Zoho Books and Xero are both cloud accounting systems recognised by UK small businesses and their accountants, and both handle invoicing, bank reconciliation, VAT returns under Making Tax Digital and reporting. Where they differ is in how their plans are built: what each one caps, what is included and what you add.
Every plan detail below was checked on the UK pricing pages of Zoho and Xero on 2 November 2026. Both vendors change plans and prices, and plans differ in Australia and New Zealand, so we do not quote prices; see the official Zoho Books UK pricing and Xero UK pricing pages. We build on Zoho, so read this with that in mind; we say where Xero is the better fit.
The short answer
- Choose Xero if your accountant already works in it, you want payroll in the same subscription, or you depend on apps from the Xero App Store.
- Choose Zoho Books if you hold stock across warehouses or need batch and serial tracking, already run Zoho CRM, or want custom modules and workflows inside the accounts.
- Either works for MTD. Both list MTD for VAT and MTD for Income Tax on every plan, so compliance alone does not decide it.
Zoho Books and Xero at a glance (UK)
| Area | Zoho Books (UK) | Xero (UK) |
|---|---|---|
| Plans | Free, Standard, Professional, Premium, Elite, Ultimate | Ignite, Grow, Comprehensive, Ultimate |
| Users included | 1, 3, 5, 10, 10 and 15; more as an add-on | Limits stated for expenses, projects and payroll per plan |
| Invoices | 1,000 to 100,000 a year by plan | Ignite capped at 20; no cap stated from Grow |
| Bills | 1,000 to 100,000 a year by plan | Ignite capped at 10; automated bill entry from Grow |
| MTD for VAT and Income Tax | All plans | All plans |
| Multi-currency | From Professional | Comprehensive and Ultimate |
| Stock | From Professional; warehouses, batches and serials on Elite | In every plan; up to 4,000 tracked items |
| Payroll | Not part of Zoho Books in the UK | Included for 1, 5 or 10 people from Grow; optional on Ignite |
| Billing and trial | Monthly or yearly, no contract; 14-day trial | Monthly, auto-renewing; one month free trial |
Limits: what each plan caps
The two vendors cap different things, which shapes what goes wrong as you grow.
Zoho Books caps yearly volume. The UK plans allow 1,000 invoices a year on Free, 5,000 on Standard, 10,000 on Professional, 25,000 on Premium and 100,000 on Elite and Ultimate, with the same caps for bills and expenses. Users are counted too: 1 on Free, 3 on Standard, 5 on Professional, 10 on Premium and Elite and 15 on Ultimate, with extra users sold as an add-on. The Free plan also includes one accountant user.
Xero caps its entry plan hard and then caps by people. Ignite allows quotes and 20 invoices, and 10 bills; Xero points anyone sending more invoices to Grow, and notes that invoices raised by connected apps can count towards the Ignite limit. From Grow, the plan pages state no invoice cap. Instead, limits are set per person: expense claims for 1, 5 or 10 users on Grow, Comprehensive and Ultimate, project tracking for 10 users on Ultimate, and payroll for 1, 5 or 10 people, with extra people charged.
A business sending many small invoices should check Zoho Books’ yearly caps first. A business with a growing team claiming expenses or tracking projects should check Xero’s per-person limits first.
Making Tax Digital, CIS and the UK specifics
Both products list MTD for VAT on every plan, and both list MTD for Income Tax: Zoho Books on all plans, and Xero describes all four plans as MTD for Income Tax ready.
That matters for sole traders and landlords. HMRC made MTD for Income Tax mandatory from 6 April 2026 for those with qualifying income above £50,000, and its October 2026 press release confirms the threshold falls to £30,000 from 6 April 2027 and £20,000 from April 2028. It covers self-employment and property income, not a limited company’s own profits.
For construction businesses, the Construction Industry Scheme is handled differently. Zoho Books tracks CIS contractors on Free and Standard and submits CIS returns to HMRC from Professional. Xero includes CIS calculations and reports and sells CIS returns as an add-on on all plans.
Zoho Books also lists a CT600 and final accounts add-on, which is the only add-on available on its Free plan. Xero offers company accounts and tax as an optional add-on.
