Xero vs. QuickBooks: which is best for MTD 2026?

From April 6th this year, all sole traders and landlords whose qualifying income crosses the £50,000 threshold will need to start using the new Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) system. This revolves around storing digital records, and submitting quarterly updates throughout the year to HMRC.

In order to do this, you’ll need HMRC-approved software, and we’d recommend using the best accounting software for small businesses. But which one is right for you depends entirely on your needs.

Xero and QuickBooks are two of the biggest names in the accounting software space and both are powerful, MTD-ready software options. We’ll take a deep dive into each, leading you through their pros and cons and zooming in on pricing and features to help you decide which one you should pick to get prepared for April 6th.

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		Rating	Price from	Best for	Key benefits
QuickBooks	Xero
4.5	4.3
£10 per month (excl. VAT) £1 per month (excl. VAT) for the first six months	£7/month (+ VAT) Get 95% off for 6 months
Bookkeeping on the go, thanks to the standout mobile app	Expanding businesses that need a software that can grow alongside them
Excellent mobile app Manage income and expenses with AI Create and modify reports and templates	Scalability with a well balanced range of plans 24/7 online support JAX, Xero’s AI business companion, now in beta
Get Quotes	Try Xero

Xero vs QuickBooks: which is easier to use?

Xero and QuickBooks are largely comparable when it comes to usability: both systems can have a bit of a learning curve, and both can be easy to use once you’ve spent some time getting your head around the platforms.

In our own testing we found that QuickBooks was slightly more effective at documenting transactions. Although, while both software platforms are capable of successfully calculating, adding and deducting tax, we found the setup process with QuickBooks was much longer. We needed to set up VAT, and then manually assign tax categories to stock products in order for it to register on invoices and estimates.

It’s important to note that QuickBooks has gone through a revamp of its interface since our testing and has added new features, including a powerful new search bar (though users can switch back to the older interface if they desire), making it even easier to use. Xero has likewise gone through some updates as of last year, with new tool bar functionality.

Xero can take a while to fully understand, but once you’ve built your confidence with it, it can be prove easy to use. Source: Startups.co.uk

Xero’s helpful bank categorisation feature is one of the platform’s standout features. Transactions come in from the left-hand side and can then be categorised on the right. Other areas of the software aren’t as easy to master, but when it comes to bank categorisations, quick and easy are its main descriptors.

Though QuickBooks’s bank reconciliation function is also highly useful. Users can manually enter their bank balance, and therefore use it to ‘prove’ that all necessary transactions have been brought across. It’s a helpful tool to ensure your numbers are correct.

QuickBooks isn’t the most immediately user-friendly option, but it can be worth the time you need to put into mastering it. Source: Startups.co.uk

Ultimately, there isn’t a massive gulf of difference between the usability of the platforms:

• Xero can have a steep learning curve (it’s not for those just wanting something really simple) and it can take a while to get your head around, but once you do, it can end up being one of the easiest accounting software platforms to use.
• QuickBooks could be overwhelming for novice users, and its major hindrance is that it can be tricky to fully master its complexities, and it can be easy to break. But if you spend the time learning it, it can be a powerful tool.

Xero vs QuickBooks: features

When looking at accounting software features overall, Xero is the better of the two, but if we’re specifically drilling down on MTD-applicable features, QuickBooks is arguably the better option, especially thanks to the baked-in receipt capture and first-class mobile app.

Which one you choose will depend on your needs, Xero’s range of plans are well balanced with lots of features, so for scaling businesses this will be best option. If you’re a solopreneur that just needs software for MTD for Income Tax, then QuickBooks’s starter plans will deliver what you need.

For MTD for ITSA specifically you will most likely be looking at QuickBooks’s Sole Trader plan (£10 per month plus VAT), and Xero’s Simple plan (£7 per month plus VAT). Both are HMRC-approved software for MTD, and both have solid features, including:

• Submit updates directly to HMRC
• Run customised reports
• Calculate Construction Industry Scheme (CIS) calculations

There’s not too much difference between these two plans, except that Xero’s Simple plan limits you to ten invoices per month. If you’re non-VAT registered, and you’re sending out lots of invoices and quotes a month, then QuickBooks will be a better option.

With QuickBooks you can book a free 45 minute onboarding session with one of its experts to help you get your head around the Sole Trader plan. Considering the somewhat tricky learning curve with QuickBooks, this is well worth doing.

