If you run a construction business in the UK, your accounting software needs to do more than track income and expenses. It needs to handle CIS deductions, reverse charge VAT, subcontractor payments, retentions and payroll for site workers. A generic bookkeeping tool leaves you doing half of that manually. The right construction accounting software saves hours each month and keeps you compliant with HMRC.
We work with builders, electricians, plumbers, scaffolders and general contractors across Manchester, Birmingham, Bristol and London. The same question comes up repeatedly: which platform actually works for construction? The answer depends on your business structure, your turnover and whether you work through a limited company or as a sole trader.
This guide compares the main options for UK construction businesses in 2026: Xero, QuickBooks, Sage 50, FreeAgent and the specialist construction platforms. Prices below were checked in July 2026 and exclude VAT unless stated; vendors change them often, so treat them as a guide and confirm before you buy.
Construction Accounting Software Compared: 2026 at a Glance
| Software | CIS handling | Reverse charge VAT | Payroll | Job costing | Price from (ex VAT) |
|---|---|---|---|---|---|
| Xero | Basic CIS in all plans; CIS Contractor add-on (£5/mo) files CIS300 to HMRC | Yes, with correct tax rates enabled | Xero Payroll add-on | Projects feature, basic | £16/mo (Ignite); Grow £37/mo |
| QuickBooks | Included on all plans, incl. Simple Start | Yes, check setup | Payroll add-on | Projects feature, basic | £16/mo (Simple Start); Plus £56/mo |
| FreeAgent | Native tracking, statements and CIS300 figures (file via HMRC online) | Yes | Included | Project tracking, basic | £19/mo sole trader, £33/mo ltd; free via NatWest, RBS, Ulster Bank, Mettle |
| Sage 50 Accounts | CIS module add-on (£11/mo), files CIS300 | Yes, native | Sage Payroll add-on | Strong, contract-level cost centres | ~£77/mo (Standard) |
| Buildertrend | Via integrated Xero/QuickBooks | Via integrated accounts platform | Via integrations | Strong, full project management | Quote-based, from ~$299/mo (~£230) |
The rest of this guide explains where each one fits and, just as important, where each one falls short.
What Construction Businesses Need from Accounting Software
Before comparing specific products, it helps to list the features a construction business actually uses. Most standard accounting packages handle invoicing and bank feeds. Construction adds extra layers.
- CIS (Construction Industry Scheme) handling. The software must track CIS deductions on subcontractor payments, generate CIS300 returns monthly and produce subcontractor statements. If it doesn't do this automatically, you are doing manual calculations on spreadsheets. That is a compliance risk.
- VAT schemes specific to construction. Many builders use the Flat Rate Scheme. Some use the Cash Accounting Scheme. Anyone invoicing other VAT-registered construction businesses needs domestic reverse charge support. Your software should support whichever combination you use.
- Retentions tracking. If you hold retention money on contracts, the software needs to show that as a debtor or creditor, not as revenue received. Generic software often misses this.
- Payroll integration. Construction payroll is not standard payroll. It involves CIS deductions for subcontractors, holiday pay for site workers and RTI (Real Time Information) submissions. The payroll module needs to talk to the main accounts.
- Project costing. You need to see whether each job is profitable. That means tracking labour, materials, plant hire and subcontractor costs against a specific contract. Generic profit and loss accounts by month are not granular enough.
- MTD compatibility. MTD for VAT is long established, and since April 2026 sole traders with qualifying income over £50,000 are in MTD for Income Tax too, with the threshold dropping to £30,000 from April 2027. If you are a sole trader builder turning over £80,000, your software must handle quarterly MTD updates now.
Not every package does all of these well. Some do CIS well but project costing poorly. Some do payroll well but VAT handling badly. Here is how the main options stack up.
Xero for Construction Limited Companies
Xero is the most common accounting platform we see among UK construction limited companies. It handles bank feeds, invoicing and expense tracking well, and CIS is now built in rather than bolted on. Every Xero business plan includes basic CIS: the account codes, deduction calculations and CIS reports.
