With accounting software, even the smallest business can easily manage expenses, create and send invoices, keep on top of taxes, and more from one centralised platform.
But it’s no longer just advisable – under Making Tax Digital, it’s becoming obligatory for nearly all businesses to use compliant software for taxes and accounting.
With the extension of Making Tax Digital for VAT, all VAT-registered businesses now have to maintain digital records and file VAT returns to HMRC through approved software. MTD for Income Tax will apply from as soon as April 2026 if your qualifying income is over £50,000 in the 2024 to 2025 tax year. And corporation tax will soon follow.
Even if your income doesn’t yet qualify, or April ’26 seems a long way off, everyone will be swept up by MTD eventually, so the sooner you start using compliant software the better. Here we’ve compared and contrasted the best small business accounting software on the market so you don’t have to – all of which is MTD-compliant. Discover their pricing, pros, cons, and top features, and decide which is right for your business.
How to choose the right provider
Every small business is different. Most small businesses can make do with basic functions like invoicing, bank reconciliation, income and expense tracking and financial report generation.
Indeed, most UK small business accounting software offers the same features, it’s just that you may feel more comfortable with how one is designed over another – and then of course, there’s the cost.
First, make a list of what you need to do in terms of bookkeeping and accounting.
Do you need to track inventory and purchase ordering?
Do you need to invoice payment deadlines?
Are you a sole trader and do you plan to do self-assessment?
Do you have staff and a payroll to run?
Do you need foreign currency transactions?
Do foreign currency transactions convert to sterling?
How many users will need to use the accounting software?
How much can you afford?
Although there are free options available, when it comes to UK small business accounting software – and especially something as sensitive as financial information – it’s probably wise to pay for a package. Back in the 1970s, the US television industry coined the phrase, “If you’re not paying for the product, you are the product.” These days that means that the software provider sells on your data.
The other change that has happened is the rise of monthly subscription as opposed to a one-off software licence. On the plus side, Software-as-a-Service (SaaS) means your tech is always up to date. The downside is that, as the months roll on, you eventually end up paying more than if you’d bought a one-off licence.
Accounting software deals for small businesses
Want to get started with one of our top accounting software providers? As a new customer, you can take advantage of any of these great deals:
Sage – Get 50% off for 3 months, then £18 per month
Xero – 50% off for 3 months
FreshBooks – 50% off for first three months
Crunch – free 14-day trial on any package
QuickBooks – 90% off for 6 months or a year
4 questions you need to ask your UK small business accounting software supplier
How do you back up data?
Tell me about customer support. What are your hours and how quickly should I expect a response if I raise an issue?
Can you tell me about a similar client who’s signed up to your software?
Does your platform support foreign currency payments and convert them into sterling?
Best UK small business accounting software: In-depth reviews
Here’s a detailed rundown of each accounting software for small businesses provider, with information on pricing, features and pros and cons.
Sage Accounting – best for micro businesses with limited stock
Like all the other small business accounting software packages listed here, Sage is cloud based and links seamlessly to your bank account for real-time reporting. All Sage plans now include AI copilot, a ‘productivity assistant’ that can automate payment reminders, VAT returns, email creation, and more.
Features it offers include:
Create, send, and track invoices
Submit VAT returns directly yo HMRC
Multi-currency support
Connect your bank account for automated reconcilliaiton
Forecast cashflow with visual representations using your dashboard
Linked to Stripe payments processing system
Sage Copilot’s AI-powered receipt and invoice capture automatically extracts data for your records
Pros:
Sage Business Cloud Accounting’s bottom Accounting Start tier is affordable, simple and easy to navigate
All Sage’s plans are feature-rich
Sage is HMRC-recognised and MTD-compatible
Cons:
Payroll is not included as standard. You can add it on to your accounting plan from £10 per month
Price (excluding VAT):
Start for sole traders and microbusinesses: Free for three months then £18 per month. One Copilot user included
Standard (adds advanced reporting, cash flow management, and more): Free for three months then £39 per month. One Copilot user plus 30 AI-captured receipts and invoices included (20p per additional capture).