Receipt capture

This is going to be a critical function for MTD, especially for sole traders and landlords who need to upload documents as efficiently as possible. This is an area where QuickBooks is slightly better, as it has its own native receipt scanning app (with Xero you need to use HubDoc, which is a separate app).

One useful element with QuickBooks: you get your own QuickBooks email you can use to send yourself attachments, so you don’t have to clog up your work or personal email.

You can do this with Xero, too, but like the receipt capture feature, it’s done through HubDoc. So while it’s still useful, it’s not built into the platform, meaning the Quickbooks experience is that little bit more streamlined.

Mobile app

This is where QuickBooks particularly shines. While Xero has a perfectly serviceable mobile app, QuickBooks’s well designed mobile app is one of the best in the industry.

Both apps allow you to do the basics, like creating and sending invoices and quotes, but QuickBooks pulls ahead thanks to the inclusion of an automatic mileage tracking feature. QuickBooks’s well designed app is a great help for business owners who need to manage their accounts on the move.

Xero: one of our top recommendations for Making Tax Digital

Xero is powerful, HMRC-approved software than can help you be prepared for Making Tax Digital for Income Tax

Try Xero Start your free trial now

Xero vs QuickBooks: financial planning

It’s crucial that your software gives you the tools to understand your business’s financial health to allow for better decision making in the future. When it comes to financial planning: Xero comes out on top.

Xero was the easiest software to to track upcoming monthly bills and expenses, as well as the easiest platform to track cash flow projection, for both incomings and outgoings.

We found Xero’s cash flow planning tools slightly easier to use than QuickBooks’s (pictured above). Source: Startups.co.uk

While you can set budgets for specific departments, projects, or accounts on the higher tier Plus and Advanced plans on QuickBooks, you can do this with any tier on Xero. Similarly, Xero also automatically calculates and updates asset values, accounting for depreciation or amortisation over time.

Xero vs QuickBooks: efficiency

Being able to easily integrate with other software, as well as being able to customise your workflow, is going to be crucial to a smooth MTD experience. In this area, Xero outshines QuickBooks, thanks to its range of integrations. 

Quickbooks and Xero are both market leaders, so software developers will be building with both of them in mind, but while QuickBooks has an impressive 750+ third-party apps to choose from, Xero boasts over a thousand. Not only this, but Xero is actively expanding upon this.

For example, it recently acquired ‘Syft’, giving users access to a data analytics tool which can easily show you in greater detail how your business is performing.

And its not just integrations that Xero champions but user limits, too. Xero supports unlimited users whereas QuickBooks has strict user limits on each of its plans. These range from just one user on the Sole Trader plan, up to 25 on the Advanced plan. With QuickBooks, unlimited users aren’t an option.

AI features

Considering the important advancements in AI accounting software, it’s going to be crucial to take advantage of these to make MTD easier:

QuickBooks AI

With QuickBooks’s Simple Start plan, you get access to AI-powered bank feeds that efficiently organise transactions for your review, as well as access to VAT AI Agent. This is currently in beta, and uses machine learning to flag discrepancies between Profit and Loss and VAT reports, with recommendations for corrections.

Xero AI

Meanwhile, Xero’s key AI offering is JAX (Just Ask Xero), its AI businesses companion. JAX can help automate workflows (like bank reconciliation), and send out payment reminders to clients. It can also analyse your business data, providing you with actionable insights. JAX is currently in beta, and being rolled out for UK users.

Xero vs QuickBooks: help and support

Based on our own research, we felt that QuickBooks offered better help and support, as it provided a wider range of contact options. In fact, QuickBooks offers some of the best help and support in the accounting software space.

With QuickBooks you get access to live chat, which is run by either a human or a bot depending on the hours:

• Live chat: human assistance from 8am to 10pm, Monday to Friday, and from 8am to 6pm on weekends
• Chatbot: 24/7

QuickBooks phone support is also available 8am to 7pm from Monday to Friday.

Xero does offer free, online 24/7 support, but in order to access it, you’ll need to raise a query through Xero Central first, and then wait for them to contact you.

Testing the knowledge centres

Although, overall, our research showed that Quickbooks outperformed Xero’s help and support, when we tested the knowledge centres of both platforms, we felt Xero’s was superior. When asking our five test questions, Xero provided an accurate and helpful response within the first article.

