The single director limited company is a specific enough situation that the general answer to which accounting software is best does not reliably apply to it. A contractor does not need stock, rarely needs payroll beyond one or two people, and mostly wants to know one thing: how much of the money in the company account is actually theirs once Corporation Tax, VAT and dividends are accounted for.
We have compared the three products contractors most often shortlist on exactly that question, plus the real cost excluding VAT, how each handles Making Tax Digital, and how much room each leaves if the contracting eventually turns into a business with staff.
What a contractor actually needs
Tax visibility is the feature that matters most and it is the one most often glossed over. Money in a limited company account is not yours, and a contractor who draws dividends without watching the Corporation Tax and VAT accruing behind them creates a problem that only appears at year end. The single most valuable thing a contractor's accounting software does is show a running, honest figure for what is owed and when, so that dividend decisions are made against the real position rather than the bank balance. Judge each product on how clearly it does that before you look at anything else.
After that, the contractor requirements are refreshingly short. You need invoicing that is quick because you probably raise a handful a month, expense and mileage capture that works on a phone, a bank feed so records stay current for Making Tax Digital, and correct handling of dividends and director loans, since those are the two areas contractors get wrong most often. You almost certainly do not need inventory, project costing or multi currency, so paying for them is waste. The one forward looking question worth asking is whether you might take on staff or subcontractors, because that is the point at which a contractor specific tool starts to feel narrow and a general small business product starts to earn its extra cost.
How we assessed these tools
Every product here was judged on the things that actually decide whether software works for a UK business: the real published price excluding VAT, how it handles HMRC obligations such as Making Tax Digital, RTI or CIS where relevant, the depth of the core job it is bought for, how quickly a non specialist can get productive, and the quality of UK support. We read each vendor's own pricing pages rather than repeating third party figures, and we weight verified user ratings from people who run these tools day to day.
We also try to be honest about fit rather than crowning a single winner, because the right tool for a ten person business is rarely the right tool for a two hundred person one. Each entry below carries its real starting price, its current Assaylist rating and a clear note on who it suits and where it falls short, so you can match the software to your own situation rather than to an average. Where we earn a commission from an outbound link we say so, and it never changes the order of this list.
The best options ranked
1. FreeAgent
FreeAgent is purpose built for exactly this situation, and for a great many contractors it is also free, since it costs nothing for as long as you bank with NatWest, Royal Bank of Scotland, Ulster or Mettle. The tax timeline showing what is owed and when is the single best answer to a contractor's main question.
What you get: A UK accounting product owned by NatWest, aimed squarely at limited company contractors and sole traders. Free for as long as you bank with the group. It holds a 4.1 out of 5 rating across 297 reviews on Assaylist.
Pricing: The plans run Free with NatWest, RBS, Ulster or Mettle at free, Sole trader at £19 and Limited company at £33 per month, excluding VAT.
Why we rate it:
- Free with a NatWest, RBS, Ulster or Mettle account
- Built for UK limited company contractors
- Tax timeline showing what is owed and when
- Corporation Tax and dividend handling
Bear in mind: it does not scale to stock or a larger team, so you will move on if the contracting becomes a business.
Read our full FreeAgent review →
2. Xero
Xero is the choice for a contractor who expects the company to become something larger. The bank reconciliation is the fastest in the category, payroll arrives from the Grow plan, and almost every UK accountant already works in it, which makes handing over at year end straightforward.
What you get: The New Zealand built platform that reshaped UK cloud accounting. Four tiers, bundled payroll from the Grow plan upwards, and a very large app ecosystem. It holds a 4.1 out of 5 rating across 297 reviews on Assaylist.
Pricing: The plans run Ignite at £16, Grow at £37, Comprehensive at £50 and Ultimate at £65 per month, excluding VAT.
Why we rate it:
- Fastest bank reconciliation in the category
- Unlimited users on every tier
- Payroll included from the Grow plan
- Huge app marketplace and strong API
Bear in mind: it is more accounting software than a single director company needs, and you pay for breadth you may never use.
Read our full Xero review →
3. QuickBooks Online
QuickBooks Online is the strongest pick for a contractor who drives, because the mileage tracking is the best here and it adds up to real money over a year of client sites. The automated bank categorisation also means less time spent coding transactions each month.
