FreeAgent is a UK-grown cloud accounting platform originally designed for freelancers and contractors, now part of the NatWest Group. It's one of the most contractor-friendly accounting tools on the UK market — purpose-built for one-person Ltd companies, MTD-compliant for VAT, with native dividend voucher handling and a generally clean Ltd-director workflow. This guide covers what FreeAgent is, how it suits contractors specifically, what's free vs paid, and how it interacts with hiring (or not hiring) an accountant.
What FreeAgent is
FreeAgent is a cloud-based accounting platform aimed at UK micro-businesses, freelancers and contractors. It launched in 2007, scaled through the 2010s as the UK freelance / Ltd contractor market grew, and was acquired by NatWest Group in 2018. The acquisition is structurally important because it underpins the "free with Mettle / NatWest business account" offering that makes FreeAgent the cheapest serious option for many UK contractors.
The platform covers the full accounting cycle of a one-person Ltd:
- Bookkeeping with bank feeds
- Invoicing
- Expense capture (web + mobile)
- VAT (MTD-compliant)
- Payroll (RTI submissions)
- Dividend voucher generation
- Year-end accounts and Corporation Tax estimates
- Self Assessment integration for directors
- Reporting and tax timeline
The Self Assessment and year-end accounts modules sit in a grey area: FreeAgent can generate them, but most contractors with a Ltd structure either have an accountant file these or have FreeAgent's filing tools handle the routine cases. The platform is genuinely capable of full self-service Ltd accounting; the practical question is whether you want to.
Why it fits contractors
FreeAgent was designed in the UK freelance / contractor era and never quite shed that DNA. Compared to general SME platforms (Xero, QuickBooks) the contractor fit advantages are:
Native Ltd-director workflow
Salary + dividends, dividend vouchers, retained earnings reporting, director loan account tracking are all first-class. Other platforms can do these but require more configuration; FreeAgent assumes you're doing them.
Tax timeline
A dashboard view of upcoming tax obligations — VAT quarter due, Corporation Tax payment, confirmation statement, Self Assessment — with running estimates of liability. Useful for cash-flow planning.
MTD-compliant from day one
VAT MTD compliance is built in; FreeAgent was an early MTD-bridge platform and the integration is mature.
Simpler chart of accounts
The default chart is set for UK micro-businesses; you don't have to configure it. Adding categories is easy when needed.
Strong UK-specific reporting
Reports are tuned to HMRC and Companies House filings — CT600 prep, year-end accounts in the right format, Self Assessment supplementary pages.
Mobile expense capture
Solid mobile app for photographing receipts on the road — useful for contractors travelling between client sites.
Pricing — and when it's free
FreeAgent's pricing structure:
- Standalone subscription: typically £19/month for Ltd companies (paid plans)
- Free with Mettle: if you have a Mettle business account (Mettle is NatWest's free business banking offering), FreeAgent is free as long as you maintain the account
- Free with NatWest / Royal Bank of Scotland / Ulster business banking: similarly free with eligible business accounts
- Bundled by accountants: many UK contractor accountants (e.g. Gorilla, often Nixon Williams) include FreeAgent in their monthly fee at no separate cost
The Mettle route is the cleanest "free FreeAgent" path for UK contractors who haven't already chosen a business bank. See our Mettle review for the banking side.
If you're already accountant-led and FreeAgent is bundled, the price question is moot. If you're DIY-ing, the £19/month is a serious tool at a low price — comparable to the lower tier of dedicated accounting software but with contractor specialism baked in.
Features for Ltd contractors
Walking through what a Ltd contractor uses FreeAgent for, in order of frequency:
Bank feeds (daily passive)
Connect your business bank account; transactions appear automatically. Categorise them as expenses, sales, transfers, dividends, etc. FreeAgent's bank feed reliability has improved over the years and is generally solid.
Invoicing (weekly / monthly)
Create and send invoices in PDF or via online link. VAT-inclusive or exclusive. Recurring invoice schedules for monthly retainer-style contractor arrangements. Payment status tracking.
Expense capture (as incurred)
Mobile app for photographing receipts; web interface for entering expenses by category. Mileage claims tracked with HMRC simplified rates.
Payroll (monthly)
Run the director monthly salary. RTI submissions to HMRC automatically. Payslips generated. Most contractors set this once and let it run.