With QuickBooks, only one test question was answered accurately immediately, and the rest required some digging (it wasn’t answered within the first eight articles it provided).

Xero vs QuickBooks: pricing

Overall, we found QuickBooks to be better value for money out of the two options. However, if you’re only interested in securing the cheapest plan month-by-month for MTD for ITSA, Xero’s Simple plan is a few pounds cheaper than QuickBooks’s Sole Trader.

Let’s break down the pricing for each platform so you can have a closer look:

How much does Xero cost?

Xero has a range of five plans to choose from, including its MTD-ready Simple plan:

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	Plan	Cost
Simple	Ignite	Grow	Comprehensive	Ultimate
Paid monthly: £7/month (+ VAT) Buy by 31 March 2026 to get 95% off for the first six months	Paid monthly: £16/month (+ VAT) Buy by 31 March 2026 to get 95% off for the first six months	Paid monthly: £37/month (+ VAT) Buy by 31 March 2026 to get 95% off for the first six months	Paid monthly: £50/month (+ VAT) Buy by 31 March 2026 to get 95% off for the first six months	Paid monthly: £65/month (+ VAT) Buy by 31 March 2026 to get 95% off for the first six months

If you’re solely looking to use Xero for MTD for ITSA, then you’ll only need the Simple plan, which is a fairly reasonable £7 plus VAT per month (though you can currently get it for just £0.35 per month, for your first six months).

The Simple plan is HMRC-approved and MTD-ready, allowing you to:

• Submit quarterly updates to HMRC
• Send 10 invoices and quotes per month
• Reconcile bank transactions
• Use HubDoc for bill and receipt capture

You’ll also be able to cancel anytime, so you’re not locked into any contracts.

One of the benefits of using Xero is its well balanced range of plans, providing a smooth upgrade path for businesses. It’s great at supporting growth, so although you might have a modest sole trader business now, Xero will be able to keep up with you if it turns into a VAT-registered enterprise in the future.

Xero’s range of plans are sure to have you covered for future growth, so you won’t need to worry about the headache of switching to a new accounting software when you outgrow your plan.

How much does QuickBooks cost?

QuickBooks, like Xero, also has five plans to choose from, and each one has an impressive balance of cost vs features. For example, it’s one of the few accounting software platforms that includes the ability to handle multiple currency banks on a lower tier plan (Essentials).

QuickBooks is one of the best value for money accounting software platforms on the market when it comes to features:

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	Plan	Cost	Best suited for:	Features
Sole Trader	Simple Start	Essentials	Plus	Advanced
Paid monthly: £10/month (+ VAT) You can currently get 90% off for the first six months	Paid monthly: £16/month (+ VAT) You can currently get 90% off for the first six months	Paid monthly: £38/month (+ VAT) You can currently get 90% off for the first six months	Paid monthly: £56/month (+ VAT) You can currently get 90% off for the first six months	Paid monthly: £123/month (+ VAT) You can currently get 90% off for the first six months
Sole traders not registered for VAT, and single property landlords, and being MTD for Income Tax ready	Sole traders and small business owners who are managing income tax and VAT	Small, growing limited companies	Small businesses that are managing projects and inventories of stock	Businesses that need more sophisticated support like custom permissions and tailored insights
Helps you prepare your self-assessment tax return Receive income tax estimates  Send out invoices	AI-powered bank feeds for quick categorisation Checks your VAT return for errors Gives you VAT deadline reminders	Bill management Multi-currency support (over 145 currencies) Employee time tracking so you can invoice your clients accurately	Track your products, and see what’s selling the most See the profitability of each of your projects Smart budgeting	Version control Automate workflows Custom charts and customised dashboards

If you need a plan for MTD for ITSA you’ll be looking at either the Sole Trader plan, or the Simple Start plan. The Sole Trader plan (£10 plus VAT per month) is perfect if you only want something that ticks the MTD for ITSA box, but if you need to manage both Income Tax and VAT submissions, then you’ll need Simple Start (£16 plus VAT per month).

With the basic Sole Trader plan you will be able to:

• Submit your quarterly updates to HMRC
• Send unlimited invoices and estimates
• Access AI-powered income and expense management

If you need to upgrade to the Simple Start plan, for VAT, then you’ll also get:

• VAT AI Agent (in beta, this helps you catch errors quickly in your VAT reports)
• AI-powered bank feeds

The ability to send unlimited invoices and estimates even on the most basic tier gives QuickBooks a lot of value for money, and don’t forget each plan comes with the excellent mobile app.  