To file CIS300 monthly returns to HMRC directly from Xero, and to get the subcontractor statement workflow, you add the CIS Contractor add-on at £5 per month. You can also verify subcontractors and set deduction rates (20% registered, 30% unregistered, or gross status) in the same place. For employee payroll you add Xero Payroll separately.
On price, Xero's plans in mid 2026 run from £16 per month (Ignite) through £37 (Grow) to £50 (Comprehensive) and £65 (Ultimate), with a small rise announced for September 2026. A typical construction limited company on Grow plus CIS Contractor and payroll lands around £50 to £60 per month. That is competitive for what it covers.
The main limitation is job costing. Xero's Projects feature lets you tag time and costs to a job, but the reporting lacks the depth of Sage 50's contract-level cost centres, and retentions still need a manual workaround with dedicated account codes.
Xero works best for: limited company builders who want strong bank feeds, good mobile access and CIS filing from the same platform. It is less suited to businesses running large contracts with complex retentions.
QuickBooks for Sole Traders and Small Builders
QuickBooks is popular with sole trader builders and small partnerships, and its big advantage for construction is that CIS is included on every plan, including the cheapest. It calculates deductions, produces subcontractor statements and handles CIS300 filing without forcing you up a tier.
Pricing rose sharply in January 2026. Simple Start is now £16 per month, Essentials £38, Plus £56 and Advanced from £123, all plus VAT. For a sole trader electrician in Leeds turning over £60,000 with one or two subcontractors, Simple Start or Essentials covers CIS, VAT (including Flat Rate and Cash Accounting) and MTD quarterly updates.
The weak spot is payroll. QuickBooks payroll is a separate paid add-on, and once you employ site workers the combined bill for Plus and payroll can pass £70 per month. At that point Xero plus its add-ons, or FreeAgent with payroll included, may offer better value. Project tracking is basic on all tiers.
QuickBooks works best for: sole traders and small partnerships with a few subcontractors who want CIS handled cheaply. It is less suited to larger limited companies with multiple employees and serious job costing needs.
Sage 50 for Established Construction Firms
Sage 50 Accounts is the traditional choice for construction businesses that have been running for a decade or more. Its CIS module, an £11 per month add-on, handles subcontractor records, deduction calculations, statements and CIS300 submissions natively, and Sage's job costing remains the strongest of the mainstream packages.
You can set up each contract as a separate cost centre, track labour hours, material purchases, plant hire and subcontractor costs against it, and see margin in real time. Retentions can be handled properly as debtors and creditors rather than fudged through revenue. For a construction firm in Birmingham turning over £800,000 with 10 employees and multiple concurrent contracts, that depth matters.
The downsides are cost and usability. Sage 50 Accounts Standard starts around £77 per month, Professional from around £155, before payroll and the CIS module, and prices scale with users. The interface is dated, training staff takes time, and cloud access still trails Xero and QuickBooks even on the connected versions.
Sage 50 works best for: established firms with multiple contracts, complex retentions and a genuine need for detailed project costing. It is overkill for sole traders or small partnerships.
FreeAgent for Contractor-Led Construction Ltds
FreeAgent suits construction limited companies that are essentially contractor-led: one director, maybe one or two employees, and a handful of subcontractors. CIS is built in. It tracks deductions on both sides (money you deduct from subcontractors and money contractors deduct from you), produces subcontractor statements and prepares your CIS300 figures each month. One honest caveat: FreeAgent does not e-file the CIS300 itself; you take its return-ready figures and submit through HMRC's CIS online service, which takes a few minutes.
VAT handling is good, covering Flat Rate, Cash Accounting, standard VAT and the domestic reverse charge. Payroll is included, not an add-on, which is rare at this price. Project tracking is basic but sufficient for a business running 5 to 10 jobs at a time.
