Luca vs Xero — 2026 comparison for UK SMEs

Pricing — the honest breakdown

Xero has three UK plans: Starter (£15/mo) capped at 20 invoices and 5 bills per month — outgrown quickly; Standard (£35/mo) for most growing SMEs; Premium (£55/mo) for multi-currency. On top of that, most businesses pay extra for Hubdoc receipt capture, Xero Projects, Xero Payroll, and one of dozens of paid add-on apps from the marketplace.

Luca is straightforward. Self-host free, or pay £20/month for the hosted plan with everything included. AI bookkeeping is part of the platform, not an upsell. You'll still need a Claude Co-Work Pro subscription (from $20/month), billed separately by Anthropic — Luca runs on top of Claude.

12-month total cost (typical UK SME)

Cost	Xero (Standard)	Luca (hosted)
Software subscription	£420 (£35 × 12)	£240 (£20 × 12)
Hubdoc / receipt capture	£0 (now bundled)	£0 (built in)
Bookkeeper time (typical)	£2,400-£4,800/yr	~£0 (AI does it)
Claude Co-Work Pro (you also need)	N/A	~£190/yr ($20×12)
Year 1 software + Claude	£420	£430
Year 1 with bookkeeper	£2,820-£5,220	~£430

The big win isn't on the subscription — it's on the bookkeeper time Luca eliminates. If you currently spend nothing on bookkeeping (you do it yourself), the headline numbers are similar. If you pay a bookkeeper £200-£400/month, Luca pays for itself many times over.

AI — the actual difference

Xero added some AI features in 2024-2025 (predicted bank rule suggestions, "Just Ask Xero" chatbot for navigation). They're useful but limited — they don't replace bookkeeping work, they help you do it slightly faster.

Luca is built AI-first. Bank reconciliation, transaction categorisation, invoice posting, VAT preparation, expense classification are all done by Claude through the Luca MCP tool layer. You don't categorise transactions; you check what Luca's done. The work-pattern is fundamentally different.

The accountant question

Almost every UK accountant uses Xero. They're trained on it, certified on it, and know its quirks. If your accountant insists you stay on Xero because they don't want to learn something new, that's a real concern.

Luca handles this in two ways:

1. Luca exports clean data in formats your accountant already knows — trial balance, journals, P&L, balance sheet. They can audit and file from these without ever logging into Luca.
2. Luca gives accountants direct read access with a cryptographic audit trail (every journal entry hash-linked via Merkle chain). Many accountants find this audit-grade trail more reassuring than Xero's standard logs.

What Xero is genuinely better at

• App marketplace. Xero has 1,000+ third-party integrations — Stripe, Shopify, GoCardless, every UK payroll provider, etc. Luca's integration library is newer and smaller.
• Industry-specific features. Xero has dedicated tooling for construction (CIS), retail, hospitality. Luca is general-purpose.
• Multi-currency. Xero Premium handles multi-currency natively with FX revaluation. Luca handles it but with less polish.
• Track record. Xero has been live since 2006 with millions of users. Luca is in beta.

What Luca is genuinely better at

• AI-native bookkeeping. Categorisation, reconciliation and VAT prep happen automatically.
• Cryptographic audit trail. Tamper-evident ledger that's better than anything Xero offers.
• Open source. You can read the code, modify it, and self-host. Your books aren't trapped behind a vendor.
• Pricing simplicity. One number includes everything. No add-on creep.
• No vendor lock-in. Even on the hosted plan, you can pull your full data and migrate at any time.

Migrating from Xero to Luca

If you decide to move:

1. Export from Xero: chart of accounts, contacts, invoices, bills, bank transactions (all CSV)
2. Import into Luca via the standard import flow
3. Reconnect bank feeds via Open Banking
4. Run both systems in parallel for one VAT quarter to verify
5. Cancel your Xero subscription

Typical migration: 2-4 weeks. Most painful step is reconciling the parallel-run differences — usually small timing/categorisation discrepancies.

FAQ

Is Luca cheaper than Xero?

For most UK SMEs, yes. Luca is £20/month all-in for hosted, £0 if you self-host. Xero ranges £15-£60/month depending on plan, plus add-ons most businesses end up needing. The bigger saving is bookkeeper time Luca eliminates.

Can I migrate my data from Xero?

Yes. Luca accepts Xero CSV exports. Migration is typically 2-4 weeks for an SME.

Is Luca MTD-compliant?

Yes. MTD VAT is supported via direct integration with HMRC's MTD VAT API.

Can my accountant use Luca?

Yes. Accountants get full read access to ledgers, reports, VAT returns and the Merkle-chain audit trail. They can audit and file without learning a new UI — they just look at the standard exports.

What happens to my data if Luca shuts down?

Luca is open source. You can self-host. The accounting engine runs independently of the AI layer, so even if Claude becomes unavailable, your data and reports remain fully accessible.