HSBC and Sage tackle Making Tax Digital burden for SMEs
HSBC UK is launching a new digital tax tool inside its business banking platform, as the countdown to the government’s biggest shake-up of income tax reporting enters its final phase.
Built using embedded tech from Sage, the service, called My Business Finances, will allow small business owners to manage invoicing and tax reporting.
The move comes ahead of Making Tax Digital for Income Tax (MTD ITSA), which comes into force from April.
The new legislation will require millions of sole traders and landlords to submit quarterly digital updates to HMRC, followed by end-of-year declarations.
Initially, the HSBC tool will be available to sole traders and landlords, the first groups to be brought into the new regime, with the bank aiming to simplify what many small firms see as a complex and costly compliance shift.
Tom Wood, head of SME business banking at HSBC UK, said: “Tax compliance can be time-consuming and costly. This will take care of invoicing, accounting and tax compliance all in one place, which is especially useful ahead of new requirements in April.”
Annual returns to quarterly reporting
From April 2026, landlords earning more than £50,000 will be required to keep digital records and submit updates every three months.
Lower income thresholds will be phased in over the following two years.
The rules effectively replace the traditional once a year self-assessment with a rolling reporting cycle.
Industry bodies have repeatedly warned that many landlords and small businesses remain under-prepared.
HMRC has already begun writing to affected taxpayers, prompting a surge of queries to agents and accountants alike.
Sage said embedding its tech directly into a banking platform could help reduce friction for customers unfamiliar with accounting software.
Gordon Stuart, senior vice-president of fintech and embedded services at Sage, said small firms “want to focus on doing what they do best, without the burden of complex admin”.
The launch comes amid a wider shift among banks and software providers to position themselves as MTD enablers rather than just payment providers.
Sage unveiled its own AI-driven MTD automation tools last year, while accountants warn that manual spreadsheets and legacy systems are no longer compatible with HMRC’s requirement for “digital links” between records and submissions.