Xero vs QuickBooks vs Sage: Which UK Accounting Software Fits Your Business?

Every year, thousands of UK businesses go through this same decision. Often they're switching from spreadsheets, sometimes from desktop Sage, occasionally from one cloud platform to another. The advice they find online is almost universally useless - affiliate-stuffed listicles that mysteriously recommend whichever platform pays the highest commission.

This is not that article. We don't run affiliate links. We integrate with all three platforms, so we have no horse in this race. What follows is an honest assessment of where each platform stands in early 2026, who it actually suits, and where it falls short.

Xero: the UK default

Ask most UK accountants what software they recommend and you'll hear "Xero" before you've finished the question. It has become the default recommendation for UK small businesses, and for good reason - it's polished, well-connected, and accountants know it inside out.

Xero is a New Zealand company that cracked the UK market years ago by aggressively courting the accounting profession. It worked. The majority of UK practices now use Xero as their primary client platform, which creates a self-reinforcing cycle: accountants recommend what they know, businesses adopt what their accountants recommend, and Xero's UK market share keeps growing.

Pricing (February 2026, + VAT)

A word on the Simple plan: it exists primarily so Xero can advertise "from £7/month." In practice, five invoices and twenty bank transactions per month is barely enough for a dormant company. Any real business needs Ignite at minimum, which means the actual starting price is £16.

Where Xero wins

• App ecosystem. Over 1,000 integrations. Whatever niche tool your business uses - inventory, CRM, time tracking, project management - there's almost certainly a Xero connector for it. No other UK accounting platform comes close.
• Accountant fluency. Your accountant already knows it. This matters more than most feature comparisons acknowledge. A tool your accountant uses daily will get you better support, faster troubleshooting, and fewer "let me look into that" delays.
• Bank feeds. The bank feed experience in Xero is genuinely the best of the three. Transactions import cleanly, the matching suggestions are sensible, and the reconciliation flow is smooth enough that most users can get through it without hating their lives.
• Clean interface. Xero looks good. It doesn't feel like software designed by a committee in 2009. For non-accountants, this matters - you're more likely to use a tool that doesn't make you wince every time you open it.

Where Xero falls short

• Relentless price creep. Xero has raised prices every year for the past three years. The "Growing" plan that used to cost £26 is now the "Grow" plan at £37. Multi-currency, which was once included on mid-tier plans, now requires the £50 Comprehensive plan. If you're budgeting for accounting software, budget for it to get more expensive.
• Basic inventory. If you sell physical products and need proper stock management - tracking across warehouses, bill of materials, serial numbers - Xero's built-in inventory is thin. You'll end up buying a third-party app to fill the gaps, which means more cost and more complexity.
• Multi-currency costs £50/month. For businesses that only occasionally deal in foreign currency, paying £50 a month for the privilege is hard to justify. QuickBooks gives you multi-currency at £38.
• No free tier. Not even a limited one. If you're a micro-business doing ten transactions a month and just need basic record-keeping, there are cheaper options.

QuickBooks Online: the US giant growing in the UK

QuickBooks is the dominant accounting platform globally, though in the UK it's more of a strong second that's been closing the gap. Intuit has invested heavily in localising QuickBooks for the UK market - UK VAT, HMRC MTD compliance, PAYE, pension auto-enrolment - and the product has genuinely improved year on year. It's no longer the American import that felt slightly foreign on British books.

Pricing (February 2026, + VAT)

Payroll is a separate add-on at £8/month plus £2 per employee. This can add up quickly, but it also means you're not paying for payroll you don't use - which is a genuine advantage for the many businesses that outsource payroll or don't have employees.

Where QuickBooks wins

• The Sole Trader plan. There's a real gap in the market for sole traders who need proper accounting software but don't need VAT, invoicing, or a full chart of accounts. QuickBooks's £10 Sole Trader plan fills it. It handles Self Assessment, tracks income and expenses, and does simplified record-keeping. Nothing else at this price point does that as well.
• Reporting. QuickBooks has the deepest reporting of the three. Customisable columns, saved report templates, class and location tracking on Plus and above. If you need management reporting that goes beyond the standard P&L and balance sheet, QuickBooks has the edge.
• Multi-currency at £38. Twelve pounds a month cheaper than Xero's equivalent. For businesses that trade internationally but aren't big enough to justify £50/month, that difference adds up to £144 a year.
• US compatibility. If your business works with American clients or has a US entity, QuickBooks speaks both dialects natively. Xero can handle this but it's more awkward. QuickBooks was built for American accounting first, and that foundation shows.

Where QuickBooks falls short

• Thinner UK app ecosystem. QuickBooks has plenty of integrations, but the UK-specific ones lag behind Xero. Niche tools built for UK accounting practices, UK payroll bureaux, or UK industry verticals tend to build their Xero integration first and their QuickBooks integration second, if at all.
• UK accountants are less fluent. Most UK practices have a Xero specialist. Fewer have a QuickBooks specialist. This is changing, but slowly. If you pick QuickBooks and your accountant has to look things up as they go, that's your time and money being spent on their learning curve.
• Interface clutter. QuickBooks tries to surface everything at once. The left sidebar has an alarming number of menu items. For people who just need to send invoices and reconcile their bank, the UI can feel overwhelming. Xero is cleaner.
• Payroll is an add-on. On its own, this is fine - you only pay for what you use. But the per-employee cost means that for businesses with 10+ employees, QuickBooks payroll can end up costing more than Sage's bundled payroll. Run the maths for your specific headcount.

Sage: the incumbent

Sage has been in UK accounting software longer than most of its users have been alive. Sage 50 was once installed on essentially every small business PC in Britain. The cloud version - Sage Accounting - is a different product entirely, and it's worth evaluating on its own merits rather than on nostalgia for (or resentment of) Sage 50.

