TapTax vs Xero
A cheap big-brand plan vs a tax-only mobile app
Xero's Simple plan brought a major accounting brand down to £7 plus VAT a month. HMRC's own directory shows just 2 of its 16 tax-return items ready, with 14 still in development. Here is the honest 2026 comparison.
Estimate your self-employed tax in seconds
See what you would owe for the year, then file the real figures with TapTax in a couple of taps.
Total turnover before expenses
Under £1,000 we use the trading allowance automatically
Estimated tax bill
£6,872
15.3% effective rate for 2026/27
- Income tax
- £5,286
- Class 4 NI
- £1,586
Take-home pay
£32,128
after tax, NI and expenses
This is an estimate using GOV.UK rates for 2026/27, not your official tax calculation. TapTax is MTD-compatible, so you can connect to HMRC and file the real figures in a couple of taps.
Xero did something significant for sole traders in 2026: it brought a major accounting brand down to £7 plus VAT a month with the Simple plan, aimed squarely at people who need MTD for Income Tax rather than a full accounting system. For anyone who assumed the big names would price themselves out of the mandate, that was the moment they did not.
But the directory data tells a second story that the price does not. HMRC grades every listed product against 16 separate tax-return items, and Xero has 2 of them ready today, with 14 in development. That is the gap this comparison turns on, and it has nothing to do with whether Xero is good software.
- Xero is on HMRC's directory and graded ready on all three income sources, including foreign property, which most big brands are not.
- HMRC grades just 2 of Xero's 16 tax-return items ready now, UK interest and foreign interest, with 14 in development as of the 23 August 2026 scrape.
- Xero Simple is £7 plus VAT a month and Ignite £16 plus VAT, checked August 2026, with six-month intro discounts. There is no free tier.
- Xero is an accounting platform with MTD added; TapTax is tax-only, mobile-first, with open banking, AI categorisation and one-tap quarterly filing.
- Xero is listed with HMRC today. TapTax is MTD-compatible and going through HMRC's recognition process.
How HMRC's directory grades Xero
HMRC publishes a feature grid for every listed product using its own three-state scale: ready now, in development, or not included. We scraped all 133 listings on 23 August 2026.
Xero
£7 + VAT/mo Simple, £16 + VAT/mo Ignite(checked August 2026)
- Free version: no
- Android; Apple iOS: yes
- Sole trader income: yes
- UK property income: yes
- Foreign property income: yes
- Keeps digital records: yes
2/16 tax-return items ready, 14 more in development.
HMRC MTD for Income Tax directory, scraped 23 August 2026. Feature flags are vendor-declared. Vendor site
No free tier. Graded ready on all three income sources including foreign property, but only 2 of the 16 tax-return items are ready now, with 14 in development.
HMRC lists what each vendor declares. Feature flags, mobile-app support in particular, are vendor claims rather than verified facts, and listings change. Check with the vendor before you buy. Data: HMRC find-MTD-software service (tax.service.gov.uk), scraped 23 August 2026.
Read that carefully, because it cuts both ways. On the axes that decide whether software can handle your business at all, Xero grades well: digital record-keeping, sole trader, UK property, foreign property, calendar quarters, agent software. Foreign property in particular puts it ahead of QuickBooks, Sage's sole trader and landlord products and FreeAgent, all of which are graded not included on it. Clear Books joined Xero on the right side of that line in the week to 23 August 2026.
On the axis that decides whether it can finish your return, Xero is near the bottom of the field with 2 of 16.
The 2 of 16 problem, in context
The 16 tax-return items are the year-end work: interest, dividends, employment income, state and private pensions, partnership income, pension contributions, Construction Industry Scheme, charitable giving, capital gains, student loan, marriage allowance, voluntary Class 2 NI and the High Income Child Benefit Charge. Quarterly updates cover your business income and expenses. These cover everything else that has to reach the return before it is finished.
93of 133 (70%)cannot complete a single tax-return itemHMRC MTD for Income Tax directory, scraped 23 August 2026So the whole market is thin here, and Xero at 2 is not an outlier so much as slightly above a very low floor. What makes it notable is the contrast with its own peer group: QuickBooks, Clear Books, Kletta, untied, RentalBux, TaxHeaven and My Tax Digital are all graded at 15 of 16, and FreeAgent at 16 of 16.
