Xero vs QuickBooks for UK small businesses.

The short answer

There is no single winner. Both packages connect to UK bank accounts, send invoices, submit VAT returns under Making Tax Digital and handle the Construction Industry Scheme. Both let you invite your accountant or bookkeeper at no extra cost.

The choice usually comes down to three things:

• How the plans are split. Features such as multi-currency, projects and stock sit on different tiers in each package.
• Payroll. Xero includes payroll for a set number of people from its Grow plan up. QuickBooks sells payroll as a paid add-on.
• Who uses it day to day. User limits and the feel of the software matter more than most feature lists.

We do not include subscription prices in this guide. They change often, and both vendors run offers. Check the current price on each vendor's own site before you decide.

What both packages do

The core of any bookkeeping system is the same in both. According to their UK sites, each one offers:

• Bank feeds. Your business bank account connects so that transactions flow into the software automatically.
• Reconciliation. The software suggests matches between bank lines and invoices or bills, so the bank reconciliation is a matter of checking and confirming.
• Invoicing. You can send invoices and let customers pay online.
• VAT returns. You can submit VAT returns to HMRC from inside the software.
• Making Tax Digital for Income Tax. Both list MTD for Income Tax on every plan.
• CIS. Both list CIS calculations for contractors and subcontractors.
• Receipt capture. Xero lists "smart document capture". QuickBooks lists "receipt capture" on every plan.
• Mobile apps. Both have apps for phones and tablets.
• App integrations. Xero says it connects with over 1,000 apps. QuickBooks says it offers hundreds of integrations.
• Adviser access. Both say you can invite your accountant or bookkeeper free of charge.

How Xero splits its plans

Xero's UK pricing page lists four plans: Ignite, Grow, Comprehensive and Ultimate. Each one adds to the plan below it.

• Ignite is the entry plan. It caps how many invoices and bills you can enter, and includes document capture, VAT returns and CIS calculations. Auto-reconciliation and payroll are optional paid extras on it.
• Grow adds automated bill entry, auto-reconciliation, expense and mileage claims for one user, and payroll for one person.
• Comprehensive adds multiple currencies, budgeting and payroll for up to five people.
• Ultimate adds project time and cost tracking, KPI analysis and payroll for up to ten people.

Xero also notes that Hubdoc, its document capture tool, is included with any plan while connected to Xero. Contractor CIS returns are listed as an optional add-on.

How QuickBooks splits its plans

QuickBooks' UK pricing page lists five plans: Sole Trader Plus, Simple Start, Essentials, Plus and Advanced.

• Sole Trader Plus is for one user. It includes receipt capture, CIS and Making Tax Digital for Income Tax. QuickBooks says direct VAT submission is not available on it.
• Simple Start is for one user and adds VAT management and submission to HMRC.
• Essentials allows three users and adds bill management and multiple currencies.
• Plus allows five users and adds project management, inventory and budgeting.
• Advanced allows up to 25 users.

QuickBooks lists CIS on every plan and says its CIS features come at no extra cost. Payroll is a paid add-on that QuickBooks says can be added to Simple Start, Essentials, Plus or Advanced, but not Sole Trader Plus.

Feature by feature

• Payroll. Xero: included from Grow, with the number of people set by your plan, and charged per person on Ignite. QuickBooks: a separate paid add-on.
• Multi-currency. Xero: Comprehensive and Ultimate. QuickBooks: Essentials and above.
• Projects. Xero: Ultimate only. QuickBooks: Plus and Advanced.
• Stock tracking. Xero's plan page does not list stock features. QuickBooks lists inventory on Plus and Advanced.
• Bills. Xero: a capped number on Ignite, automated bill entry from Grow. QuickBooks: bill management from Essentials.
• Users. QuickBooks sets a user limit on each plan, from 1 to 25. Xero ties expense claims and project tracking to a number of users on each plan.
• Sole traders. QuickBooks has a dedicated sole trader plan. Xero links to a separate self-employed page from its pricing page.

Plan names and limits change, so confirm the detail on each vendor's site.

Which suits which kind of business

Sole traders and landlords facing Making Tax Digital

Making Tax Digital for Income Tax now applies to sole traders and landlords with qualifying income over £50,000 in 2024/25, from 6 April 2026. Those over £30,000 in 2025/26 join from 6 April 2027, and those over £20,000 in 2026/27 from 6 April 2028. You will need software that can send quarterly updates. Both packages say they are ready for this. A sole trader who is not VAT registered may find a QuickBooks sole trader plan enough. If you are VAT registered, check the plan allows VAT submission. Read more on what Making Tax Digital means for the self-employed.

Limited companies with staff

If you run payroll, the way each package charges for it matters. Xero builds payroll into Grow and above by headcount. QuickBooks adds it as a separate product. Compare the total cost for your number of employees, not just the headline plan. Either way, payroll filings sit outside the bookkeeping itself.

Construction firms under CIS

Contractors must send a CIS monthly return to HMRC by the 19th of every month following the end of the tax month. Both packages list CIS calculations. Xero shows contractor CIS returns as an optional add-on. QuickBooks says you can file CIS directly to HMRC at no extra cost. If you are a contractor, check how each one handles your monthly return. Our page on bookkeeping for construction and CIS covers the day-to-day side.

Businesses that buy or sell abroad

If you invoice or pay in other currencies, multi-currency is the deciding feature. In QuickBooks it starts at Essentials. In Xero it starts at Comprehensive.

Businesses that hold stock or run projects

QuickBooks lists inventory and project management together on its Plus plan. Xero lists project tracking on Ultimate and does not list stock features on its plan page. Many businesses with stock use a separate inventory app that links to either package, so check the apps your business already uses.

Ecommerce sellers

Online sellers care most about links to their sales channels and payment providers. Xero names Shopify and Stripe among its connected apps. QuickBooks points to its app store. Check that your own platforms are listed before you choose. See our page on bookkeeping for ecommerce sellers.

Things to check before you decide

• Can your bank connect to the software with a live feed?
• Does the plan you are looking at allow VAT submission, if you are registered?
• How many people need to log in, and does the plan allow that many?
• Do you need payroll, multi-currency, projects or stock, and which tier includes them?
• Do your other tools, such as Dext, Stripe or your till system, connect to it?
• What does it cost for your setup today, on the vendor's own site?

HMRC's guidance says you must use compatible software to keep your VAT records and file VAT returns. It runs a search service to help you find software, and says questions about using the software go to the provider.

Switching between them

Moving from one package to the other is possible, but it takes care. Opening balances, open invoices and bills, and VAT history all need to come across cleanly. The simplest time to switch is at a year end or the start of a VAT quarter. Bring the books up to date first. Our guide on setting up a chart of accounts helps whichever package you land on.

The software is your choice

Wenzo works in both. We also work in Sage, FreeAgent and other packages. So you can pick the one that suits how your business runs, and keep the subscription in your own name. If you already use one of them, there is no need to move. See Xero bookkeeping or QuickBooks bookkeeping for how the daily work runs in each.