Pricing in 2026 is £19 per month plus VAT for sole traders and £33 for limited companies, usually half price for the first six months. The standout deal: FreeAgent is completely free if you bank with NatWest, Royal Bank of Scotland, Ulster Bank or Mettle (Mettle requires at least one transaction a month). For a contractor in the Northern Quarter in Manchester running a £150,000 turnover limited company with a NatWest account, it is very hard to beat free.
FreeAgent works best for: contractor-led limited companies and sole traders with straightforward CIS needs, especially customers of the partner banks. It is less suited to firms with complex retentions or many concurrent projects needing detailed cost tracking.
Accounting Software for Builders: Sole Trader vs Limited Company
The right choice shifts with your structure, so here is the practical split we recommend to trade clients.
Sole trader builders should optimise for MTD for Income Tax and cheap CIS handling. QuickBooks Simple Start (£16 per month) or FreeAgent (£19, or free via a partner bank) both do the job. Since April 2026, if your qualifying income is over £50,000 you must be submitting quarterly MTD updates, and from April 2027 that net widens to £30,000. Spreadsheets stopped being a serious option at that point.
Limited company builders should optimise for CIS filing, payroll and a clean corporation tax year end. FreeAgent (£33 per month, payroll included) for contractor-led companies; Xero Grow plus the CIS Contractor add-on (around £42 combined) once you want app integrations and stronger reporting; Sage 50 once retentions and job costing become the daily headache rather than a quarterly annoyance.
Growing construction companies hit an inflection point around £500,000 to £1 million turnover where the accounts platform stops being the constraint and project visibility becomes it. That is when the specialist platforms below enter the conversation, usually alongside, not instead of, Xero or QuickBooks.
Check if and when MTD applies to you
Skip the spreadsheet. Tell us about your situation and a specialist will review your position and the next sensible step, with no obligation.
Specialist Construction Software: Buildertrend, COINS and Others
For larger construction businesses, general accounting software may not be enough. Specialist platforms such as Buildertrend and COINS combine project management, scheduling, contract costing and client communication, with the accounting side handled either in-platform or through an integration.
Buildertrend is the most accessible. It is quote-based rather than list-priced, with plans starting around $299 per month (roughly £230) and rising steeply for the higher tiers, plus onboarding fees. It integrates with Xero and QuickBooks, so you keep your existing accounts and CIS setup and add project management on top. That hybrid approach works well for growing firms.
COINS and similar construction ERPs sit above that again, aimed at firms managing 20 or more contracts simultaneously with complex retention structures and procurement integrations. Expect a sales process, not a sign-up page, and a monthly cost in the hundreds. For most small and medium construction businesses the cost is hard to justify against Sage 50 or a Buildertrend-plus-Xero stack.
CIS Handling: The Non-Negotiable Feature
Whichever software you choose, CIS handling must be automatic. Manual CIS calculations on spreadsheets are a common source of errors and HMRC penalties. Your software should:
- Calculate CIS deductions at the correct rate (20% standard, 30% for subcontractors not registered for CIS)
- Generate CIS300 returns monthly (the deadline is the 19th of each month)
- Produce subcontractor statements showing gross payments and deductions
- Track gross payment status (some subcontractors are verified gross and should not have deductions applied)
Xero with the CIS Contractor add-on, QuickBooks on any plan, and Sage 50 with the CIS module cover all four including direct CIS300 filing. FreeAgent covers the calculations, statements and return figures, with the final submission made through HMRC's own service. Whatever you pick, verify each new subcontractor with HMRC before their first payment; paying at 20% when HMRC has them at 30% is your liability, not theirs.
VAT Schemes for Construction: What Your Software Must Support
Construction businesses use VAT schemes differently from other sectors. The main schemes are:
- Flat Rate Scheme. Common among smaller trades. The software must apply the correct percentage for your trade: 9.5% for general building or construction services supplying materials, 14.5% for labour-only building or construction services. Limited cost traders are restricted to 16.5%, which usually kills the scheme's benefit for labour-only subbies.
- Cash Accounting Scheme. You account for VAT when you receive payment, not when you invoice. Useful if you have slow paying clients, which in construction is most of them.
