FreeAgent vs Xero for Landlords (MTD 2026): Free vs Flexible
Last updated 24 June 2026 · 8 min read · By the LandlordTaxAi Editorial Team
The short answer
Both are HMRC-recognised for MTD for Income Tax, but the headline difference is cost. FreeAgent is free if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle — a huge saving for landlords. Xero is a paid subscription that scales well for larger portfolios and is widely used by accountants.
If you’re choosing MTD software, FreeAgent and Xero sit at interesting opposite ends: one can be completely free with the right bank account, the other is a polished paid platform built to scale. For a cost-conscious landlord, that difference can decide it on its own.
This guide compares FreeAgent and Xero for landlords in 2026. As always with software, features and pricing shift — confirm the current details before signing up. For the wider market, see MTD software for landlords.
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MTD Threshold Checker
See whether you need MTD software like FreeAgent or Xero, and from when.
Result
- Total qualifying income
- £28,000
- You must use MTD for Income Tax
- From 6 April 2028
Both HMRC-recognised. FreeAgent free with NatWest/RBS/Ulster/Mettle. Check current terms. Estimate only.
The free FreeAgent route
FreeAgent’s standout feature for landlords is price. If you hold a business bank account with NatWest, Royal Bank of Scotland or Ulster Bank, you get FreeAgent free for as long as you keep the account. Mettle (NatWest’s free business account) also includes it, provided you make at least one transaction a month.
FreeAgent is HMRC-recognised for MTD for Income Tax and offers a "FreeAgent for Landlords" setup that supports UK property income. For a landlord who can open one of these bank accounts, that’s a fully compliant tool at no software cost.
Free FreeAgent with a qualifying bank account is one of the cheapest routes to MTD compliance — well worth checking if you’re choosing a business account anyway.
Where Xero fits
Xero is a paid, subscription-based platform with a strong reputation among UK accountants and good scalability. It handles UK property income using tracking categories to separate properties, and higher tiers support separate submissions for mixed income.
You pay for it regardless of your bank, but you get a mature, widely-supported platform — which matters most if your accountant uses Xero or your affairs are more complex.
| Factor | FreeAgent | Xero |
|---|---|---|
| Cost | Free with NatWest/RBS/Ulster/Mettle | Paid subscription, all users |
| MTD for Income Tax | HMRC-recognised | HMRC-recognised |
| Property income | Supported (FreeAgent for Landlords) | Tracking categories per property |
| Accountant adoption | Common, esp. with NatWest group | Very widely used in UK practices |
| Best for | Cost-conscious landlords with a qualifying bank | Scaling portfolios / accountant-led |
If you don’t bank with the qualifying providers, FreeAgent has a normal paid price too — at which point the choice comes down to features and your accountant’s preference.
Which should you choose?
For most landlords the decision starts with the bank account, then moves to complexity and accountant fit.
Property-first, whatever your bank
LandlordTaxAi focuses purely on landlord tax — reading your bank statements, categorising them and keeping MTD-ready records — so compliance fits your properties, not a general ledger.
See how it worksA worked example
Two landlords compare FreeAgent and Xero for April 2026.
| Banks with NatWest, two properties | Free FreeAgent for Landlords — £0 software cost |
| Banks elsewhere, accountant on Xero | Xero, to match the accountant |
| Growing portfolio, mixed income | Xero higher tier for flexibility |
| Both | HMRC-recognised; choose on cost and fit |
The NatWest-banking landlord gets a compliant tool free with FreeAgent; the accountant-led landlord may prefer Xero. The bank account often makes the call.
Frequently asked questions
Is FreeAgent really free for landlords?
Yes — if you bank with NatWest, Royal Bank of Scotland or Ulster Bank (for as long as you keep the account), or with Mettle (with at least one transaction a month). Otherwise it’s a paid subscription.
Are FreeAgent and Xero both HMRC-recognised?
Yes. Both are on HMRC’s compatible software list for MTD for Income Tax.
Does FreeAgent support property income?
Yes — it offers a "FreeAgent for Landlords" setup that supports UK property income for MTD.
Why choose Xero over free FreeAgent?
Mainly if your accountant uses Xero, or you want its scalability for a larger or mixed-income portfolio. Xero is paid regardless of your bank.
What if I don’t bank with the qualifying providers?
FreeAgent then has a normal paid price, so the choice comes down to features, accountant preference and cost — compare current pricing.
Can I switch later?
Yes, but moving accounting data mid-year takes care. It’s better to choose well before your first MTD quarter than to switch part-way through.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.freeagent.com/mettle/; https://www.gov.uk/guidance/find-software-that-works-with-making-tax-digital-for-income-tax; https://www.gov.uk/guidance/choose-the-right-software-for-making-tax-digital-for-income-tax. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.