Dividend vouchers (when dividends paid)
Generate a compliant dividend voucher and board minute for each declared dividend. A small but important compliance step that FreeAgent handles cleanly.
VAT return (quarterly)
The MTD-compliant VAT module pulls relevant transactions from the books, generates the return, and submits directly to HMRC. Review before submission; sign and file.
Self Assessment (annual)
The director's personal tax return can be prepared in FreeAgent (in the appropriate plan) and filed to HMRC. Salary, dividends, and other income heads are integrated.
Year-end accounts and CT600 (annual)
FreeAgent can produce abridged year-end accounts in the right format for Companies House filing, and a CT600 corporation tax return for HMRC. Whether to use these directly or rely on an accountant is a personal choice.
IR35 considerations
FreeAgent itself doesn't make IR35 judgements — it's an accounting platform, not a status-determination tool. But its workflows accommodate both inside and outside-IR35 contractors:
Outside IR35 (standard Ltd contractor)
Full FreeAgent workflow: invoices, expenses, salary, dividends, Corporation Tax. The standard use case the platform is designed for.
Inside IR35 (deemed payment via Ltd)
When working inside IR35 through a Ltd, the fee-payer (usually the agency or end client) typically deducts tax and NIC at source. The net flows into your Ltd. FreeAgent can record this — but the entries are a bit unusual (income net of source deductions, with the income tax and employee NIC tracked separately). This is one of the cases where an accountant adds value: ensuring the inside-IR35 entries are correctly recorded for both the Ltd's books and the director's Self Assessment.
Mixed inside / outside
Contractors with both inside-IR35 and outside-IR35 engagements in the same year can track both in FreeAgent, but the bookkeeping is fiddlier. Specialist input helps.
For IR35 status itself (assessing whether an engagement is inside or outside), use our IR35 status quick-check and the deeper Inside vs Outside IR35 explainer.
MTD readiness
Making Tax Digital is the HMRC regime requiring digital record-keeping and direct software-to-HMRC submission for tax. The current state:
- MTD for VAT — mandatory for VAT-registered businesses (all). FreeAgent is MTD-compliant.
- MTD for Income Tax Self Assessment (MTD ITSA) — phased rollout. Currently in scope for sole traders / landlords above certain income thresholds; not yet in scope for Ltd director Self Assessment.
- MTD for Corporation Tax — still in consultation / piloting phase as of 2026.
FreeAgent's MTD readiness is mature — it was an early bridging-software platform and integration with HMRC's APIs is settled. For VAT-registered Ltd contractors it's a comfortable MTD path. See our MTD for VAT guide for the broader context.
With an accountant
The common pattern for UK Ltd contractors:
- You operate FreeAgent day-to-day — invoicing, expenses, bank reconciliation
- Your accountant has read/write access to your FreeAgent account
- Quarterly the accountant reviews and submits the VAT return (or you do, depending on the arrangement)
- Monthly the accountant runs payroll (or you do, with their review)
- Annually the accountant prepares the year-end accounts and CT600 from FreeAgent's data, files them, and prepares your Self Assessment
This split — DIY for the routine, accountant for year-end and complex matters — is what most contractor accountants are set up for. FreeAgent is a natural fit because of its multi-user / accountant-access model.
Without an accountant (DIY)
For contractors who choose DIY, FreeAgent is one of the most accessible platforms for full self-service Ltd accounting in the UK. The realistic workflow:
- Bookkeeping and invoicing in FreeAgent throughout the year
- Quarterly VAT returns filed from FreeAgent directly
- Monthly payroll filed from FreeAgent
- At year-end: review the auto-generated draft year-end accounts and CT600; file via FreeAgent's HMRC integration
- Director Self Assessment: file via FreeAgent or directly through HMRC's online service
The hard parts for DIY: getting comfortable with what's allowable as expenses, the salary / dividend split decisions, dealing with HMRC enquiries if they happen, and not missing the more obscure deadlines (P11D filing, confirmation statement). FreeAgent helps with most of this through the tax timeline, but the judgement remains with you.
See contractor accountant vs DIY accounting for the full decision framework.
