TapTax vs Xero
A cheap big-brand plan vs a tax-only mobile app

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 11 of them ready today, with 5 in development, including capital gains and pension income. That remaining gap is what this comparison turns on, and it has nothing to do with whether Xero is good software.

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 159 listings on 17 October 2026.

Xero

£7 + VAT/mo Simple, £18 + VAT/mo Ignite(checked 7 October 2026)

• Free version: no
• Android; Apple iOS: yes
• Sole trader income: yes
• UK property income: yes
• Foreign property income: yes
• Keeps digital records: yes

11/16 tax-return items ready, 5 more in development.

HMRC MTD for Income Tax directory, scraped 17 October 2026. Feature flags are vendor-declared. Vendor site

No free tier. Graded ready on all three income sources including foreign property, and 11 of the 16 tax-return items are ready now, with 5 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 17 October 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 now in the top quarter of the field with 11 of 16, though still short of the leaders.

The 11 of 16 position, 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.

104of 159 (65%)cannot complete a single tax-return itemHMRC MTD for Income Tax directory, scraped 17 October 2026

So the whole market is thin here, and Xero at 11 is well clear of that floor. What still separates it from the top of its peer group is the last few items: 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. 112 of the 159 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 5 in-development items mean it intends to close the rest 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. On that estimate TapTax is now behind Xero, and well behind the 15 of 16 cohort. We publish that rather than hide it, and the full picture for every listed product is in our analysis of the HMRC MTD directory.

Pricing in detail, checked 7 October 2026

Xero pricing is from its published UK pricing as checked on 7 October 2026, exclusive of VAT as Xero lists it. Xero raised Ignite from £16 to £18 a month, and the plans above it, on 1 September 2026; Simple stayed at £7. Feature grades in the Xero columns are HMRC's own from the 17 October 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.”

Invoicing: Xero against TapTax

Xero's invoicing is one of its strengths, and the plan you need depends on how many invoices you send. On 7 October 2026 Simple included quotes and 10 invoices a month, Ignite 20 invoices and 10 bills, and Grow unlimited invoices and quotes. Xero's own page puts it plainly: for more than 10 invoices, see Ignite.

Sources: Xero's pricing plans, Simple plan, invoicing and Stripe fees pages, checked 7 October 2026. Stripe fees exclude VAT; premium UK cards and Amex were 1.9% + 20p.

Where Xero is ahead: quotes that convert to an invoice in one click, card and Pay by Bank payments on the invoice through Stripe or GoCardless, tap-to-pay on the phone app, and invoicing that sits inside full double-entry accounting your accountant can work in.

Where TapTax is ahead: no invoice cap once you pay £4.99 a month, six templates in your own colours with a rate card of the jobs you do, and reminders that can add statutory interest at 8% above the Bank of England base rate plus £40, £70 or £100 fixed compensation when a business client pays late. A sole trader sending more than 20 invoices a month would need Xero Grow at £39 plus VAT; on TapTax that is Starter at £4.99. See how TapTax invoicing works on the invoicing feature page.

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: import your bank statements by CSV with presets for 16 UK banks (direct bank connection is coming soon), let AI categorisation sort the transactions as they arrive, capture receipts with the camera, and file the quarterly update from your phone in a few taps. No chart of accounts and no VAT settings to leave switched off; invoicing is there when you need it, without a module to learn.

It is also cheaper at every tier, with a genuinely free entry point. On ready-now return items it is, on our own estimate, behind Xero and the leaders today.

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 11 of 16 ready now, with pension income and capital gains still in development, 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 use a product on the HMRC directory today. Xero, or another listed product. TapTax is HMRC-recognised, but its directory listing is still pending.

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 11 of its 16 tax-return items ready, with 5 in development, including capital gains and pension income. If your return has those in it, that is the number to weigh.

TapTax is the tax-only, mobile-first, cheaper option covering all three income sources, on our own estimate currently behind Xero and the leaders on ready-now return items, and it is HMRC-recognised, with its directory listing pending. 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

Is Xero good for MTD for Income Tax?

It is capable and cheap at the entry tier, with a caveat. HMRC's directory grades Xero ready on digital record-keeping, all three income sources including foreign property, and both standard and calendar update periods, so it will keep your records and file your quarterly updates. And 11 of HMRC's 16 tax-return items are graded ready now, with 5 in development at our 17 October 2026 scrape: employment income, State Pension, private pensions, partnership income and capital gains. For business-only income it is fine. For a return with pensions, employment income or capital gains, check what has shipped.

What is the cheapest Xero plan for sole traders?

The Simple plan at £7 plus VAT a month as checked on 7 October 2026, which works out around £100 a year including VAT at list price, with a six-month introductory discount available. Ignite is £18 plus VAT after the 1 September 2026 price rise. Xero has no free tier, which HMRC's directory confirms. Among the big accounting brands this is competitive: QuickBooks Sole Trader is £10 plus VAT and Sage Sole Trader and Landlord is £7 plus VAT, while Clear Books files MTD on a forever-free tier.

Which MTD software supports foreign property?

Only 77 of the 159 products on HMRC's directory, so just under half. Xero is one of them, which is unusual for a big brand: QuickBooks, FreeAgent and Sage's sole trader and landlord products are all graded not included on foreign property. Others graded ready include untied, Kletta, RentalBux, TaxHeaven, My Tax Digital, MTD 4 Income Tax and Self Assessment Direct. TapTax supports foreign property including the per-property detail endpoints.

Is TapTax cheaper than Xero?

Yes at list price. TapTax is £0 on its free tier, £4.99 a month at Starter and £9.99 at Pro, against Xero Simple at £7 plus VAT and Ignite at £18 plus VAT as checked on 7 October 2026. Over a year that is £49 for TapTax Starter against roughly £100 including VAT for Xero Simple, and TapTax has a free tier where Xero has none. Xero's six-month introductory discount narrows the gap for a first year. Note that TapTax is HMRC-recognised, with its directory listing pending, while Xero is listed today.