Plus (adds multicurrency invoicing, inventory management, and more): Free for three months then £59 per month. One Copilot user plus 100 AI-captured receipts and invoices included (20p per additional capture).
Mobile: iOS, Android
Check out Sage
Xero – best for larger SMEs with multiple users
Xero’s accounting software is MTD ready and allows you to send quotes and invoices, reconcile bank transactions and forecast your cashflow. It has an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners.
It includes payroll from one to 10 people on the highest three tiers, as well as expenses and mileage claims. The highest tiers feature multiple currencies and advanced analytics.
Xero offers the following as standard:
Connects straight to your bank account enabling automatic reconciliation
Generates quotes and invoices that customers can pay online
Manages purchase orders, bills and supplier payments digitally
Helps track stock
Keeps your account up to date as you buy and sell
Customisable reports
Range of apps in marketplace including Shopify, Stripe, PayPal and Square
However, you have to pay extra as bolt-ons if you want to do your payroll on Xero or enable staff to submit expenses, track expense claims.
Pros:
Xero is popular with small businesses and especially sales-oriented businesses that need basic stock management built in
Its usability, features, extendibility, and network of “Xero certified” accountants make it one of the best small business accounting websites available
Payroll for a limited number of users is included with the top three tiers, whereas for many rivals, it is a paid add-on.
Cons:
The Starter plan is limited, with restrictions on invoices and quotes and no access to expenses, multiple currencies and payroll
There is no telephone customer support
Price (excluding VAT):
Ignite: £8 for 3 months (then £16 per month)
Grow: £18.50 for 3 months (then £37 per month)
Comprehensive: £25 for 3 months (then £50 per month)
Ultimate: £32.50 for 3 months (then £65 per month)
Mobile: iOS, Android
Check out Xero
Tide offers an integrated banking and accounting solution designed to simplify financial management for small businesses. With seamless connectivity between banking and bookkeeping, users can automate tasks, track business performance, and file tax returns with ease. Tide provides automated profitability insights, tax bill estimates, and HMRC-compatible VAT filing.
The app streamlines daily admin with features like bulk transaction categorisation and real-time reconciliation. Users can send invoices, track payments, and manage cash flow effortlessly. Additionally, a three-month free trial of Admin Extra allows businesses to explore premium features. Tide supports business growth with accurate financial reports, funding applications, and tax preparation, making it a comprehensive financial tool for entrepreneurs and small business owners.
Features include:
Manage banking and accounting within the Tide app
Auto-categorise transactions and bulk-categorise for efficiency
Prepare Self Assessment (for sole traders) and submit VAT returns to HMRC
Generate financial statements and track profitability
Create and send invoices, match payments, and automate reminders
Pros:
Combines banking and accounting for a streamlined experience
Reduces manual effort with smart bookkeeping tools and automated admin
Offers unlimited invoicing on select plans with auto-matching and premium templates
Cons:
Some bookkeeping and tax tools are only available on higher-tier plans
Only available on higher-tier plans, limiting collaboration for some users
Pricing Plans (excluding VAT)
Invoice assistant: £5.99 per month
Accounting: £19.99 per month for limited companies, £13.99 per month for sole traders
Admin Extra: £24.99 per month for limited companies, £17.99 per month for sole traders
Check out Tide
Moss – best for flexible pricing
Moss is a comprehensive spend management platform designed to streamline financial processes for businesses. It automates expense tracking, invoice processing, and reimbursements while integrating seamlessly with accounting software. With AI-powered pre-accounting, Moss captures and categorises expenses, reducing manual work. Finance teams benefit from real-time visibility, custom approval workflows, and spend controls, ensuring accuracy and efficiency.
Moss offers flexible pricing with modular plans, allowing businesses to tailor their packages based on needs. Corporate cards, accounts payable, and employee reimbursements can all be included in the standard package (though all are optional), while advanced accounting (which includes AI automation), advanced control features, procurement, and enterprise resource planning are available as paid add-ons.
