Our verdict
Being tested. An editor is using Xero hands-on; the verdict and score appear here once they sign it off.
What it does
Xero is online accounting software for small businesses. It brings in your bank transactions, sends invoices, tracks bills and files VAT returns to HMRC under Making Tax Digital. Its AI assistant, JAX (“Just Ask Xero”), reads the receipts and bills you upload and can match bank transactions for you (a beta feature).
It suits sole traders through to growing firms, especially if your accountant already uses Xero. Its Simple plan is aimed at sole traders and landlords who must keep digital records for Making Tax Digital for Income Tax.
Why use it
- Bank feeds bring in your transactions every day, so you don’t have to type them up.
- JAX reads the receipts, bills and invoices you upload and gets the details ready for you to check.
- It is recognised by HMRC for Making Tax Digital for VAT, and its Simple plan includes Making Tax Digital for Income Tax submissions.
- Many UK accountants and bookkeepers use it, which makes sharing your books with them easy.
How it works
- Start the 30-day free trial and choose the plan that fits your business.
- Connect your business bank account so transactions come in automatically.
- Upload or email in receipts and bills, and let JAX pull out the details.
- Check the matches JAX suggests, then reconcile your bank.
- Send invoices, and file your VAT return to HMRC from Xero.
How hard is it to use?
Intermediate Some set-up, or a little practice, to get good results.
Everyday tasks are simple, but setting up your accounts, VAT and bank rules takes some learning, which is why we rate it Intermediate. Many people ask an accountant to set it up.
What it costs
Paid plans; free trial. Paid monthly plans with a 30-day free trial, from Simple for sole traders and landlords to plans that lift limits and add features such as multiple currencies and projects. Automatic bank reconciliation needs the Grow plan or above.
Prices change often, so check Xero’s own site before you pay.
Watch out for
- Automatic bank reconciliation is still in beta in the UK, so check what JAX has matched before you file a VAT return.
- Introductory discounts end after a few months, so check the full monthly price before you commit.
- Cheaper plans limit how many invoices you can send each month.
Your data
Xero says it doesn’t use your data to train AI models, and the AI providers it works with don’t keep your data to train theirs. Xero hosts its services with Amazon Web Services on servers in the US.
We haven’t confirmed that Xero can keep your data in the UK, so check where it keeps your data before you share anything private or about other people.