- Domestic Reverse Charge. Mandatory for most construction services between VAT-registered, CIS-registered businesses since 1 March 2021. The customer accounts for the VAT, not the supplier. Your software must word the invoice correctly and keep the VAT off your box 1 figure.
All four mainstream platforms handle Flat Rate and Cash Accounting. The reverse charge is where setup errors happen: Xero and QuickBooks need the correct reverse charge tax rates enabled, while Sage and FreeAgent apply it once the customer is flagged. Whichever you use, run a test invoice both ways and check the draft VAT return before the first real one goes out.
Payroll Integration: Employees and Subcontractors Together
Construction payroll is unusual because you often pay employees and subcontractors from the same business. The software should handle both without a reconciliation headache at month end.
FreeAgent handles employee payroll and CIS tracking in one product at no extra cost. Sage 50 pairs Sage Payroll with the CIS module. Xero splits the job between Xero Payroll (employees) and the CIS Contractor add-on (subcontractors), which works cleanly because both post into the same ledger. QuickBooks runs employees through its payroll add-on and CIS through the main product. All are workable; the expensive mistake is running a standalone payroll product that never posts back to the accounts.
Project Costing: Can You See Job Profitability in Real Time?
Generic profit and loss accounts tell you whether the whole business is profitable. They do not tell you whether Job A on a new build in Digbeth is making money while Job B on a refurb in Moseley is losing it. Project costing answers that question.
Sage 50 is the strongest mainstream option here, with each contract as a separate cost centre and margin visible in real time. Buildertrend goes further by tying costs to schedules and change orders. Xero, FreeAgent and QuickBooks all offer project tagging that works for simple job-level tracking but thins out once jobs run for months with retentions and variations.
For a construction firm running 10 or more contracts simultaneously, project costing is not optional. If your software cannot show you margin per job, you are flying blind.
Making Tax Digital for Construction Businesses
MTD for VAT is long established and every platform in this guide files MTD VAT returns. The bigger change is MTD for Income Tax: since April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and submit quarterly updates through compatible software, and from April 2027 the threshold falls to £30,000. Xero, QuickBooks, FreeAgent and Sage all support it; if you are on an old desktop version of Sage 50, check yours does before your first quarterly deadline.
Limited companies are not directly affected by MTD for Income Tax. It is triggered by qualifying income only, meaning gross self-employment and property rental income. Salary and dividends do not count towards the threshold, so a director paid purely via salary and dividends is generally not brought into MTD by that income alone. But many builders run a limited company alongside personal rental property or a side trade; if those together clear the threshold, the quarterly cycle applies to you personally even though the company stays outside it.
Which Software Should You Choose?
There is no single best construction accounting software. The right choice depends on your business structure, turnover and complexity. Here is our summary as at July 2026:
- Sole trader or small partnership, under £100k turnover: QuickBooks Simple Start or FreeAgent. Both handle CIS, VAT and MTD quarterly updates at low cost, and FreeAgent is free via NatWest, RBS, Ulster Bank or Mettle.
- Limited company, £100k to £500k turnover, contractor-led: FreeAgent or Xero with the CIS Contractor add-on. Cost effective, clean CIS handling, decent mobile access.
- Limited company, £500k to £1M turnover, multiple contracts: Xero plus CIS Contractor and tighter project tagging discipline, or Sage 50 with the CIS module if job costing and retentions are the daily problem.
- Established firm, £1M+ turnover, complex contracts and retentions: Sage 50, or Buildertrend integrated with Xero or QuickBooks if you want project management and client communication in the same system.
Whichever you choose, make sure it handles CIS automatically, supports your VAT scheme including the reverse charge, and gives you job-level profitability. Anything less is a compromise that costs you time and money.
If you are unsure which platform suits your construction business, speak to an accountant who works with trade businesses. We see the practical differences between these platforms every day, and we can help you choose the right one and set it up properly for CIS, VAT and payroll.
Get in touch if you want to discuss your specific setup. We work with builders, electricians, plumbers and contractors across Manchester, Birmingham, Bristol and London.