The UK tax software market size is projected to reach US$ 2.79 billion by 2031 from US$ 1.28 billion in 2023. The market is expected to register a CAGR of 10.2% during 2023–2031. The increasing adoption of blockchain technology is likely to remain a key trend in the UK tax software market
Since the advent of digitalization in the UK, end users have adopted advanced technologies to reduce manual processes and implement automation to increase productivity and achieve efficient business outcomes. Owing to the increasing penetration of the Internet and the growing use of computers and smartphones, individuals do not need to visit a tax office. They can file a tax return and pay the taxes remotely. End users such as commercial enterprises and individuals increasingly adopt tax software as it automates tax processes and reduces the manual efforts of calculating tax. The software allows the registration of taxpayer information, which is then automatically entered into tax returns; it also enables automatic calculation. Various industries use tax software for filing and returns, generating a huge volume of data. In such cases, industries have to be cautious while transferring tax-related files online. Tax software vendors provide software with security measures, which is increasing their demand.
Tax software is designed to make the tax preparation process more efficient and help the average taxpayer understand the various nuances of tax law. The primary purpose of tax software is to automate the tax return filing process. Tax software has various features, such as e-filing and, eSignature, and others. Many tax software programs store tax returns in the cloud for several years so businesses can access them easily during tax filing. The tax software can be incorporated with many other software, such as customer relationship management (CRM), enterprise resource planning (ERP), and reporting applications.
The tax software market has been positively impacted by the significant initiatives taken by the UK government to modernize the tax system. For instance, on April 1, 2019, the government implemented Phase 1 of Making Tax Digital (MTD). On April 1, 2021, Phase 2 of the MTD initiative was initiated, and its completion date is set for April 2027. The government has set certain deadlines for digitalizing taxes for non-VAT-registered businesses, such as sole traders and landlords:
Under the MTD initiatives, the government plans to remove all the paperwork linked to taxes and embrace automation in accounting processes. The government encourages businesses to utilize compatible accounting and tax software that automates a variety of their financial operations, including data entry, computations, and report production. This software encourages automation, increases efficiency, and helps save time by decreasing errors, which is increasing its demand among businesses.
In the UK, cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), and robotic process automation (RPA) are changing traditional accounting and taxation methods. These technologies support taxation and accounting firms to operate more efficiently and reduce the number of errors. These advanced technologies automate numerous tasks, including invoice processing, data input, and reconciliations, which support tax professionals in increasing their focus on and investing more time in strategic tasks such as data analysis and customer consulting services. Significant benefits offered by AI, ML, and RPA to tax software increase their adoption among tax companies, further creating market growth opportunities. For instance, in February 2022, KPMG LLP, a UK limited, partnered with Blue J to jointly develop and launch a first-of-its-kind suite of artificial intelligence (AI) tax analysis tools for their customers in the UK. The tool allows KPMG's tax team to employ use AI to forecast tax scenario outcomes with 90%+ accuracy by significantly reducing time spent looking for and analyzing tax legislation and case law. This tool will also support KPMG's tax team in technical analysis and decision-making processes on complex tax issues. Moreover, benefits offered by advanced technologies encourage companies to develop new innovative software for their customers. For instance, in February 2024, PwC UK developed and launched a UK tax AI assistant tool with Harvey and OpenAI. This UK tax AI assistant tool is available for all 2,300 PwC UK Tax professionals and assists them in generating tax content to provide tax-related services to their clients.
Key segments that contributed to the derivation of the UK tax software market analysis are component, tax type, and end user.
The accounting and taxation landscape in the UK is undergoing a profound transformation driven by the advent of new technologies. Within the UK's tax landscape, new technologies streamline compliance by automating tax calculations and reporting processes. This reduces errors and optimizes deductions and credits, contributing to more accurate tax submissions. Startups and international enterprises are expanding their presence across the UK owing to a well-established economic structure. SMEs and other established enterprises in the country adopt tax software to address tax compliance.
| Report Attribute | Details |
|---|---|
| Market size in 2023 | US$ 1.28 Billion |
| Market Size by 2031 | US$ 2.79 Billion |
| Global CAGR (2023 - 2031) | 10.2% |
| Historical Data | 2021-2022 |
| Forecast period | 2023-2031 |
| Segments Covered |
By Component
|
| Regions and Countries Covered | UK
|
| Market leaders and key company profiles |
The UK tax software market is evaluated by gathering qualitative and quantitative data post primary and secondary research, which includes important corporate publications, association data, and databases. A few of the developments in the UK tax software market are listed below:
The “UK Tax Software Market Size and Forecast (2021–2031)” report provides a detailed analysis of the market covering below areas:
The List of Companies - UK Tax Software Market
Accountancy firms are adopting the software for handling invoicing & billing, payroll, reporting, and bookkeeping. The accountancy profession contributes significantly to the UK economy via specialist accounting practices and in-house accountants existing in all industries. Moreover, the accounting and legal firms are pivotal to the country's financial and professional services ecosystem, thereby anticipated to boost the market growth in the upcoming years.
The retail sector in the UK has experienced a tremendous transformation with the growing trend of online shopping, which has emerged as a major disrupter. The continuous introduction of various advanced technological solutions helps retailers increase their efficiency. Companies in the tax software market players catering to this sector maintain an enormous quantity of sensitive data that varies from financial statements, invoices, legal contracts, and e-mails to receipts.
Acorah Software Products Limited (TAXCALC), BTCSoftware Limited, Capium, FreeAgent, GoSimpleTax Ltd., IRIS Software Group Ltd, Nomisma, Sage Group Plc, Thomson Reuters, and Xero Limited are the leading companies in the UK tax software market.
The large enterprises segment dominated the market in 2021 and is expected to hold significant share during the forecast period. Large enterprise continues to demand for real-time global data that informs them of tax payment-related obligations, risks, and opportunities. Moreover, companies providing tax software mare responding to these demands by providing platforms that aims at collecting of data from both unstructured and structured sources, thereby becoming major factors driving the market growth.
The accountancy sector in the UK is growing at a fast pace, thereby increasing the need for advanced technologies to streamline tax processes. The entire accountancy industry is witnessing the emergence of cloud computing and automation amid the digital revolution. Cloud accountancy has widely transformed how accountants work regularly and communicate with their customers. Cloud-based solutions enable accountants to run accounting tasks from any location, thereby becoming major trend in the UK tax software market during the forecast period.