Can a bookkeeper do tax returns? Your guide to UK rules

Published Friday 16 January 2026

Table of contents

• What does a bookkeeper do?
• What does an accountant do?
• What is the difference between an accountant and a bookkeeper?
• Can a bookkeeper do tax returns?
• When do you need a registered tax agent?
• How do you know if you need a bookkeeper?
• The benefits of working with a bookkeeper for Making Tax Digital for Income Tax
• Getting started with the right professional support
• FAQs on bookkeepers and tax returns

Key takeaways

• Verify that your bookkeeper has proper qualifications and supervision by professional bodies like AAT or HMRC registration before allowing them to prepare and submit your tax returns.
• Utilize bookkeepers for Making Tax Digital compliance by having them maintain digital records, prepare quarterly updates, and implement MTD-approved software systems.
• Recognize when you need professional bookkeeping support if you experience time constraints, lack technical expertise, use disconnected systems, or want to avoid HMRC penalties.
• Consider hiring a chartered accountant or registered tax agent instead of a bookkeeper when your tax situation involves complex planning, strategic advice, or representation in HMRC dealings.

What does a bookkeeper do?

A bookkeeper manages the day-to-day financial records of your business. Think of them as the organised caretaker of your financial data.

Their main job is to accurately record all financial transactions, including sales, purchases, payments, and receipts. They ensure your books are balanced and up to date, which is essential for everything from tracking cash flow to preparing for tax time.

What does an accountant do?

An accountant takes a higher-level view of your finances. While a bookkeeper records the data, an accountant interprets it to provide strategic advice.

They analyse your financial records to give you insights into your business performance, help with financial forecasting, and develop strategies for growth. Accountants are also experts in tax law, helping you plan for tax liabilities and ensure you're compliant with all regulations.

What is the difference between an accountant and a bookkeeper?

Bookkeepers and accountants work together but have different roles:

Bookkeepers handle:

• Daily transaction recording: Sales, purchases, expenses
• Bank reconciliation: Matching records with bank statements
• Digital record maintenance: Essential for Making Tax Digital (MTD) compliance
• Tax return preparation: Many offer this service

Accountants focus on:

• Strategic financial advice: Business planning and growth
• Complex tax planning: Advanced strategies and compliance
• Financial analysis: Interpreting data for decision-making
• Audit preparation: Formal reviews and certifications

For MTD for IT compliance, bookkeepers can provide all required services including digital record-keeping and quarterly updates.

Can a bookkeeper do tax returns?

Yes, many bookkeepers can prepare and submit tax returns. However, their services vary by specialisation and qualifications.

What bookkeepers can do:

• Prepare Income Tax returns: Self-assessment and basic tax calculations
• Submit VAT returns: Quarterly VAT submissions to HMRC
• Maintain MTD-compliant records: Digital bookkeeping for quarterly updates
• Implement compliant software: Help choose and set up MTD-approved systems

Service limitations vary by bookkeeper:

• Basic bookkeepers: Focus on transaction recording and reports
• Tax-qualified bookkeepers: Handle full tax preparation and submission
• MTD specialists: Expert in digital compliance requirements

When do you need a registered tax agent?

While many bookkeepers can prepare and file tax returns, there are specific legal requirements. In the UK, anyone providing paid tax advice or services must be supervised by a professional body like the Association of Accounting Technicians (AAT) or be registered with HMRC.

If your tax situation is complex, or if you need strategic tax planning to minimise your liability, you may need a chartered accountant or a registered tax agent. They have advanced training to handle intricate tax matters and can represent you in dealings with HMRC.

How do you know if you need a bookkeeper?

You need a bookkeeper if you experience any of these common challenges:

• Time constraints: You don't have time to maintain accurate financial records
• Limited expertise: You're new to bookkeeping and lack technical knowledge
• System fragmentation: You're using disconnected apps that create confusion
• MTD uncertainty: You're unfamiliar with compliant software requirements
• Penalty concerns: You want to minimise the risk of HMRC fines, protect yourself from Self Assessment scams, and stay compliant

The benefits of working with a bookkeeper for Making Tax Digital for Income Tax

Bookkeepers deliver measurable benefits beyond MTD compliance, improving your business operations and financial management.

1. Accuracy

Professional accuracy reduces errors and ensures compliance. Bookkeepers are trained to maintain precise financial records, which directly supports:

• Correct tax returns: Accurate calculations and timely submission
• MTD compliance: Digital record-keeping meets HMRC requirements
• Penalty avoidance: Proper procedures prevent costly mistakes

2. Regular maintenance

Regular maintenance ensures consistent, up-to-date financial records. Professional bookkeepers work systematically rather than sporadically, which:

• Reduces errors: Consistent processes minimise mistakes
• Supports MTD compliance:Quarterly updates require regular record-keeping
• Improves accuracy: Systematic approach catches issues early

3. Time savings

Time savings allow you to focus on revenue-generating activities. Outsourcing bookkeeping typically saves business owners 5–10 hours per week, which you can redirect towards:

• Business development: Growing your customer base
• Strategic planning: Improving operations and profitability
• Work-life balance: Reducing stress and administrative burden

4. Improved cash flow

Improved cash flow visibility enables better business decisions, which is especially helpful when global economic surveys of finance professionals point to ongoing economic uncertainty. Regular bookkeeping provides real-time financial insights including:

• Current cash position: Know exactly how much money you have available
• Payment patterns: Understand when customers typically pay invoices
• Expense trends: Identify opportunities to reduce costs or improve timing

5. Peace of mind

Peace of mind comes from professional expertise handling your financial obligations. A qualified bookkeeper provides:

• Compliance confidence: Know your tax affairs meet HMRC requirements
• Reduced stress: No more worrying about missed deadlines or errors
• Professional backup: Expert support when you need guidance or have questions

6. Informed decision making

Informed decision-making improves when you have accurate, up-to-date financial information. Professional bookkeepers provide:

• Bank reconciliation: Ensure records match actual account balances
• Payroll management: Handle employee payments and tax obligations
• Fraud detection: Spot unusual transactions or potential issues
• Cash flow monitoring: Track money in and out of your business

Getting started with the right professional support

Choosing between a bookkeeper and an accountant depends on your business needs. A bookkeeper keeps your daily finances in order, while an accountant provides strategic insights for growth. Both can help you run your business with more confidence.

Ready to find an MTD-compliant bookkeeper? Browse qualified professionals in the Xero advisor directory who use Xero-approved software to help keep your business compliant and organised. Or, if you're looking to manage your books with simple, intuitive software, try Xero for free.

FAQs on bookkeepers and tax returns

Here are answers to some common questions about the roles of bookkeepers and accountants.

What is a bookkeeper not allowed to do?

A bookkeeper focuses on recording financial transactions. They generally cannot provide strategic tax advice, conduct official audits, or offer legal interpretations of financial data. For high-level financial strategy and planning, you'll need an accountant.

Is a bookkeeper the same as a tax preparer?

Not always. While many bookkeepers are qualified to prepare and file tax returns, their primary role is managing daily financial records. A dedicated tax preparer's sole focus is on preparing tax returns, ensuring they are accurate and compliant with the law.

What is the difference between a bookkeeper and a tax accountant?

A bookkeeper handles the day-to-day recording of your business's financial activities. A tax accountant is a specialist who focuses on tax law, strategic tax planning, and ensuring your business complies with all tax regulations. They step in to provide expert advice, especially for complex situations.