Is there a free plan?

Unfortunately, neither QuickBooks nor Xero provides a free plan. However, you can use the respective free trials to see if the software is a good fit for your needs.

If you’re on a very tight budget, however, and you need MTD-ready software for free, you can check out our guide to the best free software for Making Tax Digital.

Get MTD-ready for free with Sage

Sage Individual Free is HMRC-approved software and you can get started today for £0

Visit Sage Try Sage for free

Xero vs QuickBooks: Making Tax Digital for Income Tax pros and cons

As Xero and Quickbooks are two of the biggest players in the accounting software landscape, there’s understandably a lot of crossover between the two.

However, it’s important to bear in mind that, MTD for Income Tax aside, every business is unique and so are its needs. This means that the small differences between the two platforms can be big factors in deciding which one will be better suited for you in the long run.

Here’s a roundup of the top pros and cons when considering QuickBooks and Xero for MTD:

Xero’s MTD pros and cons

QuickBooks’s MTD pros and cons

Our methodology: how did we test Xero and QuickBooks

In January 2025, our dedicated research team undertook extensive testing and analysis of seven top accounting software platforms, including Xero and QuickBooks. This comprised a total of 1512 areas of investigation, spread across 25 sub categories, six main categories across the seven platforms.

These six main categories, which our research department determined to be the most relevant to small business owners, were:

1. Usability: we assessed each platform on how easy it is to use.
2. Core features: the most commonly used accounting software features.
3. Financial planning: the tools that help you understand your businesses financial health.
4. Efficiency: how effectively the platform supports your day-to-day operations.
5. Help and support: the types of support the platform can offer to assist you.
6. Price: how much does it cost?

Our research team rigorously tested the two platforms based on the above metrics. Our Senior Reviews Writer then undertook independent research to ensure our recommendations were still up to date, and relevant to users needing software that was MTD for Income Tax ready.

What’s the current timeline for Making Tax Digital?

Making Tax Digital was originally introduced in 2019 for VAT registered businesses, but by April 6th, Making Tax Digital for Income Tax will also be mandatory for all sole traders and landlords whose qualifying income exceeds £50,000. The threshold is then planned to drop:

• To £30,000 (for the 2025 to 2026 tax year) in April 6th 2027
• To £20,000 (2026 to 2027 tax year) in 2028

For now, though, only landlords and sole traders who exceed the £50,000 threshold will need to start getting ready for Making Tax Digital. You can learn more about this, and when you need to start submitting your quarterly submissions, in our complete Making Tax Digital timeline.

Buying guide: how to choose the best software for MTD

In order to choose the best MTD-compliant software, you need to ensure it is HMRC-approved and can carry out the main three tasks:

• Create, store, and correct digital records of your self-employment and property income and expenses
• Send quarterly updates directly to HMRC
• Submit your tax return by 31 January the following year

These are the bare minimum requirements for the software, but in order to get the best MTD-ready software for your business, you also need to consider:

• How user-friendly the software is as you’ll need something you can get to grips with quickly.
• Which income sources the software is able to support.
• If the software can support multiple agents, especially if you plan on engaging the help of professionals with your MTD submissions.
• You’ll need to make sure it can sync up to your bank account and other apps.

You can find more information in our dedicated guide to finding the right MTD-approved software for your business.

Summary: should I use Xero or QuickBooks for Making Tax Digital?

Both platforms have their strengths. Xero is the best choice for integrations, as you’ll struggle to find an app that doesn’t plug into it. It’s also the best platform for supporting long-term growth, if you’re planning to expand in the future.

QuickBooks, on the other hand, provides a lot of bookkeeping power, and is arguably the best immediate value for money. Plus, if you’re a sole trader or landlord who wants to manage their bookkeeping on mobile, then QuickBooks should be your top choice.

Ultimately, it all comes down to personal preference and business needs, so my main piece of advice is to take advantage of the free trials that both platforms offer. This way, you can see which one feels more natural to your workflow. It might even come down to something as trivial as the colour of the interface!

Whichever you choose, though, both are great options for getting MTD-ready. If you’re still feeling confused about Making Tax Digital, and what you need to do, you can find all the information you need to be fully prepared in our comprehensive guide to Making Tax Digital.

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