tax Digital for Income Tax penalties
Frequently asked questions
Can I file my MTD quarterly updates through Xero Simple?
Yes. Xero Simple is HMRC-recognised for Making Tax Digital for Income Tax. You can submit all four quarterly updates and your Final Declaration directly to HMRC from within the software. No bridging software or separate HMRC portal is needed.
Is Xero Simple suitable for landlords?
Yes. Xero Simple handles property income well, particularly if your rent is collected by standing order or through a letting agent. You reconcile incoming rent via the bank feed and categorise expenses such as insurance, repairs, and mortgage interest. Most landlords will not hit the 10-invoice limit because tenants typically pay by standing order rather than in response to invoices.
What happens if I need to send more than 10 invoices in a month?
You will need to upgrade to Xero Ignite (£16+VAT per month) which allows 20 invoices, or Xero Grow (£33+VAT per month) for unlimited invoicing. The upgrade is straightforward and all your existing data carries over to the new plan.
Does Xero Simple support MTD for VAT?
No. Xero Simple does not include VAT return filing. If you are VAT-registered, you need at least the Xero Ignite plan. The current VAT registration threshold is £90,000.
Can my accountant access my Xero Simple account?
Yes. You can invite your accountant or bookkeeper to your Xero organisation at no additional cost on any plan, including Simple. They get their own login and can view your transactions, review quarterly submissions, and prepare your Final Declaration.
