Why use Self Assessment Tax Return Software?

HMRC has done a great job of making the self assessment system as clear as possible to nonexperts. Everything is online and there’s a dedicated phoneline that you can use to ask a real human any questions.

But self assessment isn’t just about filing your return on time. It’s also about having organised, accurate records. Using personal tax return software can do this for you, behind the scenes.

And it can help alleviate the stress of contacting HMRC and the worry about those accidental mistakes that can carry heavy financial penalties.

The right personal tax return software can save you time and hassle preparing and sending your self assessment tax return.

What does personal tax return software actually do?

Think about all the records you need to keep: banks statements, loans, receipts, pension plan certificates, identity documents, P60s, P45s, taxable benefits.

And then there’s all the information to evidence your expenses claims: receipts, mileage, purchase records, credit card statements. Picture where all this information is right now.

Personal tax return software centralises everything in one digital space. From there, data can be stored and synched automatically – often making it much easier to complete your self assessment tax return.

Self assessment tax return software is able to do all these jobs for you:

• Generate sales and purchase invoices.
• Send automatic reminders for overdue invoices.
• Connect with your bank account so that transactions are reconciled automatically.
• Turn quotes into invoices and monitor the success rate of all estimates over time.
• Get cash flow report in real time.
• See outstanding invoices summary at a click.
• Track mileage.
• Be able to specify an expense by percentage of personal and business use.
• Capture receipt and other expenses documentation digitally, and file in the correct category.
• Just snap and save. How many receipts have you already lost this year?
• Create range of financial reports to give you an up to date financial health check.
• Give your accountant access to your personal tax return software account, improving communications with everything in one place.
• Always have an accurate idea of how much income tax you owe, without having to contact HMRC.
• Auto population of some parts of your self assessment tax return.
• Most personal tax return software is cloud-based, which means you can access your account anywhere there’s an internet signal, on whichever device you prefer, whenever’s most convenient.
• Send your self assessment tax return directly from your software account to HMRC.

Which one of these is your least favourite job? Let the software do it for you.

Benefits of using self assessment tax return software

The benefits of using personal tax software go beyond saving time on all the admin tasks listed above. It takes the pressure of possible human error out of the equation.

We all know that there are hefty potential fines for mistakes on your tax return. Using the right software goes a long way to getting peace of mind.

It’s also another way to ensure that you claim all of the expenses you’re entitled to because it makes collecting the evidence much less messy.

Even though we don’t have to send all our evidence in with our tax returns, we’re all aware that HMRC can ask for the information to support our claims.

On losing a receipt, lots of taxpayers omit that expense from their claim because they know the evidence blew out the van door. Whereas a quick photo to capture the data in your app means that everything’s safely in the right place.

How do I know which personal tax software to choose?

There’s a lot of choice out there in the personal tax software market. In fact, in can be overwhelming.

The best place to start is by deciding what features you particularly want and the ones that aren’t that relevant to your business.

HMRC provides an up to date list of registered self assessment commercial software providers which is a helpful starting point.

Self assessment tax return software price

Most software providers have tiered pricing structures, with each segment geared towards different-sized businesses. Some of them clearly list everything that’s included in that package. Others have optional add ons that come with an extra fee.

It’s as important to make sure you’re not paying for things you don’t need, as it is to get a package that has all your essentials.

There are regular offers across most companies, which are tempting. But don’t just go for the best offer without checking out the package details and the price it’ll revert to after the offer closes.

Self assessment tax return software support

Another thing to check is the amount of support you get from your software provider. Most established companies have ‘knowledge hubs’ on their website that contain a large amount of useful information.

But what if you need to speak to someone about a specific issue. Is there a customer service phoneline? Webchat? Can you email directly? It’s good to know that there’s provision for however you prefer to communicate.

Making tax digital and self assessment

Do they adapt to HMRC regulatory changes quickly? There should be some mention of ‘Making Tax Digital for ITSA’ on their website. ITSA stands for income tax for self assessment and is not a requirement just yet.

But you need to know that your software will be updated in line with any rule changes, in a timely manner.

A significant modification introduced in MTD for ITSA is the requirement for reports every quarter.

These periodic updates supply HMRC with the newest quarter’s earnings and expenditure data, and separate quarterly updates are required for each source of income from trade or property.

There are deadlines established for each quarter, and these are not affected by the end of your accounting period. The current deadlines for the submission of quarterly reports have been assigned as 5 August, 5 November, 5 February, and 5 May.

Free HMRC self assessment tax return software

HMRC provides free self assessment tax return software which can be used in most cases for the submission of your tax return only.

The vast majority of the benefits you can get from paid for tax return software aren’t included with the free tax return software made available by HMRC.

If you are a self employed sole trader or a landlord you need to be aware that the changes being brought in by making tax digital means that the free HMRC tax return software may be unavailable to use from April 2026.

From this date and depending on your level of taxable income HMRC will only be able to accept tax return submissions through third party tax return software.

With this in mind it may well be best to move away from using the free software provided by HMRC as early as you can to ensure a smoother making tax digitial transition.