Features include:
Automates transaction coding and data extraction from receipts and invoices
Two-way API integration with accounting software for seamless reconciliation
Issue unlimited virtual and physical cards with customisable limits
Streamlines invoice processing with OCR-based automation and one-click payments
Provides full visibility, spend tracking, and budget oversight for finance teams
Pros:
Automates manual finance tasks, cutting month-end reconciliation time
Modular pricing lets businesses tailor their spend management solution
Centralised platform for expenses, invoices, reimbursements, and corporate cards
Cons:
Pricing information is not available unless you make an enquiry
Not available for businesses with fewer than 10 employees and less than £2m turnover
Pricing:
Moss Starter (Free) – For up to 3 users. Allows you to choose either corporate cards or accounts payable as your standard product. Includes standard features with limitations.
Custom Pricing – Businesses select modules (Corporate Cards, Employee Reimbursements, Accounts Payable) and add-ons (Advanced Accounting, Procurement, ERP integration) based on needs, with pricing based on features and transaction volume.
Check out Moss
Zoho Books – best for international businesses
Zoho Books is an HMRC-recognised, MTD-ready accounting software designed for small and growing businesses. It streamlines financial processes by offering automated invoicing, expense tracking, VAT filing, bank reconciliation, and inventory management. On the more premium tiers, the platform supports multi-currency transactions and invoicing, making it ideal for global operations.
Zoho Books integrates seamlessly with other Zoho apps and third-party tools, ensuring smooth business operations. Its affordability, CIS filing readiness, and user-friendly interface make it a popular choice for businesses transitioning from competitors like Xero and FreshBooks.
Features include:
Directly submit VAT returns to HMRC
Automate workflows, reminders, and reports
Manage global transactions with automatic exchange rate updates
Track stock levels, set reorder points, and update purchases/sales
Access financial data, send invoices, and track expenses on the go
Multilingual invoicing on all plans. Multi-currency transactions and invoicing on premium tiers
Pros
Competitive plans with comprehensive features
Tailor invoices and automate recurring transactions
Works with Zoho ecosystem and third-party apps
Cons
Limitations of lower tier plans can be restrictive for smaller businesses
Pricing (paid annually and excluding VAT):
Free Plan: Basic features for micro-businesses.
Standard: £10 per month
Professional: £20 per month
Premium: £25 per month
Elite: £85/month
Ultimate: £165 per month
Check out Zoho Books
FreshBooks – best for sole traders
FreshBooks is a Toronto-based small business software company that offers invoicing, bills and payments, expense tracking, quotes and financial reporting features. You can use it to submit VAT returns to HMRC and all plans feature a client self-service portal, though you are limited to five clients on the basic plan and 50 on the next tier up. The top tiers have unlimited clients.
On the top tiers you can access advanced accounting features, accounts payable, and customised email templates. The highest tier unlocks subscription payments, dedicated support, customised onboarding and more.
Pros:
Specifically designed for small businesses
Colourful and intuitive UX
Cons:
Lower-level plans have client limits
Charge for additional users
Lacks functionality larger businesses need
FreshBooks offers the below when it comes to pricing:
Lite: £7.50 per month for first three months then £15 a month
Plus: £12.50 per month for first three months then £25 a month
Premium: £17.50 per month for first three months then £35 a month
Select: Customised pricing
Mobile: iOS, Android and Windows
Check out FreshBooks
Crunch – best for ease of use
Crunch is the easy-to-use tax and accounting software that has Chartered Certified Accountants on hand to ensure you can meet your tax obligations.
Whether you opt for the sole trader plan or limited company package, Crunch’s software is MTD-ready and HMRC recognised. There’s a 14-day free trial for all plans, and each one allows you to create and send invoices, manage expenses, and connect your bank account.