What you get: Intuit's cloud accounting software, sold in four tiers from Simple Start to Advanced. Strong automation, deep app ecosystem, aggressive introductory discounting. It holds a 4.1 out of 5 rating across 262 reviews on Assaylist.
Pricing: The plans run Simple Start at £14.33, Essentials at £34.2, Plus at £50.4 and Advanced at £110.7 per month, excluding VAT.
Why we rate it:
- Strong automated bank categorisation
- CIS from the entry tier
- Project profitability tracking
- Very large app marketplace
Bear in mind: the introductory discount hides a much higher renewal price, so budget on the standard rate.
Read our full QuickBooks Online review →Comparison at a glance
Here is how the shortlist compares on what it is best for, the starting price excluding VAT and the current Assaylist rating.
| Software | Best for | Starting price | Rating |
|---|---|---|---|
| FreeAgent | Best for contractors | From £19 / month | 4.1 |
| Xero | Best room to grow | From £16 / month | 4.1 |
| QuickBooks Online | Best for mileage and automation | From £14.33 / month | 4.1 |
How much should you budget?
For many contractors the honest answer is nothing. FreeAgent is free indefinitely for customers of NatWest, Royal Bank of Scotland, Ulster and Mettle, and since it is also the product best suited to the single director company, that combination is difficult to argue with. If you bank elsewhere, moving your business account is worth considering purely on this basis, though weigh it against whatever your current bank offers you.
Otherwise, expect roughly sixteen to twenty pounds a month excluding VAT for an entry plan that covers a contractor properly, rising to around thirty to forty pounds if you add payroll for yourself or a second director. Budget on the renewal price rather than the first year discount, because the step up after the introductory period is significant on some products and it is the figure you will actually be paying for years. Also factor your accountant's fee, since many contractor accountants include a licence in their package, which can make the software effectively free by another route.
Our verdict
For most UK limited company contractors, FreeAgent is the clear first choice. It is built for precisely this situation rather than adapted to it, the tax timeline answers the question contractors actually have, and for customers of the qualifying banks it costs nothing at all. There is no stronger value proposition in UK accounting software.
Choose Xero instead if you expect the company to grow into something with staff and more complexity, because it is the one you will not outgrow and the one your accountant is most likely to prefer. Choose QuickBooks Online if you spend significant time driving between client sites, since its mileage tracking is the best of the three and turns into a meaningful deduction across a year.
The bottom line
Start with your bank. If you bank with NatWest, Royal Bank of Scotland, Ulster or Mettle, FreeAgent is free and is also the product best designed for a single director company, which makes this an unusually easy decision. If not, ask one question: is this company going to stay a contracting vehicle, or become a business with staff? Staying a contractor means FreeAgent or QuickBooks if you drive a lot. Growing means Xero. And check with your accountant, because many include a licence in their fee.
Frequently asked questions
What is the best accounting software for a UK contractor?
FreeAgent is the best fit for most UK limited company contractors because it is purpose built for the single director company and its tax timeline shows clearly what is owed and when. It is also free for customers of NatWest, Royal Bank of Scotland, Ulster and Mettle, which makes it exceptional value.
Is FreeAgent really free for contractors?
Yes, for as long as you hold a qualifying business account with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle. The software is the full product rather than a limited version. If you leave that bank the subscription becomes payable, so it is worth knowing the standard price before you rely on it.
Should a contractor use Xero or FreeAgent?
FreeAgent if the company will remain a contracting vehicle, since it is designed for exactly that and is often free. Xero if you expect to take on staff or grow into a broader business, because it has the room you will need and is the product your accountant is most likely to already use.
How do contractors track dividends and Corporation Tax?
Good contractor software shows a running figure for Corporation Tax and VAT accruing against the money in the company account, so dividend decisions are made against the real position rather than the bank balance. FreeAgent's tax timeline is the clearest implementation of this among the three products here.
Do contractors need to worry about Making Tax Digital?
Yes if the company is VAT registered, since MTD for VAT requires digital records and direct filing. All three products here are recognised by HMRC and handle it as standard. Making Tax Digital for Income Tax affects you personally as a sole trader or landlord rather than through the limited company.
Prices were checked against each vendor's UK pricing on 7 August 2026 and exclude VAT unless stated. Vendors change pricing, so confirm the current figure on the vendor's own site before you buy. Some links are commercial; where we earn a commission it never affects our ratings or the order of this list.