Pricing (February 2026, + VAT)

The standout detail here is payroll. Every Sage plan includes payroll, from the £15 Start plan upward. No add-on fees, no per-employee charges. For businesses where payroll is a core requirement, this changes the cost comparison substantially.

Where Sage wins

• Payroll is bundled and solid. Sage's payroll module is not an afterthought. It handles RTI submissions, pension auto-enrolment, statutory payments, and P11Ds without requiring a separate subscription. For businesses with 5+ employees, this alone can make Sage cheaper than Xero or QuickBooks once you factor in payroll costs.
• UK compliance pedigree. Sage has been dealing with HMRC requirements for decades. CIS, MTD for VAT, RTI - Sage tends to have compliance features working reliably on day one, because they've been building for HMRC's systems since before HMRC was called HMRC.
• Brand trust. For many business owners, Sage is the name they know. Their previous accountant used Sage. Their bookkeeper used Sage. Their business studies teacher used Sage. Familiarity isn't a feature, exactly, but it reduces the psychological friction of adopting new software.
• Unlimited users on Plus. If you need more than five people accessing the accounting system, Sage Plus at £59 with unlimited users can work out cheaper than buying extra seats on Xero or QuickBooks.

Where Sage falls short

• Confusing product line. Sage 50, Sage 200, Sage Intacct, Sage Accounting, Sage Business Cloud - working out which Sage product you actually need requires a PhD in Sage marketing. We're talking about Sage Accounting (the cloud product) here, but many businesses end up on the wrong Sage product because the naming is a labyrinth.
• Dated interface. Sage Accounting has improved, but it still feels a generation behind Xero. Navigation is less intuitive, the design language is more cluttered, and certain workflows take more clicks than they should. This is the kind of thing that matters daily.
• Smallest app ecosystem. Sage's marketplace has fewer third-party integrations than either Xero or QuickBooks. If you need your accounting platform to be the hub that connects to everything else, Sage is the weakest option.
• Adequate, not excellent, bank reconciliation. The bank feed and reconciliation workflow in Sage works, but it's noticeably less smooth than Xero's. Matching suggestions are less intelligent, and the flow requires more manual intervention.

Head-to-head comparisons

The platform profiles above give you the shape of each product. Here's how they compare on the specific features that tend to drive the decision.

Bank reconciliation

Winner: Xero. Xero's bank reconciliation is the gold standard among the three. Bank feeds connect reliably, the matching algorithm is sensible, and the workflow for processing transactions is clean. QuickBooks is solid but slightly more cluttered. Sage gets the job done but requires more manual effort. All three support automatic bank feed imports from UK banks.

Invoicing

Winner: QuickBooks, just. All three handle invoicing competently, but QuickBooks edges ahead with better customisation, recurring invoice scheduling, and payment reminders that actually work. Xero's invoicing is clean and fast. Sage's is functional but less polished.

Reporting

Winner: QuickBooks. QuickBooks has the deepest reporting engine. Custom reports, class tracking, location tracking, and saved report templates give it genuine flexibility. Xero's reporting is adequate for most businesses but customisation options are limited unless you pay for the Ultimate plan. Sage's reporting sits between the two.

Multi-currency

Winner: QuickBooks on price. Xero on execution. QuickBooks gives you multi-currency at the cheapest price point. But Xero's multi-currency implementation is more mature - better handling of exchange rate gains/losses, smoother invoicing in foreign currencies, and more currency options. If you trade internationally often, Xero's extra £12/month buys a better experience. If you occasionally invoice a European client, QuickBooks saves you money.

Payroll

Winner: Sage. Sage wins the payroll comparison clearly. It's included on every plan, the module is mature and reliable, and for larger headcounts the unlimited payroll on the £59 Plus plan is unmatched. Xero's payroll is good but gated by plan tier. QuickBooks payroll is capable but the per-employee pricing punishes growth.

Mobile apps

Winner: tie between Xero and QuickBooks. Both have solid mobile apps that let you invoice on the go, photograph receipts, and check your bank balance. Sage's app exists but feels like a reduced version of the desktop rather than a properly designed mobile experience.

Accountant features

Winner: Xero, decisively. Xero HQ - the practice management dashboard for accountants - is the most developed of the three. Multi-client views, practice-level reporting, easy client onboarding, and a certification programme that most UK practices have adopted. QuickBooks ProAdvisor is catching up but remains a step behind. Sage's accountant tools are the least developed in the cloud space.

API and developer ecosystem

Winner: Xero. Xero's API is the most widely adopted by UK third-party developers. The documentation is good, the developer community is active, and the OAuth 2.0 implementation is well-maintained. QuickBooks's API is technically more powerful in some areas (especially reporting), but UK developer adoption is lower. Sage's API is serviceable but less documented.

Other contenders worth knowing about

The big three dominate the conversation, but they're not the only options. A few platforms deserve a mention for specific use cases.

Decision framework: 8 questions

Rather than telling you which platform to pick (we genuinely don't mind), here are the eight questions that actually determine the right answer for your specific situation.

The bottom line

There is no objective "best" here. Xero is the safest default for most UK businesses because of its accountant adoption and ecosystem depth. QuickBooks is the best value for sole traders and the strongest choice for reporting-heavy or US-linked businesses. Sage makes the most sense when payroll is a priority and you want everything in one subscription.

All three are competent products that will handle your invoicing, bank reconciliation, VAT returns, and financial reporting without embarrassing themselves. The differences are at the margins - and the margins that matter most are the ones specific to your business, your accountant, and your budget.

Pick the one that fits your situation. Use the trial. Ask your accountant. Then stop agonising over it and get back to running your business.