FileThat vs Xero for Making Tax Digital.
Xero is full accounting software with Making Tax Digital on every plan. FileThat is built for keeping records and filing, priced per submission. Which costs less depends on what you need besides filing.
Prices from Xero
Checked 1 October 2026
VAT included
A year of Making Tax Digital: FileThat and Xero
| Software | How you pay | A year, sole trader (4 updates) | A year, VAT registered (4 updates and 4 VAT returns) |
|---|---|---|---|
| FileThat | £3.99 to £5.99 per submission, set by your income. Final declaration and NIL VAT returns free. At most £55 a year. | £15.96 to £23.96 | £31.92 to £47.92 |
Xero Ignite Checked 1 October 2026, Xero pricing | £18 a month plus VAT, after 90% off for the first 6 months | £259.20Ignite | £259.20Ignite |
Regular prices, including VAT where the provider quotes without it. A VAT-registered business not on the Flat Rate Scheme can usually reclaim that VAT.
Where Xero is the better choice
Full accounting
Xero sends quotes as well as invoices and handles bills, and its higher plans have no limits on either.
Several currencies
Xero's Comprehensive and Ultimate plans handle more than one currency. FileThat works in pounds only.
If your accountant uses it
If your accountant already works in Xero, keeping your books where they can see them may be worth more than the saving.
Every provider side by side: compare MTD software.
Where FileThat is the better choice
A fraction of the price
A sole trader's four quarterly updates cost £15.96 to £23.96 a year on FileThat, and the final declaration is free.
No invoice limit to grow out of
Xero Ignite allows 20 invoices and 10 bills a month. FileThat's invoicing is free with no limit.
Never more than £55
Once you have paid £50 in a tax year, everything else you file is free. The most you can pay is £55.
FileThat's prices in full: FileThat pricing.
Straight answers
Does Xero include Making Tax Digital for Income Tax?
Yes. Xero's pricing page lists Making Tax Digital for Income Tax and for VAT on every plan, from Ignite upwards. Ignite limits you to 20 invoices and 10 bills a month; Grow, at £39 a month plus VAT, removes those limits.
Is FileThat cheaper than Xero?
For filing, usually. A sole trader's four quarterly updates cost £15.96 to £23.96 a year on FileThat, against £259.20 a year on Xero Ignite (£18 a month plus VAT, regular price). Xero may still be worth more to you if you need what it does besides filing.
Can I move from Xero to FileThat part way through the year?
Yes. Bring your records for the year so far, by upload or by hand, and connect FileThat to HMRC. Quarterly updates you have already sent stay with HMRC, and because updates are cumulative, your next one covers the whole year to date.
Does FileThat file the final declaration?
Yes, and it is free, as are amendments and NIL VAT returns. FileThat files quarterly updates, the annual submission, the final declaration and VAT returns directly to HMRC. Only a new quarterly update or a VAT return that is not NIL uses a credit.
Does FileThat connect to my bank?
No. There is no live bank feed. You download a CSV of your transactions from online banking and upload it, and FileThat reads it into records. It is a deliberate choice to hold less of your data, and it does mean one more step than a bank feed.
See if per-submission suits you
4 free credits, no card needed. No subscription, and never more than £55 in a tax year.
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