- In development (HMRC grade)
- HMRC's middle grade on its software directory. The vendor has committed to supporting that item for the 2026-27 return but has not shipped it. It is a stated intention, not a capability. 102 of the 133 listed products carry at least one in-development promise, and many list all 16, so the 2026-27 season is when the promises get separated from the products.
Xero's 14 in-development items mean it intends to close most of that gap for the 2026-27 return. It may well do so; it is a company with the resources to. But when you are choosing software now, count what is ready now.
TapTax's own honest grade on this axis is mid-pack, not top: roughly six to eight of the 16 items are live, with pensions income, CIS, capital gains and partnership income still to come. That is ahead of Xero today and well behind the 15 of 16 cohort. We publish that rather than hide it, and the full picture for all 133 products is in our analysis of the HMRC MTD directory.
Pricing in detail, checked August 2026
| TapTax Free | TapTax Starter | TapTax Pro | Xero Simple | Xero Ignite | |
|---|---|---|---|---|---|
| Monthly cost | £0 | £4.99 | £9.99 | £7 + VAT | £16 + VAT |
| Approx. annual cost inc VAT | £0 | £49 | £99 | ~£100 | ~£230 |
| Introductory discount | No | No | No | 6 months | 6 months |
| Free tier | Yes | n/a | n/a | No | No |
| Sole trader income | Yes | Yes | Yes | Ready (HMRC grade) | Ready (HMRC grade) |
| UK property | Yes | Yes | Yes | Ready (HMRC grade) | Ready (HMRC grade) |
| Foreign property | Yes | Yes | Yes | Ready (HMRC grade) | Ready (HMRC grade) |
| Return items ready | 6 to 8 of 16 | 6 to 8 of 16 | 6 to 8 of 16 | 2 of 16 | 2 of 16 |
| Calendar quarters | Yes | Yes | Yes | Ready (HMRC grade) | Ready (HMRC grade) |
| Mobile app | iOS and Android | iOS and Android | iOS and Android | iOS and Android | iOS and Android |
| Invoicing, VAT, payroll | No, by design | No, by design | No, by design | Platform features | Platform features |
| HMRC directory status | Not listed; recognition in progress | Not listed; recognition in progress | Not listed; recognition in progress | Listed | Listed |
Xero pricing is from its published pricing as checked in August 2026, exclusive of VAT as Xero lists it. Xero also ran a £25 voucher promotion for filing a first quarterly update by 7 August 2026. Feature grades in the Xero columns are HMRC's own from the 23 August 2026 scrape.
At list, Xero Simple is around £100 a year including VAT against £49 for TapTax Starter paid annually, and TapTax has a free tier where Xero has none. The six-month introductory discount narrows that materially for a first year, which is worth factoring in if you are only comparing year one.
A cheap plan from a big brand is still a good deal. Just check what it can actually file at year end, not just what it costs each month.
Where Xero genuinely wins
It is a real accounting platform with a large ecosystem behind it. Invoicing, VAT, payroll, bank reconciliation, hundreds of app integrations and, importantly, an accountant who almost certainly already knows it. If you have or want a bookkeeper, Xero fluency is close to universal in UK practice, and that is worth something no comparison table captures.
Foreign property is the other clean win over its peer group. Among the big brands it is unusual, and if you have an overseas rental and want a large vendor with a long track record, Xero is one of the few options.
And it is listed with HMRC today, which TapTax is not.
Where TapTax fits better
If you are on Xero only because of MTD, you are buying a platform to use a fraction of it. TapTax is built for the fraction: connect your bank via open banking, let AI categorisation sort the transactions as they arrive, capture receipts with the camera, import anything the feed misses via CSV with presets for 16 UK banks, and file the quarterly update from your phone in a few taps. No chart of accounts, no invoicing module, no VAT settings to leave switched off.
It is also cheaper at every tier, with a genuinely free entry point, and it is ahead of Xero on ready-now return items today, though behind the leaders.
Before you decide, size the numbers with the sole trader tax calculator, which applies the £12,570 personal allowance, the 20% basic band to £50,270, 40% to £125,140 and 45% above, plus Class 4 NIC.
