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Published 08 May 2024
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Xero Accounting Software Review: Pros, Cons & Features

Find out where Xero accounting software stands out, and falls short, with our review.

Many or all of the products and brands we promote and feature including our ‘Partner Spotlights’ are from our partners who compensate us. However, this does not influence our editorial opinion found in articles, reviews and our ‘Best’ tables. Our opinion is our own. Read more on our methodology here.

Xero accounting software offers users a choice of four different plans. These plans are suited to different business types, including sole traders, growing small businesses, established companies and larger organisations. 

Based on where you are in your small business journey, you should be able to choose the plan most suited to your business and your circumstances. Every plan is Making Tax Digital (MTD) compliant, allows you to submit VAT returns directly to HM Revenue & Customs (HMRC), and can provide account access to an unlimited number of users at no extra cost.

However, you should be aware that Xero requires users to pay an additional monthly fee for certain add-on features. While they are all included as part of Xero’s most expensive Ultimate plan, if you want to use features like payroll, expenses and project tracking, you’ll have to pay an additional fee to add them to your plan.

» MORE: Best accounting software for small businesses

Key features

Key features

  • Making Tax Digital-compliant
    All Xero accounts are MTD-compliant,  and allow you to submit VAT returns directly to HMRC.
  • Unlimited users
    You can have an unlimited number of users logged into your Xero account at no extra cost.
  • Payroll features
    Xero’s payroll plan costs £5 a month for up to five employees, which is cheaper than many competitors.
  • Cash-flow forecasts
    Every Xero plan comes with the ability to forecast your cash flow over seven- and 30-day periods.

Xero accounting software pros & cons


  • Every Xero account is Making Tax Digital-compliant.
  • You can use Xero to submit MTD-compliant VAT returns directly to HMRC.
  • Xero’s payroll features are cheaper than many of its competitors.
  • You have an unlimited number of users logged into your Xero account at no extra cost.
  • Seven- and 30-day cash flow forecasting is available with every plan.


  • The entry-level Xero Starter plan is more expensive than many comparable plans elsewhere.
  • You can only access multiple currencies if you pay for the more expensive Premium or Ultimate plans.

The pros and cons featured here are chosen by us based on our expert, research-based opinions. They are unlikely to be the only product features and restrictions that you should consider. Pros and cons are subjective and you should align them to your own personal and business circumstances. Information was correct at the time of publication but may have changed since. 

Xero accounting software full review

Founded in 2006, Xero is a global accounting software platform that claims to have over 3.95 million subscribers across the world.

All Xero plans are compliant with Making Tax Digital. It is now required by the UK government that you use MTD compatible software when submitting returns as a VAT-registered business. Further MTD rules will be introduced around income tax returns in April 2026 and 2027.

In the UK, Xero offers four options: Starter, Standard, Premium and Ultimate, each of which allows for an unlimited number of users. The plans, pre-VAT and pre-discounts, are as follows:

  • Starter: This plan costs £15 a month  It allows customers to enter five bills a month and approve and send 20 invoices, alongside submitting VAT returns to HMRC, bill and receipt capture, automatic Construction Industry Scheme (CIS) calculations, and short-term cash-flow forecasting.
  • Standard: This plan costs £30 a month, and includes everything in the Starter plan, but with unlimited invoices and bill entries. On top of this, you can also bulk reconcile transactions.
  • Premium: This plan costs £42 a month. On top of everything included in the Standard plan, you can also use multiple currencies when accounting.
  • Ultimate: This plan costs £55 a month. This tier includes everything in the Premium plan, as well as a built-in payroll function for up to 10 people, expenses and project tracking for up to five people, and Analytics Plus. These are all features you have to pay extra for with the other plans.

Xero also offers a number of add-ons for the Starter, Standard and Premium plans: 

  • Payroll: This starts at £5 a month for up to five employees.
  • Expenses: This starts at £2.50 a month for one user.
  • Projects: The ability to track projects starts at £5 a month for one user.

Xero accounting software features: at a glance

Monthly fee (pre-discounts, pre-VAT)£15 (Starter)
£30 (Standard)
£42 (Premium)
£55 (Ultimate)
Free trial30 days
Making Tax Digital compliantYes
Submit VAT to HMRCYes
Payroll costs per month (for five employees, pre-discounts, pre-VAT)£5 per month (Starter, Standard and Premium)
Free (Ultimate)
Multi-user accessYes (Unlimited)
Multi-currency accountingYes (Premium and Ultimate)
Customer service24/7 online support via email

Where Xero stands out

Free trial and introductory offers: Xero offers a 30-day free trial when you first sign up for an account. Xero also offers discounts, which can vary depending on when you apply. Currently, Xero is offering users a 75% discount on their first six months.

At the time of writing, Xero’s Starter, Standard and Premium plans also come with two free months of payroll and expenses support, in addition to three free months of project tracking services, and Analytics Plus.

Making Tax Digital-compliant VAT returns: All Xero accounting plans are MTD-compliant, and allow you to submit VAT returns directly to HMRC.

Cash-flow forecasting: Every Xero accounting plan allows you to forecast your cash flow over a seven- or 30-day period. Longer term cash flow forecasts of 60 and 90 days are available with Analytics Plus. Analytics Plus costs an extra £5 a month for Starter, Standard and Premium customers, and is included for free in the Ultimate plan. 

Payroll: At £5 a month for up to five employees, Xero’s payroll option is at the cheaper end of the market. It is then an extra £1 a month per additional user. If you pay for the Ultimate plan, meanwhile, you can run payroll for up to 10 people as part of your subscription.

Multiple user access: You can have an unlimited number of users attached to your Xero account at no extra cost.

Where Xero falls short

Monthly fee: At £15 a month (pre-VAT), Xero’s Starter plan is more expensive than many comparable options at other accounting software providers.

Paywalled features: Certain basic features, such as the ability to claim expenses, require additional monthly fees to use, except for the Ultimate plan.

Multi-currency: You can only access multi-currencies with the more expensive Premium and Ultimate plans.

Customer support: While Xero claims to provide 24/7 online support, this requires you to send Xero an email, which it will respond to as soon as it can. There is no live chat option, nor does Xero publish a customer support phone number you can call.

Xero customer reviews

Xero’s customers have left reviews on a range of sites. Generally, these reviews are very positive.  

  • App Store: 4.6 out of 5, based on over 1,000 reviews
  • Google Play: 4.6 out of 5, based on over 13,000 reviews
  • Trustpilot: 4.2 out of 5, based on over 6,500 reviews

This information is correct as of 7 May 2024.

Review methodology

At NerdWallet UK, we base our reviews and our ‘Best’ pages on the results of surveys we undertook about what was important to people who use these products. This allows us to look at products impartially of any commercial arrangements we have and fairly rate the products on the same set of criteria.

Best means our ‘Best’ and is based only on what products we have aligned to our surveys, which form the basis of our reviews and ratings. This means that there will be other products on the market that we have not included in our ‘Best’ pages. Best does not mean it’s best for you, nor does it mean the ‘cheapest’.

Our reviews may display lenders’ rates. This additional information has not been included in our evaluations but is still very important when choosing a product. Rates offered can depend on circumstances, amount and term. Always check details before proceeding with any financial product.

Product details reflect the information that was available at that time but may have changed since. We strive to give you a review on as many products as possible, but there will be products not included on the market. The review is our opinion, but it does not constitute advice, recommendation or suitability for your financial circumstances.

You can view our full review methodology here.

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