12 Best Cloud Accounting Software for UK Small Businesses (2026 Complete Guide)

Choosing the right cloud accounting software can transform how you manage your business finances. With Making Tax Digital requirements, real-time bank feeds, and automated VAT submissions now essential for UK businesses, selecting the proper platform isn't just about keeping HMRC happy—it's about gaining control over your cashflow, reducing admin time, and making better business decisions.

This comprehensive guide examines twelve leading cloud accounting solutions for UK small businesses in 2026: Xero, QuickBooks Online, FreeAgent, Sage Business Cloud Accounting, Zoho Books, FreshBooks, Crunch, QuickFile, Nomi, KashFlow, Wave, and MYOB. We'll compare their pricing structures, core features, integration capabilities, and suitability for different business types.

For specific UK tax calculations and tools, visit our accounting calculators including VAT calculators, salary calculators, and dividend tax calculators.

Quick Comparison: At a Glance

Software	Starting Price	Best For	Key Strength
Xero	£16/month	Growing businesses	Unlimited users
QuickBooks Online	£10/month	Sole traders & SMEs	AI-powered features
FreeAgent	FREE* or £13.50/month	Freelancers	Tax timeline
Sage	£18/month	UK-focused businesses	Built-in payroll
Zoho Books	FREE (under £35k)	Startups	Free plan available
FreshBooks	£15/month	Service businesses	Time tracking
Crunch	FREE or £24.50/month	Full-service needed	Accountant included
QuickFile	FREE (under 1,000 trans.)	Budget-conscious SMEs	Forever free plan
Nomi	Pricing on request	Self-employed	Simple interface
KashFlow	£10.50/month	Small businesses	UK VAT specialist
Wave	FREE	Micro-businesses	Completely free
MYOB	From $68/month	International businesses	Multi-currency

*FreeAgent is free with qualifying bank accounts (NatWest, RBS, Ulster Bank, Mettle)

Premium Solutions (£15-£65/month)

1. Xero – Best for Collaborative Teams

Xero has established itself as the market leader for UK small businesses, particularly those with multiple team members or external accountants. Its standout feature—unlimited users at every price point—makes it exceptionally cost-effective for growing businesses. Learn more about Xero's features.

Pricing (2026)

• Ignite: £16/month (20 invoices, 10 bills monthly)
• Grow: £33/month (unlimited)
• Comprehensive: £50/month (+ multi-currency)
• Ultimate: £65/month (+ payroll for 10 employees)

Best for: Limited companies with teams, businesses needing extensive integrations, companies working with accountants. Use our limited company tax calculator to estimate your company tax obligations.

2. QuickBooks Online – Best for AI-Powered Automation

QuickBooks brings powerful automation and AI features to UK small businesses through Intuit's platform, including the new Intuit Assist AI for transaction categorisation.

Pricing (2026)

• Sole Trader: £10/month (no VAT features)
• Simple Start: £16/month (1 user)
• Essentials: £31/month (3 users)
• Plus: £41/month (5 users, inventory)
• Advanced: £115/month (25 users)

Best for: Sole traders managing Self Assessment, mobile-first users, businesses wanting AI automation. Calculate your Self Assessment tax online.

3. FreeAgent – Best for Freelancers & Contractors

Designed specifically for UK freelancers and contractors, FreeAgent offers exceptional tax planning tools with its Tax Timeline feature.

Pricing (2026)

• FREE: With NatWest, RBS, Ulster Bank, or Mettle accounts
• Sole Trader: £13.50/month (50% off first 6-12 months)
• Limited Company: £27/month (50% off first 6-12 months)

Best for: Self-employed professionals, IT contractors, CIS subcontractors. Check our CIS tax calculator for construction industry tax.

4. Sage Business Cloud – Best for UK-Focused Businesses

Sage brings decades of UK accounting expertise with built-in payroll and new Sage Copilot AI assistant.

Pricing (2026)

• Start: £18/month (unlimited users, basic payroll)
• Standard: £39/month (+ CIS, expense claims)
• Plus: £59/month (+ inventory, multi-currency)

Best for: Retail businesses, construction companies, UK-focused operations not needing international features.

5. Zoho Books – Best for Budget-Conscious Startups

Zoho Books offers a genuinely free plan for businesses under £35k revenue, part of Zoho's extensive business suite.