Alternatives
Xero
Larger, more general-purpose. Strong if your Ltd has employees or grows beyond one-person contractor. Slightly fiddlier for pure contractor workflows out of the box. See Xero review for UK freelancers.
QuickBooks
Intuit-owned, popular with US-influenced UK firms. Solid Ltd contractor support but less UK-contractor-specific than FreeAgent. See QuickBooks Self-Employed review for the sole-trader side; QuickBooks Online is the Ltd-applicable product.
Proprietary platforms (Crunch, inniAccounts)
If you go with a firm using its own platform, FreeAgent isn't part of the equation. Trade-off: less data portability if you ever leave.
Spreadsheet + HMRC online
Possible but increasingly impractical in the MTD era. VAT must now be filed via MTD-compatible software (FreeAgent qualifies; a plain spreadsheet doesn't unless you use bridging software).
Integrations and ecosystem
FreeAgent integrates with the surrounding contractor software stack:
Banking
Bank feeds from most UK business bank accounts: Mettle, Starling, Tide, Monzo, Revolut Business, the major high-street banks. Mettle and NatWest / RBS / Ulster integrations are deepest because of the corporate group relationship — they include the free FreeAgent offering.
Payment processing
Stripe and GoCardless integrations for accepting online payments directly from FreeAgent invoices. Useful for contractors who prefer card payments over bank transfer.
Receipt capture
Native mobile app for photographing receipts. Also integrations with third-party tools like Dext for higher-volume expense workflows. See our receipt scanning app comparison.
HMRC
Direct API integration for VAT (MTD), PAYE (RTI), Corporation Tax (CT600), and Self Assessment. Filings go from FreeAgent straight to HMRC.
Companies House
Some filing options available directly (e.g. confirmation statement); statutory accounts filings typically still routed via accountant or HMRC-recognised CHIPS / WebFiling.
Other contractor tools
Time-tracking integrations (Toggl, Harvest), project management tools, calendar integrations. Less critical for pure contractor workflows but useful when you scale to agency mode.
FreeAgent's practical limits
For honest balance, where FreeAgent isn't the right fit:
Multi-employee businesses
FreeAgent's payroll works for single-director Ltd or very small teams. Scaling to 5+ employees, FreeAgent's payroll feels under-tooled — Xero or QuickBooks with proper payroll modules (or BrightPay / Moneysoft) usually fit better.
Stock / inventory businesses
FreeAgent isn't built for stock-based businesses. E-commerce, manufacturing, retail — Xero / QuickBooks handle stock; FreeAgent doesn't.
Multi-currency at scale
FreeAgent supports multi-currency invoicing but doesn't have the depth of Xero's multi-currency for businesses with material foreign-currency operations.
Complex group structures
Subsidiaries, consolidated accounts, intercompany — FreeAgent doesn't address these. Specialist software or larger platforms required.
For most UK Ltd contractors, none of these limits matter — they're operating a one-person Ltd with single-currency UK invoicing. FreeAgent fits cleanly. If you grow into one of these patterns, the migration to a larger platform is the natural progression.
Free if you have a Mettle, NatWest, RBS or Ulster business account. Otherwise £19/month for Ltd companies. Often bundled by contractor accountants at no separate cost.
Yes — FreeAgent was originally designed for UK freelancers and contractors. Ltd-director workflows (salary, dividends, vouchers) are first-class.
Yes — FreeAgent is HMRC-recognised MTD-compatible software and has been since the regime launched.
Yes — monthly payroll with RTI submissions to HMRC is built in. Suitable for a single-director Ltd.
FreeAgent can prepare and file abridged year-end accounts and CT600 for many simple Ltd contractors. For complex cases (multiple shareholders, group structures, R&D claims) an accountant typically takes over.
FreeAgent doesn't make IR35 judgements but accommodates both inside-IR35 and outside-IR35 bookkeeping. Inside-IR35 entries are fiddlier; accountant input helps.
Yes — import opening balances and historical transactions; FreeAgent supports CSV imports and has migration guides for common alternatives.
Yes — FreeAgent handles multiple revenue streams, projects, and clients within a single Ltd. Self Assessment integration also handles director-side multi-source income (salary + dividends + property etc.).
Editorial product overview — neutral description of FreeAgent's features and fit for UK contractors. Verify current pricing and feature set directly with FreeAgent.