Xero vs QuickBooks for MTD: Which Is Right for Sole Traders and Landlords?

Xero and QuickBooks are two of the most widely used accounting software packages in the UK. Both are recognised by HMRC for Making Tax Digital for Income Tax (MTD ITSA), and both have plans aimed at sole traders and landlords. Choosing between them comes down to your workflow, budget, and how you prefer to manage your records.

This comparison covers pricing, MTD readiness, ease of use, and the key practical differences. Neither product is definitively "better" for every user, and this article does not make a recommendation. It sets out the facts so you can decide.

MTD ITSA Compatibility

Both Xero and QuickBooks appear on the HMRC list of compatible software for MTD for Income Tax. That means both can:

• Store digital records of your self-employment and property income and expenses
• Submit quarterly updates directly to HMRC
• Generate a final declaration at the end of the tax year

Being on the HMRC compatibility list is the baseline requirement. Neither product gives you a technical compliance advantage over the other in this respect.

Pricing (as of February 2026)

Prices exclude VAT and are based on standard monthly billing. Both providers offer promotional discounts for new customers, which change regularly. Check provider websites for current pricing before committing.

Xero Simple is the entry-level plan designed specifically for sole traders and landlords who do not need VAT filing or payroll. It includes bank feeds, invoicing (up to 20 invoices per month), receipt capture via Hubdoc, and MTD ITSA submission. The invoice limit and cap on bill entries makes it unsuitable if your business involves high transaction volumes.

Xero Ignite (£16/mo) removes the invoice cap and adds auto-reconciliation, which is useful once you have a connected bank feed producing regular transactions.

QuickBooks Sole Trader (£12/mo) is Intuit's dedicated plan for self-employed individuals. It includes unlimited invoicing, mileage tracking, bank feeds, and MTD ITSA submission. There is no multi-currency support at this tier.

Both providers offer a 30-day free trial with no commitment.

Ease of Use

Xero Simple

Xero has invested significantly in making the Simple plan accessible for non-accountants. The dashboard shows your cash position, outstanding invoices, and an estimate of your tax liability after each quarterly submission. Navigation is streamlined compared to Xero's fuller plans.

Bank reconciliation involves reviewing suggested matches rather than manually entering transactions. For sole traders with a connected bank feed, this is the primary day-to-day task.

QuickBooks Sole Trader

QuickBooks has a reputation for being accessible to users new to accounting software. The mobile app is particularly strong for capturing receipts on the go and logging mileage, which is relevant for self-employed people who travel for work.

The interface uses US-origin terminology in some places (for example, "Schedule C" references are not relevant to UK users), but core UK workflows are well supported.

Bank Feeds and Reconciliation

Both products support direct bank feeds from major UK banks, building societies, and fintechs. A bank feed pulls your transactions in automatically, which means you are not manually entering every payment.

The quality of your bank feed experience depends more on your specific bank than on the software. Both Xero and QuickBooks work with Open Banking connections for most major UK banks. Check each provider's list of supported banks if you use a less common institution.

Receipt Capture

Xero includes Hubdoc in all plans, including Simple. Hubdoc lets you photograph receipts on your phone and attaches them to transactions in Xero.

QuickBooks has a built-in receipt capture feature within its app. Both approaches are functionally similar for sole traders logging business expenses.

Reporting and Tax Estimates

After each quarterly update, both products show you an estimate of your Income Tax liability based on the figures submitted. This is useful for planning ahead, particularly if your income is variable across the year.

Xero's tax estimate display is accessible from the main dashboard. QuickBooks shows a running "profit and loss" view which you can use alongside the tax estimate feature.

Neither product is a substitute for professional tax advice, and neither calculates your final tax liability (that happens when you submit your final declaration).

Landlord-Specific Functionality

For landlords with UK property income, both products allow you to record rental income and expenses and submit quarterly updates. Neither has purpose-built property management features at the sole trader/landlord plan level (for example, tenancy tracking or rent arrears management). If you need those features, you would be looking at add-on apps or a specialist property tool.

The key requirement for MTD ITSA is that digital records of income and expenses are maintained and submitted quarterly. Both products meet this requirement.

Key Differences Summary

What This Means for You

If your primary concern is cost and you send fewer than 20 invoices a month, Xero Simple at £7/mo is the lowest-cost fully MTD-ready option of these two. If you need unlimited invoicing or regularly track mileage, QuickBooks Sole Trader at £12/mo adds those features.

For sole traders and landlords who want a broader view of all compatible software (including FreeAgent and Sage), see the compatible software comparison in our MTD guide.

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This article contains no affiliate links. DigiTaxHub.co.uk is an independent information resource and is not affiliated with or endorsed by HMRC, Xero, or Intuit. Prices are verified as of February 2026 and may change. Always check provider websites for current pricing.

DigiTaxHub.co.uk is an independent information resource and is not affiliated with or endorsed by HMRC. This article is for information purposes only and does not constitute tax or financial advice. Always verify current rules at GOV.UK and speak to a qualified accountant if you are unsure.