With the right accounting software for your sole trader business, the most taxing parts of the job can be streamlined, simplified, and sometimes even automated. Combine a self-employed accounting app with professional advice from a dedicated accountancy firm, and the tax year end no longer need be a source of stress for you or your business. Moreover, when the HMRC makes taxes digital from April 2026, having a basic understanding of digital accountancy will serve you to no end.
Of course, with so much accountancy software available each promising to be better than the last at helping freelancers and sole traders file their self-employment tax returns it’s hard to know where to start.
UWM Accountants has over 40 years of experience in enabling our clients to work toward a better bottom line and achieve their financial goals. Putting this expertise to good use, we’ve compiled this guide, comparing the top 4 accounting software for self-employed people available today.
Benefits of using accounting software when you’re self-employed
Before we dive right in, it’s worth briefly discussing exactly why accounting software for sole traders can be beneficial. After all, so many of us file our taxes manually and have been doing so for years so why switch things up now? Let’s take a look.
Accounting on the go
Much of analogue accountancy happens in the office be that at home or in a dedicated office space. It tends to require spreadsheets, cashflow books, time and the headspace to spend hours rifling through loose receipts, invoices and purchase orders.
In contrast, digitising your accounts with accounting software built for the self-employed means you can do all of this as you go, whenever and wherever you are.
All of the software we’ve recommended below offers companion apps for smartphones and tablets, allowing you to quickly log an expense receipt here, create an invoice there, or even track billable time whilst you work.
Preparing for Making Tax Digital (MTD)
In April 2026, the UK’s tax authority, HMRC, will implement their Making Tax Digital (MTD) plans, which will directly affect sole traders and the self-employed. From filing your tax returns once a year, freelancers with a gross income exceeding £50,000 will be required to log their returns on at least a quarterly basis, followed by a Final Declaration’ at SATR (Self-Assessment Tax Return) time. By investing in sole trader accounting software now, you can get ahead of the game, ensuring you’re not caught off guard when MTD goes live.
Invoicing, expensing, and handling cashflow all in one place
Perhaps obvious to state, it’s still worth noting that the biggest draw of accounting software is that it consolidates the many disparate elements of personal accountancy into one user-friendly app. Rather than keeping track of invoices by email, expenses by a folder of receipts, and cashflow via a separate ledger, all of these tasks (and many more) can be easily tracked and dealt with via your accounting software. Moreover, you can dispense with the anxiety of missing important calendar accountancy dates with an app which keeps you reminded.
Comparing the top 4 best accounting applications for the self-employed
Last but not least, let’s explore 4 pieces of accounting software for freelancers and the self-employed which we at UWM believe to be the best on the market.
Full disclosure, we ourselves use Xero and are in fact a Xero Gold Partner, meaning that we are intimately familiar with the award-winning software and capable of helping sole traders across the UK with their cloud-based accounting needs.
We think Xero is the best accounting software for sole traders, but that doesn’t mean it’s the only one. Let’s take a look.
Sage Business Cloud Accounting
Sage is a recognisable name in business and finance, and as such has unsurprisingly put together a pretty comprehensive accounting software package. One of the shining features of Sage Business Cloud Accounting is its customer support, available around the clock and via a range of mediums (phone, live chat, email, etc.). The main drawback to Sage is that, whilst its UI (user interface) is clean and straightforward, and its reputation solid, its range of features does feel limited in ways others on this list do not.
Recommended plan: Accounting Start
Free trial: 3 months
Key features
- Invoice creation and delivery
- Invoice tracking (track payments owed to you)
- Automatic bank account reconciliation
- Making Tax Digital (MTD) VAT report creation and filing (with HMRC)
Pros
- Great 24/7 customer support
- Well-established brand with history of expertise in the industry
- Clean user interface which is easy to use
- Unlimited invoicing
Cons
- Few available additional tools and features, like time- or mileage-tracking
- CIS contractors will have to upgrade to the Accounting Standard plan to access the CIS deductions feature
- AI receipt capture is only available as an optional extra
FreshBooks
FreshBooks is a Canadian export which has been making ground in the UK for the past few years, catching attention with the MTD VAT integration tool it launched in 2020. Limited in scope on the lowest tier plan, FreshBooks nevertheless offers a decent range of features to sole traders and freelancers, including an attractive and creative invoice and quote creation tool. The tool makes it easy to heavily customise the invoices and quotes you send to clients, making it easy to both look professional and stand out from the crowd.
Recommended plan: Plus
Free trial: 30 days / currently 90% off the price of all plans for the first 3 months
Key features
- Time-tracker
- Record expenses
- Mileage tracker (for sole traders who expense fuel by the mile/kilometre)
- Unlimited invoice and estimate creation and delivery
- Reporting tools
- Bank account integration
- Making Tax Digital (MTD) VAT reporting
Pros
- Arguably the best invoice creation tool available
- Unlimited access to expensing, invoicing and reporting each month
- All plans include advanced features (time- and mileage-tracking, for example)
Cons
- The basic Lite’ plan strictly limits you to just 5 clients at a time
- Customer support phonelines only operate on US/Canadian time, meaning they are open from 1pm-1am GMT+00 (UK time)
QuickBooks
Here’s a name you’ll likely already recognise: QuickBooks. QuickBooks has been doing the rounds in digital accounting software for a while now, and has rightly earned a solid reputation.