Payroll
This is Xero’s clearest advantage in the UK. Grow includes payroll for one person, Comprehensive for five and Ultimate for ten, with more people charged per person, and Ignite users can add payroll per person. Zoho Books’ UK plans do not include payroll, so a Zoho Books business runs payroll in separate software or through its accountant.
If payroll in the same login matters to you, that alone can decide it for Xero.
Stock and light manufacturing
For businesses that hold stock, this is where Zoho Books goes further.
Xero lists inventory among the features in every plan, and its stock control page says you can track up to 4,000 finished items, see quantities on hand and available to sell, and adjust quantity, average cost or total value. For assemblies, multiple warehouses or batch tracking, Xero businesses usually add an inventory app from the Xero App Store; MRP tools such as MRPeasy integrate with Xero natively, as our MRPeasy vs Zoho comparison explains.
Zoho Books tracks inventory from Professional. Elite adds what Zoho calls advanced inventory control: warehouses, composite items for kits and simple assemblies, serial and batch tracking and bin locations. Businesses that outgrow that can move to Zoho Inventory, which shares the same item records.
Neither is a production system. If you make products with routings and work orders, plan for a separate MRP alongside either one.
CRM and the rest of the stack
Zoho Books has a built-in integration with Zoho CRM: CRM accounts and contacts become customers, products can sync, and quotes, sales orders and invoices raised in CRM’s finance module flow into the books. Our Zoho Books vs QuickBooks Online comparison describes that sync in more detail. Zoho Books Premium and above also adds custom modules and custom functions written in Deluge, and Elite adds Blueprints for enforcing a process; our Deluge script examples show what that code looks like.
Xero’s strength is the size of its app marketplace and how many UK accountants know it. Xero can be linked to Zoho CRM through third-party extensions on the Zoho Marketplace, which sync contacts, products and invoices, but that is an add-on to maintain rather than a native link.
Which fits
| Your situation | Usually the better fit |
|---|---|
| Your accountant runs your books in Xero and wants to keep it that way | Xero |
| You want payroll for a small team in the same subscription | Xero |
| You hold stock in more than one location, or need batch or serial numbers | Zoho Books Elite, or Zoho Inventory |
| Sales already run in Zoho CRM | Zoho Books |
| A sole trader sending a handful of invoices a month | Either: compare Zoho Books Free or Standard with Xero Ignite |
| You need custom approval rules or modules inside the accounts | Zoho Books Premium or above |
Switching between them
Whichever way you move, plan the cut-over at a VAT quarter end, bring across opening balances, open invoices and bills, and keep the old system read-only for your records. Ask your accountant to sign off the chart of accounts mapping before you import anything. If you move to Zoho Books and want it connected to CRM, stock or e-commerce, our Zoho integrations page explains how we approach it.
Frequently asked questions
Frequently asked questions
Is Zoho Books cheaper than Xero in the UK?
It depends on your invoice volume, users, payroll and stock needs, and both vendors change prices. Compare the plan you would actually need on each official UK pricing page: Zoho Books caps invoices and users per plan, while Xero caps its entry plan and sets per-person limits for expenses, projects and payroll.
Do Zoho Books and Xero support Making Tax Digital?
Yes. Zoho Books lists MTD for VAT and MTD for Income Tax on every UK plan, and Xero lists VAT returns to HMRC on every plan and describes all four plans as MTD for Income Tax ready.
Does Zoho Books include payroll in the UK?
No. Zoho Books' UK plans do not include payroll, so it is run in separate software or by your accountant. Xero includes payroll for 1, 5 or 10 people on Grow, Comprehensive and Ultimate, and offers it per person on Ignite.
Which is better for inventory, Zoho Books or Xero?
Zoho Books goes further inside the accounting system: inventory from Professional, and warehouses, composite items, serial and batch tracking and bin locations on Elite. Xero includes inventory in every plan, with up to 4,000 tracked items, and businesses needing more usually add an app.
What are Xero's current UK plans?
Xero's UK pricing page lists Ignite, Grow, Comprehensive and Ultimate, and says the older Starter, Standard and Premium plans are no longer sold. Subscriptions are monthly and renew until cancelled.
Does Xero integrate with Zoho CRM?
Not natively. Third-party extensions on the Zoho Marketplace connect Xero with Zoho CRM to sync contacts, products and invoices. Zoho Books has a built-in Zoho CRM integration.
