Choose FreeAgent if you're a sole trader, subcontractor, or work in construction (CIS). It's simpler, handles CIS brilliantly, and is often free with business bank accounts. Choose Xero if you have employees, want maximum app integrations, or your accountant strongly prefers it. Both handle MTD compliance and basic accounting well.
Xero and FreeAgent are the two most popular accounting apps for UK small businesses, and both work well for tradespeople. But they're designed for different users, and picking the wrong one can cost you time and money.
This comparison focuses specifically on what matters for trade businesses: CIS handling, Making Tax Digital compliance, integration with job management software, and everyday usability when you'd rather be on site than staring at spreadsheets.
Quick Comparison Table
| Feature | Xero | FreeAgent | Winner |
|---|---|---|---|
| Starting Price | £14/month | £19/month | Xero |
| Free with Bank Account | No | Yes (NatWest, RBS, Mettle) | FreeAgent |
| CIS Handling | Basic | Excellent | FreeAgent |
| MTD Compliant | Yes | Yes | Tie |
| Self Assessment | Via accountant | Built-in filing | FreeAgent |
| Invoicing | Excellent | Good | Xero |
| App Integrations | 1,000+ | 50+ | Xero |
| Job Software Integration | Tradify, ServiceM8, Jobber | Tradify, ServiceM8 | Xero |
| Ease of Use | Moderate | Easy | FreeAgent |
| Accountant Preference | Most prefer Xero | Many support it | Xero |
| Mobile App | Good | Good | Tie |
| Multi-User | Unlimited | Limited | Xero |
Pricing Comparison
Xero Pricing
- Starter: £14/month — 20 invoices, 5 bills, bank reconciliation
- Standard: £29/month — Unlimited invoices and bills
- Premium: £38/month — Multi-currency, expenses, projects
Most tradespeople need the Standard plan for unlimited invoicing.
FreeAgent Pricing
- Sole Trader: £19/month — Full features for unincorporated businesses
- Limited Company: £29/month — Full features including Corporation Tax
Big advantage: FreeAgent is free if you have a business account with NatWest, RBS, Ulster Bank, or Mettle. That's a genuine £228-348/year saving.
Verdict: FreeAgent wins on value if you can get it free with your bank. Otherwise, Xero Starter is cheaper for basic needs.
CIS Handling: The Crucial Difference
If you work in construction — as a subcontractor or if you hire subcontractors — CIS (Construction Industry Scheme) handling is critical. This is where FreeAgent and Xero differ most.
FreeAgent CIS Features
FreeAgent was built with UK sole traders in mind, and it shows in the CIS handling:
- Automatic CIS calculations: Records deductions from contractor payments automatically
- CIS tax position tracking: Shows exactly what CIS you've suffered and can reclaim
- Self Assessment integration: CIS deductions flow directly into your tax return
- Contractor management: If you pay subcontractors, it handles that side too
- HMRC verification: Verify subcontractor status directly from the app
Xero CIS Features
Xero handles CIS, but it's more manual:
- CIS tracking requires correct setup and understanding
- Less automated than FreeAgent
- Many users need their accountant to manage CIS properly
- Third-party add-ons available for enhanced CIS handling
Verdict: FreeAgent wins decisively on CIS. If construction is your trade, this alone might make the decision.
Making Tax Digital (MTD)
Both Xero and FreeAgent are fully MTD compliant for VAT, and both will handle MTD for Income Tax when it becomes mandatory.
- VAT returns: Both submit directly to HMRC
- Digital records: Both maintain compliant digital records
- MTD for Income Tax: Both will support this when it arrives
Verdict: Tie. Both handle MTD equally well.
Self Assessment
Here's another area where FreeAgent shines for sole traders.
FreeAgent
FreeAgent can file your Self Assessment tax return directly to HMRC. It calculates your tax liability throughout the year, so there are no surprises. When January comes, you can file in a few clicks without needing an accountant.
Xero
Xero doesn't file Self Assessment directly. You'll need to either use HMRC's portal yourself or have an accountant handle it. Xero provides the numbers, but not the filing.
Verdict: FreeAgent wins for sole traders who want to self-file. If you have an accountant anyway, this matters less.
Job Management Integrations
Your accounting software needs to talk to your job management app. Here's how they compare:
Xero Integrations
- Tradify: Native integration — invoices sync automatically
- ServiceM8: Native integration — customers and invoices sync
- Jobber: Native integration — full sync
- 1,000+ other apps: Massive ecosystem
FreeAgent Integrations
- Tradify: Native integration — works well
- ServiceM8: Native integration — works well
- Jobber: No direct integration
- 50+ other apps: Smaller ecosystem
Verdict: Xero wins on integrations. More options, more flexibility. But both work with the most popular trade apps.
Ease of Use
FreeAgent
FreeAgent is designed for people who aren't accountants. The interface is clean, the language is plain English, and it guides you through tasks step by step. Most tradespeople can set it up and use it without training.
Xero
Xero is more powerful but also more complex. It uses proper accounting terminology (debits, credits, journals) which can confuse non-accountants. Many users need some training or accountant support to use it effectively.
Verdict: FreeAgent wins for ease of use. If you want to manage your own books without accounting knowledge, it's the better choice.
Who Should Choose What?
Choose FreeAgent If...
- You're a sole trader or small partnership
- You work in construction and deal with CIS
- You want to file Self Assessment yourself
- You have a NatWest/RBS/Mettle account (free access)
- You want the simplest possible interface
- You don't have or want an accountant
Choose Xero If...
- You have employees and need payroll
- You're a limited company with complex needs
- Your accountant strongly prefers Xero
- You need maximum app integrations
- You're planning significant business growth
- You use Jobber (no FreeAgent integration)
Our Recommendation for Tradespeople
Plumbers, Electricians, Gas Engineers (Sole Traders)
Recommendation: FreeAgent — Simpler interface, great CIS handling if you do subcontract work, often free with bank account. Integrates with Tradify and ServiceM8.
Builders and Construction (CIS Heavy)
Recommendation: FreeAgent — CIS handling is significantly better. Worth it even if you have to pay, essential if you're a subcontractor.
Trade Businesses with Employees
Recommendation: Xero — Better multi-user features, better payroll integrations, accountant will thank you.
Growing Trade Business (10+ Staff)
Recommendation: Xero — Scales better, more integrations, industry standard for larger businesses.