Sage vs Xero for Making Tax Digital
Both are recognised by HMRC for Making Tax Digital for Income Tax. Here is what each one supports today, according to HMRC's own software finder, and what each costs on its own pricing page — all checked on 9 October 2026. No opinions, no star ratings: just the differences that matter for your situation.
“Sage” here means Sage Sole Trader & Landlord, the product HMRC lists for sole traders and landlords.
The short answer
Choose Sage if…
- you want a free option — free plan, limited to 25 auto-categorised transactions, 1 bank account, 5 sales invoices a month
- you want the lower listed entry price — Sage from £7/month + VAT (Sage Sole Trader plan) against £18/month + VAT (Ignite plan) for Xero
Choose Xero if…
- you have foreign rental income — Xero handles it today; Sage lists it as not included
- you need to report savings interest, foreign interest, pension contributions and charitable giving (Gift Aid) in your tax return — Xero supports them now; Sage lists them as in development
- you are VAT registered and want MTD for VAT in the same product
Not sure either fits?
Our 2-minute check compares every HMRC-recognised product with your exact income — salary, dividends, foreign property included.
At a glance
| Sage | Xero | |
|---|---|---|
| Free option | Free plan, limited to 25 auto-categorised transactions, 1 bank account, 5 sales invoices a month | No |
| Paid plans from | £7/month + VAT · Sage Sole Trader | £18/month + VAT · Ignite |
| Free trial | — | One month free |
| Keeps digital records | Ready now | Ready now |
| Bridging (spreadsheets) | Not included | Not included |
| Final tax return | Yes | Yes |
| Sole trader income | Ready now | Ready now |
| UK property income | Ready now | Ready now |
| Foreign property income | Not included | Ready now |
| MTD for VAT | Not included | Ready now |
| Agent software (for your accountant) | Ready now | Ready now |
| Other income items ready now | 0 of 16 | 4 of 16 |
| Other income items in development | 15 of 16 | 12 of 16 |
| Accessibility features | 0 of 4 | 0 of 4 |
Every HMRC-listed feature, side by side
HMRC lists the same features for every recognised product. Sage and Xero differ on 7 of them (highlighted). “In development” means the provider has committed to HMRC to build it in time for the 2026 to 2027 tax return.
| Feature | Sage | Xero |
|---|---|---|
| What it can send to HMRC | ||
| Quarterly updates | Yes | Yes |
| Tax return | Yes | Yes |
| Features provided | ||
| Free version | Not included | Not included |
| Agent software | Ready now | Ready now |
| Individual software | Ready now | Ready now |
| Standard update period (6 April to 5 April) | Ready now | Ready now |
| Calendar update period (1 April to 31 March) | Ready now | Ready now |
| Software that creates digital records | Ready now | Ready now |
| Bridging software that connects to records | Not included | Not included |
| Making Tax Digital for VAT | Not included | Ready now |
| Blindness or impaired vision | Not included | Not included |
| Deafness or impaired hearing | Not included | Not included |
| Motor or physical difficulties | Not included | Not included |
| Cognitive impairments | Not included | Not included |
| HMRC Assist (Submission Feedback) | Not included | Not included |
| Business income sources | ||
| Sole trader | Ready now | Ready now |
| UK property | Ready now | Ready now |
| Foreign property | Not included | Ready now |
| Other income sources and items | ||
| UK interest | In development | Ready now |
| Employment (PAYE) | In development | In development |
| UK dividends | In development | In development |
| State Pension income | In development | In development |
| Private pension incomes | In development | In development |
| Partner income from a partnership | Not included | In development |
| Foreign dividends | In development | In development |
| Foreign interest | In development | Ready now |
| Private pension contributions | In development | Ready now |
| Construction Industry Scheme | In development | In development |
| Charitable giving | In development | Ready now |
| Capital Gains | In development | In development |
| Student Loan | In development | In development |
| Marriage Allowance | In development | In development |
| Voluntary Class 2 National Insurance | In development | In development |
| High Income Child Benefit Charge | In development | In development |
Prices
Sage
| Free | Free |
|---|---|
| Sage Sole Trader | £7/month + VATPromo 90% off for 6 months |
Free option: 25 auto-categorised transactions, 1 bank account, 5 sales invoices a month
HMRC lists the free version separately: Sage Sole Trader & Landlord Free.
Checked on 9 October 2026 on Sage’s pricing page. Promotions change often.
Xero
| Ignite | £18/month + VATPromo new UK customers: 90% off first 6 months (£1.80) |
|---|---|
| Grow | £39/month + VATPromo £3.90 first 6 months |
| Comprehensive | £55/month + VATPromo £5.50 first 6 months |
| Ultimate | £70/month + VATPromo £7 first 6 months |
Trial: One month free
Checked on 9 October 2026 on Xero’s pricing page. Promotions change often.
Sources: HMRC software finder for Making Tax Digital for Income Tax (Open Government Licence v3.0) — Sage Sole Trader & Landlord and Xero, checked 9 October 2026; providers' pricing pages as linked above. HMRC does not recommend any product. Clarpilot compares on these data only: commissions never change what we show.