HSBC UK has unveiled a new digital tax management solution integrated within its business banking platform, designed to alleviate the administrative burden on small and medium-sized enterprises (SMEs) as the deadline for the government's major overhaul of income tax reporting approaches. Developed in collaboration with Sage, the service, named My Business Finances, enables sole traders and landlords to handle invoicing and tax reporting through a single interface.
Addressing the Making Tax Digital Challenge
This initiative comes in response to the impending implementation of Making Tax Digital for Income Tax (MTD ITSA), set to take effect from April 2026. The new regulations will mandate millions of sole traders and landlords to maintain digital records and submit quarterly updates to HMRC, followed by annual declarations, replacing the traditional self-assessment system with a continuous reporting cycle.
Tom Wood, head of SME business banking at HSBC UK, emphasised the tool's value, stating: "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." Initially, the tool will be available to sole traders and landlords, who are the first groups subject to these changes, with the aim of simplifying what many perceive as a complex and expensive compliance transition.
Industry Concerns and Preparations
Industry experts have consistently highlighted that numerous landlords and small businesses are not adequately prepared for the shift. HMRC has already commenced contacting affected taxpayers, leading to a significant increase in inquiries to accountants and financial advisors. The phased introduction of lower income thresholds over the next two years adds to the urgency for SMEs to adapt their processes.
Gordon Stuart, senior vice-president of fintech and embedded services at Sage, noted: "Small firms want to focus on doing what they do best, without the burden of complex admin." By embedding Sage's technology directly into HSBC's banking platform, the partnership seeks to reduce friction for users who may be unfamiliar with traditional accounting software.
Broader Trends in Financial Services
The launch reflects a wider trend among banks and software providers to position themselves as facilitators of MTD compliance, rather than merely offering payment services. Last year, Sage introduced its own AI-driven automation tools for MTD, while accountants caution that manual spreadsheets and outdated systems are no longer sufficient to meet HMRC's requirement for digital links between records and submissions.
As the April 2026 deadline looms, tools like My Business Finances are becoming increasingly critical for SMEs navigating the evolving tax landscape, ensuring they can meet regulatory demands efficiently and focus on their core business activities.
