UK Tax Software Market Overview and Growth by 2031

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

UK Tax Software Market Analysis

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.

UK Tax Software Market Overview

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.

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UK Tax Software Market: Strategic Insights

UK Tax Software Market

• Market Size 2023
  US$ 1.28 Billion
• Market Size 2031
  US$ 2.79 Billion

Market Dynamics

GROWTH DRIVERS

• Government initiatives to modernize UK tax system

FUTURE TRENDS

• Increasing adoption of blockchain technology

OPPORTUNITIES

• Rising adoption of advanced technologies expanding tax industry

Regional Overview

• UK

Market Segmentation

Component

• Software
• Services

Tax Type

• Sales Tax
• Income Tax
• Corporate Tax

Deployment Type

• Cloud and On Premise

End User

• Individual
• Commercial

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UK Tax Software Market Drivers and Opportunities

Government Initiatives to Modernize UK Tax System to Favor Market

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:

• From April 2026, landlords and sole proprietors earning more than US$ 68,830 (GBP 50,000) are subject to the MTD income tax regulations.
• From April 2027, MTD rules around income tax will come into effect for sole traders and landlords earning over US$ 41,300 (GBP 30,000). The sole traders and landlords must maintain digital tax records and submit their tax returns online.

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.

Rising Adoption of Advanced Technologies

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.

UK Tax Software Market Report Segmentation Analysis

Key segments that contributed to the derivation of the UK tax software market analysis are component, tax type, and end user.

• Based on component, the UK tax software market is segmented into software and services. The software segment held a larger market share in 2023.
• By tax type, the market is categorized into sales tax, income tax, corporate tax, and others. The sales tax segment held the largest share of the market in 2023.
• In terms of end user, the market is bifurcated into individual and commercial. The commercial segment held a significant share of the market in 2023.

UK Tax Software Market Share Analysis

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.

UK Tax Software Market Report Scope

UK Tax Software Market News and Recent Developments

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:

• Intuit Inc announced latest updates to products and services, including Intuit Tax Advisor, Intuit ProConnect Tax, Intuit Lacerte Tax, and Intuit ProSeries Tax, for the upcoming tax year. Intuit Accountants offers a range of products and services to help tax and accounting professionals stay ahead of the curve. The Tax Year 2023 product updates offer enhanced reporting capabilities, strategies, and streamlined workflows while also providing accountants with access to new tax-related insights, advisory strategies, and reports to help firms achieve their goals. (Source: Intuit Inc, Press Release, September 2023)
• Wolters Kluwer NV received an Artificial Intelligence (AI) Excellence Award from The Business Intelligence Group (BIG) for Xpitax Scan Optimizer. The AI-powered system, which increases the speed and efficiency of preparing tax returns, was selected in the award program’s ‘Computer Vision’ category, recognizing “organizations, products, and people that bring AI to life and apply it to solve real problems. (Source: Wolters Kluwer NV, Press Releases, April 2024)

UK Tax Software Market Report Coverage and Deliverables

The “UK Tax Software Market Size and Forecast (2021–2031)” report provides a detailed analysis of the market covering below areas:

• UK tax software market size and forecast at global, regional, and country levels for all the key market segments covered under the scope
• UK tax software market trends as well as market dynamics such as drivers, restraints, and key opportunities
• Detailed PEST/Porter’s Five Forces and SWOT analysis
• UK tax software market analysis covering key market trends, global and regional framework, major players, regulations, and recent market developments
• Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments for the UK tax software market
• Detailed company profiles