Accounting software for UK sole traders

Most accounting software is built for companies and then sold to sole traders. Taxmo starts from how a sole trader actually files: one Self Assessment return a year, a VAT return each quarter if you are registered, and the need to prove where every figure came from.

What a sole trader actually needs

The work is not complicated, it is just relentless. Income and costs recorded as they happen, receipts kept, and a clean set of figures at the year end.

  • Income and expenses in one place, with the VAT split out where it applies
  • Receipts captured by photo, email forward or WhatsApp, read automatically
  • Bank transactions imported so nothing is missed and nothing is entered twice
  • A running estimate of what you owe, rather than a surprise in January

Cash basis or accruals, whichever you use

Cash basis recognises income when the money arrives; accruals recognises it when you invoice. Cash basis means you are not taxed on invoices a customer has not paid, which is why many sole traders use it. Taxmo handles both and applies the one your profile is set to, consistently, so your figures do not drift between methods.

Proper bookkeeping when you need it

You may never need a general ledger. If you do, because an accountant asked or because you incorporated, it is there: double-entry journals, a chart of accounts on standard UK nominal ranges, a trial balance that proves your books balance, and a year-end close.

Common questions

Do I need accounting software as a sole trader?

Not legally, unless you are VAT registered, in which case Making Tax Digital requires digital records and compatible software. Below that you can keep a spreadsheet. Software earns its place when the admin starts costing you more time than it saves, or when you want the tax figure before the deadline rather than after.

Will it work out my tax bill?

It gives you a running estimate from your recorded income and expenses, covering income tax and Class 4 National Insurance. Treat it as a planning figure. Your actual liability depends on your full circumstances, including other income, and is settled through Self Assessment.

Can I switch part way through the year?

Yes. Enter your opening balances for the point you switch and your reports pick up from there rather than starting from zero.

Does it file my Self Assessment for me?

Not yet. It prepares the figures and shows you the return, and direct Self Assessment submission is marked as coming rather than available. VAT is the exception: if you are VAT registered, Taxmo submits your VAT return to HMRC directly through the Making Tax Digital API and hands you back HMRC's receipt.

Can it read my bank account?

Two ways, and they are not the same thing. You can connect a UK account through Open Banking, which is read-only and authorised by you at your own bank. That connection is on-demand rather than a background sync: you re-authorise for each import and it returns a recent window, not your whole history. Or you export a CSV statement from your bank and upload it, which has no window limit and is what to use for older periods.

Last updated 2026-04-25. Thresholds, rates and allowances are indexed or reset at fiscal events and are deliberately not quoted here; check GOV.UK for current amounts.