Who should choose which
Someone who already runs their business on Xero. Stay. Adding MTD to a system your accountant works in is worth more than the monthly saving, and the Simple plan is priced sensibly.
A sole trader who only needs MTD. TapTax, or one of the other tax-first products. Paying for an accounting platform to file four quarterly updates is buying scope you will not use.
A landlord with an overseas property who wants a big brand. Xero is one of the few that qualifies, because most of its peer group is graded not included on foreign property.
Someone whose return has pensions, dividends or capital gains in it. Check both products carefully. Xero is at 2 of 16 ready now, TapTax at six to eight, and the 15 of 16 cohort, Clear Books, FreeAgent, QuickBooks, untied, Kletta, RentalBux, TaxHeaven and My Tax Digital, is ahead of both.
Someone who must file a live submission this week. Xero, or another listed product. TapTax's recognition is in progress.
If you are specifically looking to move off Xero, we have a dedicated roundup of Xero alternatives for the self-employed.
The bottom line
Xero's Simple plan made a major brand affordable for sole traders, and its foreign property support puts it ahead of most of its peers. Those are real reasons to choose it, especially if you already use Xero or your accountant does.
What the price does not tell you is that HMRC grades 2 of its 16 tax-return items ready, with 14 in development. If your return is more than business income, that is the number to weigh.
TapTax is the tax-only, mobile-first, cheaper option covering all three income sources, currently ahead of Xero on ready-now return items and behind the leaders, and MTD-compatible while going through HMRC's recognition process. Compare Xero, and every other listed product, against the same source in the MTD software directory. TapTax has no row there yet.
People also ask
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Frequently asked questions
Can Xero file MTD for Income Tax?
Yes. Xero is listed on HMRC's find-MTD-software directory and is graded ready for digital record-keeping, sole trader income, UK property, foreign property, standard and calendar update periods, and agent software. So it can keep your records and file your quarterly updates. The nuance is the year-end: HMRC grades Xero as having only 2 of its 16 separate tax-return items ready, UK interest and foreign interest, with 14 more in development as of our 23 August 2026 scrape. In development means the vendor has committed to the 2026-27 return but has not shipped. If your return needs pension income, dividends, CIS or capital gains, check what has landed before you rely on it.
How much does Xero cost for MTD in 2026?
As checked in August 2026, Xero's Simple plan is £7 plus VAT a month and Ignite is £16 plus VAT a month, with six-month introductory discounts running on both. Simple is the plan aimed at sole traders and landlords who need MTD rather than full accounting. Xero has no free tier, which HMRC's directory confirms. At list price Simple works out around £100 a year including VAT, against £49 for TapTax Starter and £0 for the TapTax free tier, though the introductory discount narrows that for the first six months.
Does Xero handle foreign property income?
Yes, and this is a genuine advantage over most of its big-brand peers. HMRC grades Xero ready on all three business income sources: sole trader, UK property and foreign property. Only 68 of the 133 listed products can report foreign property at all, and QuickBooks, Sage's sole trader and landlord products and FreeAgent are all graded not included on it. If you have an overseas rental and want a large established vendor, Xero is one of the few. TapTax also covers foreign property including per-property detail.
Is TapTax a good Xero alternative for a sole trader?
It depends what you use Xero for. If you use it as a full accounting system with invoicing, VAT, payroll and an accountant working in the same file, TapTax does not replace that and is not trying to. If you are on Xero purely because you need to meet MTD for Income Tax, TapTax does that job for less, from a phone, with open banking import and AI categorisation, and covers all three income sources. The caveat we put on every page: Xero is listed with HMRC today, while TapTax is MTD-compatible and going through HMRC's recognition process.
What does "in development" mean on HMRC's software directory?
It is HMRC's middle grade, between ready now and not included. It means the vendor has told HMRC it intends to support that item for the 2026-27 return but has not shipped it yet. It is a commitment, not a capability. This matters because in-development promises are everywhere on the directory: 102 of the 133 listed products carry at least one, and many list all 16. The 2026-27 return season is when those promises get tested. When you are comparing products, count what is graded ready now and treat in development as a plan.
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