Accounting software is a type of computer programme that automates some bookkeeping and accounting tasks.
If you’re an individual taxpayer, accounting software helps you to send invoices, keep track of your income and expenses, and submit both Self Assessment and VAT tax returns to HMRC.
Who needs accounting software?
For most everyday taxpayers, a simple spreadsheet of your income and expenses is all you need. The only exception is for sole traders who are registered for VAT.
From April 2020, VAT-registered sole traders have to use software to report VAT. This is called MTD (“Making Tax Digital”).
Does MTD replace traditional accountants?
Accounting software does not replace the need for an accountant. It only shows you what you earned and spent, and helps you to calculate the tax that you owe.
In comparison, an accountant will help you to make a claim, advise on what expenses you can claim, or which tax-free allowances you should take advantage of.
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