HSBC & Sage launch digital tax tool for sole traders

HSBC UK and Sage have launched a new accounting and tax reporting tool inside HSBC UK's business banking app and online account for eligible customers ahead of Making Tax Digital for Income Tax.

The product, called My Business Finances, sits within HSBC UK's business banking account. It covers accounting features and tax submission. It targets sole traders and landlords first.

Digital reporting

HM Revenue & Customs will require some sole traders and landlords to report income and expenses through Making Tax Digital for Income Tax if their annual income from self-employment and property exceeds £50,000. The requirement applies from April.

HSBC UK said customers can manage accounting and submit tax returns digitally from within their business banking account. The bank said the tool reduces complexity for small businesses as the change approaches.

The companies said My Business Finances includes invoicing and accounting functions. It also covers tax compliance tasks within the same service. HSBC UK said customers do not need to move between apps or platforms.

Readiness gap

Sage cited research on preparedness among sole traders. The company said seven in ten sole traders are not ready for Making Tax Digital for Income Tax. It showed that a third still track income and expenses using pen and paper, while two-thirds rely on spreadsheets for Self-Assessment returns.

IPSE conducted the study referenced by Sage among 1,000 UK sole traders. The research took place in September among respondents contacted on behalf of Sage.

HSBC UK and Sage positioned the product as an option for customers who expect new reporting obligations under Making Tax Digital. The tool will roll out first to sole traders and landlords, the companies said.

Embedded software

HSBC UK uses Sage's embedded technology for the service. Sage Embedded Services uses APIs that software platforms and financial institutions can integrate into their products.

In this case, Sage provides the accounting and tax components. HSBC UK presents the tool within its banking environment for business customers.

The arrangement puts Sage alongside a growing list of accounting software providers that integrate with banks and payments firms. Banks have expanded business account features over recent years, including invoicing, cashflow tools, and integrations with third-party platforms.

"Small businesses are often incredibly ambitious but generally short on time. As a leading and trusted SME banking partner, we're always looking at where owners can be more efficient so they can focus on growing their business," said Tom Wood, Head of SME Business Banking, HSBC UK.

"Tax compliance can be both time-consuming and costly - HSBC My Business Finances will take care of a business' invoicing, accounting and tax compliance all in one place. This is especially useful ahead of new tax reporting requirements in April," said Wood.

HSBC UK framed the launch as part of a wider set of small business initiatives. The bank previously announced changes to its Small Business Banking Account. It also highlighted access to Business Specialists and digital banking services.

HSBC UK also runs the HSBC Small Business Growth Programme, which it describes as a free platform open to all. The programme includes training and events, as well as business guidance content.

Sage said the integration reflects interest among small businesses in keeping admin tasks within fewer tools. It also pointed to the demand for digital tax tools as HMRC extends Making Tax Digital requirements.

"Small businesses and sole traders want to focus on doing what they do best, without the burden of complex admin," said Gordon Stuart, SVP, Fintech & Embedded Services, Sage.

"By embedding Sage's trusted accounting and tax capabilities directly into HSBC UK's business banking account, we're making managing finances effortless and accessible. Powered by our embedded accounting technology, HSBC UK can deliver trusted accounting and tax in one unified experience, within the tools business owners already use every day," said Stuart.

HSBC UK said My Business Finances will become available first for sole traders and landlords and will expand to additional customer groups over time.