On premium plans, you also get access to HMRC registration, VAT and Self-Assessment returns, and a dedicated accountant. What’s more, Crunch offers a variety of other essential small business services, including bookkeeping, payroll, insurance, and self-employed mortgages
Features include:
Easily create and send invoices
Record and track expenses
Connect your bank account
HMRC registration
VAT filing
Pros:
Access to advice from certified chartered accountants
Easy to switch from another accounting software
No minimum term for Pro and Premium plans
Cons:
Quite expensive compared to some other providers
Payroll costs extra
Price:
Crunch Sole Trader Pro: £21.60 (+VAT) per month
Crunch Pro for Limited Companies: £72 (+VAT) per month
Crunch Premium for Limited Companies: £109.60 (+VAT) per month
Premium Plus: £140 (+VAT) per month
Mobile: iOS, Android and Windows
Check out Crunch
Ember – best for an all-in-one solution
Built for sole traders and limited companies, Ember is an MTD-ready accounting software that automates all the most mundane tax and accounting tasks to help you save you time and money.
All plans include automated expenses, the ability to create and send invoices, real time financial reporting, integrations with plenty of apps, and open banking.
On premium plans, it also offers support for more complex queries from its in-house accountants, as well as VAT returns, tax insights and multi-currency support. Ember has paid plans for both sole traders and limited companies but no longer publishes its prices.
Features include:
Automated expense management categorises your expenses for you
Create and send invoices at any time
Support from Ember’s qualified in-house accountants
Review and submit VAT returns directly to HMRC
Automated payroll saves you time
Tax insights and optimisations help you the most of the deductions available to your business
Pros:
You’re not forced into a long-term contract and can cancel any time
Supports multi-currency accounting, including live foreign exchange in USD and Euros
Suitable for everyone from sole traders to businesses
Has in-house accountants to advise you and file your returns
Cons:
Multi-user access isn’t yet supported
Price
Sole trader
Contact for prices.
Limited company
Contact for prices.
Check out Ember
QuickBooks – best for fast-growing businesses
As well as standard accounting features like self-assessment support, invoicing and cash flow, nifty features include a client portal, where customers can view, print and pay invoices; a customer relationship management (CRM) system, which helps you keep on top of your customer database; and AI-powered income and expenses management.
Where QuickBooks stands out is the quality of its reporting, with punchy snapshots of how your business is performing financially. Its reporting facility is ahead of rivals such as Xero when it comes to customisation.
Features:
Ready for the introduction of MTD for income tax
Send invoices and estimates
Cash flow insight based on your recurring expenses an transactions
AI-powered support for managing income and expenses (Quickbooks Sole Trader uses AI to determine which are business and personal expenses)
Generate customised reports on everything from profit and loss to expenses
Pros:
QuickBooks’s user experience (UX) is easy to understand and pleasing to the eye
QuickBooks is mindful of scaling businesses and its software can have anything up to 25 users
Professional accountants rate the professionalism of QuickBook’s reports and its bank reconciliation features
Cons:
QuickBooks can be difficult to navigate with some features hidden in settings
There have been complaints that QuickBooks online is still buggy with long waiting times for telephone customer support
Price (excluding VAT):
QuickBooks is offering a 90 per cent discount for the first seven months or year, depending on the plan.
Sole Trader £1 per month rising to £10 after six months
Simple Start £1.60 per month, rising to £16 after six months
Essentials £3.30 per month, rising to £33 after six months
Plus £4.70 per month, rising to £47 after seven months
Advanced: £11.50 per month, rising to £115 after six months
Check out Quickbooks
ClearBooks – best for wholly UK small businesses
Clear Books provides clear and simple cloud accounting and payroll software to thousands of small businesses in the UK.
Invoices, bill and receipt tracking, reporting and MTD for income tax are all included as standard. The next tier add MTD for VAT reporting, budget tools, and purchase orders, while the most premium tier includes mutl-currency support, employee expenses and project accounting.
Features:
Support for MTD for income tax
Track income and expenses
Generate and send customised invoices
Send quotes and estimates
Optional extras like payroll, instant bank payments, and auto bills available
Pros:
Simple to use
Designed for British businesses
UK-based
Support team sits alongside developers
Value for money
30-day free trial
Cons:
Some functions can be overly complicated
Not suitable for enterprise level businesses
Continual UI updates do frustrate some customers
Pricing:
Small business: £7.50 per month for first three months then £15 a month
Medium business: £15.50 per month for first three months then £31 a month
Large businesses: £20.50 per month for first three months then £41 a month
Mobile: iOS, Android and Windows
Check out ClearBooks
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