The app is pretty good value for the features you get, even from the most basic plan, making it a strong contender for our top spot. Highlights include the ability to separate personal from business expenses, and AI receipt recording on the go.
Downsides are few, including support being limited to online chat support only (which isn’t even available 24/7), but from our perspective, they do still make QuickBooks just a degree inferior to the last app on our list: Xero.
Recommended plan: Self-Employed
Free trial: 1 month
Key features
- Unlimited invoice creation and delivery
- Easy self-assessment tax return reporting
- Mileage-tracker
Pros
- Highly-reputable name
- Competitively-priced plans
- Comprehensive features available on all tiers
- AI receipt-tracking
Cons
- Limited customer support options
- Accounting software not as specialised to sole traders and self-employed people as Xero
Xero
Xero is the accounting software for self-employed users we use, and for good reason. Founded in New Zealand, Xero has since expanded its offices to include locations in the USA and, more importantly for our clients, the UK. Crucially, the team behind Xero have put a great deal of time and effort into the user interface of their accounting software. A clean, supremely accessible UI makes Xero, in our opinion, the most beginner-friendly accounting software for sole traders.
At the most basic end of the subscription tier, Xero offers you all of the tools the average freelancer needs to look after their accounts whilst on the go, and with an interface which makes the whole process as straightforward and relaxing as possible.
The only notable drawback to Xero is that on its Starter plan you are limited to 20 invoices/quotes and five expenses bills per month for most start-up sole traders this will be enough, both in the short- and long-term, though if you’re aiming to grow your business beyond this you will need to upgrade to the Standard plan.
Recommended plan: Starter
Free trial: 1 month (plus 50% off all subscription plans for the first 6 months)
Key Features
- Invoice and quote creation
- Log bills and expenses
- Bank account reconciliation
- Easily submit VAT returns to HMRC
- Automatic CIS deduction calculations
- AI expenses-processing via Hubdoc
Pros
- An award-winning User Interface
- Competitive pricing, bolstered by rolling deals
- Xero Gold Partner support via UWM Accountants
- AI receipt-tracking
- Comprehensive features available on all subscription tiers
- Inclusive of VAT- and CIS-registered sole traders and self-employed workers
Cons
- Usage limits are imposed on the cheapest subscription plan
Further considerations when choosing accounting software for sole traders
Having explored 4 of the best accounting software for the self-employed, we’d like to bring your attention to a few of the most important considerations you can make when assessing which of these programmes will work best for you.
Are you VAT-registered?
There’s a good chance that most people reading this guide to accountancy software will not currently be VAT-registered, nor foresee the need to register themselves for VAT in the near future. Currently, you only need to be VAT-registered if you earn over £85,000 per year. Nevertheless, if you do, or hope to do so in future, you should choose accounting software packages which include tools for submitting your VAT digitally.
Do you make CIS (Construction Industry Scheme) contributions?
Sole traders in the construction industry (i.e. subcontractors who work on projects for construction businesses) are required by law to withhold a certain amount of their income as tax called CIS contributions for HMRC. If you’re registered for CIS, or need to be, then accounting software which facilitates withholding CIS contributions could save you a great deal of time and effort.
How big is your business, and how big do you expect it to grow?
Because each different accounting programme offers a tiered system of plans, those most affordable to self-employed people tend to come with stricter usage limits. These limits can impact the number of clients you’re allowed to log on the app, and/or the number of invoices, receipts, or purchase orders you can process each month. Depending on the size of your business, this may not be an issue now nor in the foreseeable future. Nevertheless, it’s worth making a choice of accountancy software based on reasonable projections of growth for your self-employed income.
Do you need the added extras?
The added extras available on higher subscription tiers of accounting software are deliberately shiny and attractive, so much so that they can become sticking points for us. However, before shelling out for those little extra gadgets, it’s important to assess their genuine worth to you and your business.
For example, time-tracking on the go can be really useful, but not if you bill your clients by project, rather than by hour. Similarly, an AI expense-logging tool (such as Xero’s Hubdoc, which extracts and logs information from photos of receipts) could save you hours and hours of manual work, or become another gizmo which sits collecting dust.
Ultimately, decide which accounting tools are fundamental to your operations, and which would just be an added bonus, and find the subscription which meets both your budget and fundamental needs.
Is support on hand when you need it?
Accounting software can be supremely useful to businesses large and small, from sole traders and limited companies to large groups of companies, but they’re not a cure-all. We all need a little extra support from time to time, especially when it comes to something as crucially important as paying our taxes and saving as much money as possible on the bill.
Keep note of which accounting apps offer comprehensive customer support, particularly if you’re not confident or comfortable with new technologies.
Another route you may wish to explore is to pair your chosen accounting software with an accountant. No application available to date is yet capable of making human expertise obsolete, and most accounting software works best when paired with the advice of a professional.
Knowing when and if you need an accountant can make all the difference between a manageable, and an unmanageable, self-assessment tax return.
Wrapping up: Combining accounting software with accountancy advice
Keeping track of your accounts and filing your taxes can often be an unnecessarily stressful experience for freelancers, sole traders, and small businesses. As rules and practices change, especially with the UK’s introduction of Making Tax Digital (MTD) in April 2026, investing in quality accounting software for self-employed people is a smart way to stay ahead of the curve. Pair your chosen application with the assistance of an accountant, and you’ll be able to keep on top of your finances with minimal stress and maximum efficiency. If you’d like to learn more about pairing Xero (or any other personal accounting app) with professional accounting advice, visit the UWM website today
