Bottom line: Microsoft 365 Copilot wins on workflow fit for accountants who live in Excel and Outlook. ChatGPT Business wins on flexibility and ad-hoc research. Neither replaces Xero's own AI tools for MTD compliance — and with Xero's JAX superagent now auto-reconciling 80% of bank lines, the smartest spend may be upgrading your Xero plan before adding either.
The £20-a-Month Question
Two AI assistants, both asking for roughly £20 per user per month. One sits inside the Microsoft apps your team already has open. The other is a standalone brain-in-a-box that can chew through uploaded files, draft client letters and build custom workflows. For a UK accountancy practice running Xero and staring down the Making Tax Digital for Income Tax deadline in April 2026, the question is not which tool is cleverer — it is which one fits where the work actually happens.
ChatGPT Business (OpenAI renamed it from ChatGPT Team in August 2025) costs $30 per user per month on a monthly contract, dropping to $25 per user per month on an annual plan. At today's exchange rate, that works out to roughly £24 and £20 respectively. Microsoft 365 Copilot costs £16.10 per user per month, though a promotional rate of £13.80 runs until March 2026. Both require a minimum commitment: two seats for ChatGPT, an existing Microsoft 365 Business Standard or Premium licence for Copilot.
Where Each Tool Earns Its Keep
Copilot's advantage is proximity. It runs inside Excel, Word, Outlook and Teams — the applications an accountancy practice uses every day. Ask it to summarise a long email thread from a client, draft a follow-up letter, or build a pivot table from a data export, and it does so without leaving the application. For a practice that exports Xero trial balances to Excel for management accounts, Copilot can automate the formatting, flag anomalies and draft commentary. That saves real time on repetitive month-end work.
ChatGPT Business operates as its own environment. Upload a PDF set of accounts, ask it to identify risk areas, and it will produce a structured analysis. Build a custom GPT trained on your firm's engagement letter templates, and it becomes a drafting assistant that follows your house style. Its strength is flexibility: it handles open-ended research, complex reasoning across multiple documents, and creative problem-solving better than Copilot does inside a spreadsheet.
The gap between them is not intelligence — both use frontier models. It is where the intelligence sits relative to your workflow.
The Xero Problem Neither Tool Solves
Neither ChatGPT Business nor Microsoft 365 Copilot has a native connection to Xero. You cannot ask Copilot to pull a Xero profit-and-loss report into Excel automatically, and you cannot ask ChatGPT to reconcile bank transactions inside Xero. Both tools operate on data you export and feed to them manually.
For MTD compliance specifically, the real AI capability lives inside Xero itself. Xero's JAX superagent — upgraded to a full financial superagent in late 2025 — now targets auto-reconciliation of 80% of bank statement lines in real time. In March 2026, Xero is rolling out AI-powered data capture and extraction for UK customers, handling invoice scanning and receipt processing natively within the platform.
This matters because the April 2026 MTD for Income Tax deadline affects sole traders and landlords with qualifying income above £50,000 first, with the £30,000 threshold following in April 2027 and £20,000 in April 2028. Practices preparing clients for quarterly digital submissions need their AI working inside the accounting system, not alongside it.
Head-to-Head Feature Comparison
| Capability | Microsoft 365 Copilot | ChatGPT Business | --- | --- | --- | Monthly cost per user (GBP) | £16.10 (£13.80 promo) | ~£24 monthly / ~£20 annual | Works inside Excel | Yes — native | No — paste or upload data | Works inside Outlook | Yes — native | No | Native Xero connection | No | No | Custom workflow builders | Copilot Studio (extra cost) | Custom GPTs (included) | File upload and analysis | Limited to in-app context | Up to 512MB, multi-file | Data privacy | Data stays in M365 tenant | Data excluded from training | MTD-specific features | None | None | Minimum commitment | M365 Business Standard licence | 2 seats | UK data residency | Yes (M365 UK tenants) | US-hosted (SOC 2 compliant) |
Monthly Cost for a 10-Person Practice
| Item | Copilot Route | ChatGPT Route | --- | --- | --- | Base productivity suite (M365 Business Standard) | £9.40 x 10 = £94 | £9.40 x 10 = £94 | AI assistant | £16.10 x 10 = £161 | ~£20 x 10 = £200 | Xero subscription (Growing plan) | £42 | £42 | Total monthly | £297 | £336 | Annual total | £3,564 | £4,032 | Saving with Copilot | — | £468/year |
The Copilot route is £468 per year cheaper for a 10-person practice, and that gap widens once the ChatGPT promotional pricing ends or if you pay monthly rather than annually.
What 98% of Practices Are Already Doing
Research commissioned by Xero found that 98% of UK accounting practices are already using AI in their workflows. The breakdown is worth noting: bank reconciliation prediction, receipt scanning, client communication drafting and management reporting are the top use cases. Xero's own research estimates a £338 million uplift in industry profitability from AI adoption across UK practices.
The point is that the AI your practice uses daily is probably already inside Xero. Adding Copilot or ChatGPT on top makes sense only if the productivity gain from document handling, email management and ad-hoc analysis justifies the per-seat cost.
The Verdict for a Xero-Based UK Practice
If your team spends its days in Excel and Outlook building management accounts and responding to client queries, Copilot is the better fit. It saves time where the work already happens and costs less per seat.
If your team needs a research assistant that can digest uploaded documents, draft custom client advice and handle open-ended analysis, ChatGPT Business is stronger. Its custom GPT capability alone is worth the premium for firms that want to encode their house style and processes.
For MTD compliance, neither tool moves the needle. Invest in Xero's own AI features first — JAX auto-reconciliation and the March 2026 data capture rollout will do more for quarterly submission readiness than either external AI assistant.
And if the budget only stretches to one: Copilot for a compliance-heavy practice, ChatGPT for an advisory-heavy one. The wrong choice is paying for both and using neither properly.
Quick Checklist Before You Buy
1. Confirm your Microsoft 365 plan supports Copilot (Business Standard or Premium required) 2. Check whether your Xero subscription includes JAX and auto-reconciliation features 3. Audit your team's daily workflows — where do they spend the first two hours of each day? 4. Run a two-week trial with three users before committing to full rollout 5. Export a sample Xero trial balance to Excel and test Copilot's analysis capabilities 6. Upload a sample set of client accounts to ChatGPT and test its document analysis 7. Calculate the per-seat cost including the base M365 licence, not just the AI add-on 8. Check data residency requirements — Copilot data stays in your M365 UK tenant, ChatGPT is US-hosted 9. Confirm MTD readiness sits with Xero, not with either AI tool 10. Review in 90 days — kill whichever tool your team is not actively using