Pricing (2026)

• Free: £0 (under £35k revenue, 1 user)
• Standard: £7.50/month (3 users)
• Professional: £15/month (5 users)
• Premium: £30/month (10 users)

Best for: Startups under £35k revenue, project-based businesses, companies using other Zoho products.

6. FreshBooks – Best for Service-Based Businesses

FreshBooks excels at time tracking and invoicing, making it ideal for consultants, agencies, and professional services.

Pricing (2026)

• Lite: £15/month (5 billable clients)
• Plus: £25/month (50 clients)
• Premium: £35/month (unlimited clients)
• Select: Custom pricing (2 users included)

Note: Additional users cost £8/month each (except Select plan).

Best for: Agencies, consultants, professionals billing by time, service businesses needing project profitability tracking.

Full-Service Solutions (with Accountant Support)

7. Crunch – Best for Software + Accountant Service

Crunch uniquely combines cloud accounting software with in-house chartered certified accountants, offering both DIY and full-service options.

Pricing (2026)

• Free Software: £0 (DIY bookkeeping only)
• Sole Trader Pro: £24.50/month + VAT (includes accountant support, Self Assessment)
• Limited Company: From £75.50/month + VAT (includes year-end accounts, tax returns)

Add-ons: Payroll £18/month (up to 5 employees), CIS from £21.50/month, VAT £3.50/month

Best for: Business owners wanting accountant support included, those who prefer full-service over DIY, businesses needing hand-holding through compliance. Estimate your company obligations with our corporation tax calculator.

Free & Budget Solutions

8. QuickFile – Best Free Solution for Small Accounts

QuickFile offers permanently free accounting software for businesses with under 1,000 transactions per year—no credit card required, no trial period.

Pricing (2026)

• Free Plans: £0 (XS/S/M sizes: up to 1,000 transactions/year)
• Large: £45/year + VAT (up to 2,000 transactions)
• Extra Large: £60/year + VAT (4,000+ transactions)

Note: Free plans include ads; £60/year removes adverts.

Best for: Micro-businesses, side businesses, contractors with low transaction volumes, businesses wanting zero software costs.

9. Wave – Best Completely Free Accounting

Wave is genuinely free accounting software with no limits on features, users, or time—free forever. Revenue comes from optional payment processing fees.

Pricing (2026)

• Accounting: FREE (unlimited invoices, unlimited users)
• Payments: Pay-per-use (2.9% + £0.30 per card transaction)
• Payroll: From $20/month (US/Canada only)

Best for: Solopreneurs, micro-businesses with simple needs, US/Canada businesses wanting free payroll, businesses comfortable with limited UK-specific features.

10. Nomi – Best for Simple Self-Employed Accounting

Nomi focuses on simplicity for self-employed individuals and sole traders, with an emphasis on ease of use over advanced features.

Key Features

• Simplified invoicing and expense tracking
• Self Assessment tax estimates
• Receipt capture via mobile app
• Basic VAT support
• Clean, minimalist interface

Best for: Self-employed individuals wanting simplicity over features, those intimidated by traditional accounting software.

11. KashFlow (IRIS) – Best for UK VAT Specialists

KashFlow, now part of IRIS Software Group, has been serving UK small businesses since 2005 with strong VAT and payroll features.

Pricing (2026)

• Starter: £10.50/month + VAT
• Standard: £15/month + VAT
• Plus: £20/month + VAT
• Business + Payroll: £29/month + VAT

Best for: UK-only businesses, those needing strong VAT compliance, businesses wanting integrated UK payroll, companies preferring established UK providers.

International Solution

12. MYOB – Best for Australia/NZ Businesses in UK

MYOB (Mind Your Own Business) is Australia's leading accounting software, suitable for businesses operating internationally or those with Australian/NZ connections.

Pricing (2026)

• Business Lite: AUD $27/month
• Business Pro: AUD $54/month
• AccountRight Plus: AUD $68/month

Best for: Australian/NZ businesses operating in UK, companies with international operations, businesses needing MYOB expertise.

Comprehensive Feature Comparison Matrix

Feature	Xero	QuickBooks	FreeAgent	Sage	Zoho	FreshBooks
Free Plan	✗	✗	✓*	✗	✓	✗
MTD VAT	✓	✓	✓	✓	✓	Limited
Unlimited Users	✓	✗	✓	✓	✗	✗
Payroll Included	Ultimate	Add-on	✓	✓	✗	✗
Mobile App	✓	✓	✓	✓	✓	✓
CIS Support	✓	✓	✓	Standard+	Limited	✗

Feature	Crunch	QuickFile	Wave	Nomi	KashFlow	MYOB
Free Plan	✓	✓	✓	✗	✗	✗
MTD VAT	✓	✓	Limited	✓	✓	Limited
Accountant Support	✓ (Paid)	Via partners	✗	✗	✗	✗
UK-Focused	✓	✓	✗	✓	✓	✗
Best For	Full service	Low volume	Micro biz	Simple needs	VAT	International

Which Software Should You Choose?

Choose Based on Your Business Type:

Sole Traders & Freelancers: FreeAgent (if using partner banks), FreshBooks, or Wave for simplicity. Use our UK tax calculator to estimate your obligations.

Limited Companies (Small): Xero Grow, QuickBooks Plus, or Sage Standard for comprehensive features. Calculate corporation tax on your profits.

Limited Companies (Growing): Xero Comprehensive/Ultimate, QuickBooks Advanced, or Sage Plus for scalability.

Construction/CIS: FreeAgent, Sage, or Xero for CIS compliance. Use our CIS calculator.

Service Businesses: FreshBooks or Crunch for time tracking and project management.

Retail/Inventory: Xero, Sage Plus, or QuickBooks Plus for robust inventory management.

Budget-Conscious Startups: Zoho Books (free plan), QuickFile (free), or Wave (completely free).

Want Accountant Support: Crunch (accountants included) or QuickFile (accountant marketplace).

Making Tax Digital (MTD) Compliance

All UK-focused platforms reviewed are HMRC-recognised for Making Tax Digital VAT compliance. MTD for Income Tax Self Assessment (ITSA) starts April 2026. Learn more about Making Tax Digital requirements and deadlines.

Integrations & Payment Processing

Most platforms integrate with major payment processors (Stripe, GoCardless, PayPal) and UK banks through Open Banking. Xero leads with 1,000+ integrations, followed by QuickBooks (750+) and Zoho Books (500+).

For accepting invoice payments, consider transaction fees:

• Stripe: 1.5% + £0.20 (UK cards) to 3.25% + £0.20 (international)
• GoCardless: 1% capped at £2 per transaction (Direct Debit)
• PayPal: 1.4% + £0.20 (domestic) to 3.4% + £0.20 (international)

Key Considerations Before Choosing

1. Calculate Total Cost of Ownership

Don't just compare headline prices. Include payroll add-ons, payment processing fees, additional user costs, and accountant support when comparing. A £15/month subscription might cost £40/month with necessary add-ons.

2. Consider Your Growth Plans

What works for £50k turnover may not suit £500k. Choose software that scales. Xero, QuickBooks Plus, and Sage Plus handle growth well. Check your projected growth using our profit margin calculator.

3. Integration Requirements

If you use Shopify, WooCommerce, or industry-specific tools, verify compatibility. Xero leads in third-party integrations.

4. Accountant Compatibility

Consult your accountant first. Most prefer Xero or QuickBooks due to their practice management tools. Crunch includes accountant support in pricing.

5. Trial Before Committing

Use free trials extensively. Test with real data: create invoices, reconcile banks, generate reports, and file test VAT returns.

Final Recommendations by Category

Conclusion

The UK cloud accounting market offers exceptional choice in 2026, from completely free solutions like Wave and QuickFile to premium platforms like Xero and QuickBooks, plus full-service options like Crunch that include accountant support.

For most UK small businesses, we recommend starting with:

• Under £35k revenue: Zoho Books (free) or QuickFile (free)
• Sole traders/freelancers: FreeAgent (especially with partner banks)
• Small limited companies: Xero Grow or QuickBooks Plus
• Growing businesses: Xero Comprehensive or QuickBooks Advanced
• Want full support: Crunch with accountant service
• Service businesses: FreshBooks for time tracking

Remember that accounting software is an investment in your business infrastructure. The time saved, financial clarity gained, and HMRC compliance achieved far outweigh monthly subscription costs.

Helpful Resources

For more UK tax and accounting resources:

• VAT Calculator – Calculate VAT on sales and purchases
• Self Assessment Calculator – Estimate income tax and NI
• Dividend Tax Calculator – Calculate dividend tax liability
• Corporation Tax Calculator – Estimate company tax
• Salary Calculator – Calculate take-home pay
• CIS Calculator – Construction Industry Scheme tax
• UK Tax Calculator – Comprehensive tax calculator
• Making Tax Digital Guide – MTD requirements and deadlines