Archives 2026

London, 10 June 2025: London’s small and medium-sized businesses (SMEs) are struggling to keep pace with the rest of the UK’s employment recovery, with the capital recording the weakest job growth in May, a new report from HR, payroll and employment platform Employment Hero shows.

Employment Hero’s Jobs Report uses real-time data from 105,000 employees across small and medium-sized businesses with 1-500 employees in the UK.

Data from the end of May showed that London’s employment grew by just 0.7% over the month. This lags behind May’s national average growth of 1.2% and falls significantly short compared to other major regions. The North of England led the recovery with an exceptional 3.5% increase, while Wales recorded its first growth in May (2.8%) after a prolonged year-on-year slump. Meanwhile, the South of England (excluding London) achieved a growth rate of 2.2%.

The weakness in London’s SME employment growth comes amid a broader decline in job opportunities across the UK. The ONS June labour market report shows vacancies fell by 63,000 (7.9%) to 736,000 in the three months to May – the 35th consecutive quarterly decline. With 2.2 unemployed people now competing for each vacancy compared to 1.9 last quarter, London’s cautious hiring approach among small and medium-sized businesses reflects wider labour market pressures facing employers of all sizes.

London’s wage growth lags behind

The capital’s struggles also extend to wage growth, where London has recorded the slowest progress across all regions.

London’s wage growth over the past three months stands at just 0.2% – the weakest performance nationally, and well below other major regions that have seen more robust salary increases.

The findings suggest that while other parts of the UK are competing more aggressively for talent and driving up wages, London’s SME sector remains more cautious about both hiring and pay increases.

Regional rebalancing emerges

The data points to a potential economic rebalancing away from London’s traditional dominance, with regions that have historically lagged behind now showing renewed strength.

The North’s remarkable turnaround is particularly striking, as this region was the only one to experience negative year-on-year employment growth, yet has now posted the strongest monthly recovery.

Kevin Fitzgerald, UK MD of Employment Hero commented:

“It’s encouraging to see some real green shoots of recovery across the UK, especially outside of London. After a tough period, it’s great to see regions like the North of England and Wales showing  job growth.”

London’s slower pace this month stands out and could suggest a shift towards a more balanced national economy, where opportunity isn’t just concentrated in the capital. Movements like remote and flexible work have helped unlock talent and potential right across the country – and we’re seeing that reflected in these numbers.

At Employment Hero, we believe this kind of regional resurgence isn’t just good news – it’s essential. It gives more people a fair shot and lays the foundation for a more inclusive, resilient future of work,” said Fitzgerald.

London, 17 March: Employment continued to retract in February following the Government’s decision to hike job taxes, findings from Employment Hero Jobs Report shows.

Employment Hero’s SmartMatch Employment Report uses real-time data from 105,000 employees across small and medium-sized businesses with 1-500 employees in the UK.

Data from the end of February showed that employment shrunk by 0.4% across the month, following a slight growth of 0.2% in January.

On average, employment growth has decreased by 0.3% every month since October, when the hike to employer National Insurance contributions was announced. These changes will see employers pay an additional £900 in annual taxes per employee at the median wage*.

Young and Welsh hit the hardest

All age groups contributed to the month-on-month decline in employment, but those aged 18-24 were disproportionately impacted, with employment falling 1.8% for this group.

While the tax hikes are likely to be a contributing factor, the Government’s decision to eliminate the minimum wage for 18-20-year-olds is also a probable cause of the decline. 

From 1 April, employers will have to pay all adults aged 21 or over the National Living Wage of £12.25, which previously only applied to those aged 23 or over. The lower minimum wage for 21-22 year olds is being eliminated. 

Regionally, Wales saw the largest decline in employment with a 3.3% decrease in February – offsetting employment gains made over the last year.

Scotland and The South of England experienced the highest employment growth in February, both growing 0.9%.

Kevin Fitzgerald, UK MD of Employment Hero commented:

“This 0.4% contraction in employment growth is particularly concerning given its disproportionate impact on younger workers. While employers will have to pay more for these roles, the bigger challenge is that younger employees often require more training and support. Rather than replacing them, many SMEs will simply absorb the extra workload themselves, as they can’t afford the additional strain.”

“If this trend continues, we could see a much more challenging job market emerging in the months ahead, particularly for younger workers trying to get their foot on the career ladder. We are already nearing one million** young people not in education or employment – this will only get worse.”

London, 10 July 2025: Full-time pay in June saw its largest month-on-month increase since Chancellor Rachel Reeves delivered her Autumn Budget in October. 

Employment Hero’s June Jobs Report uses real-time data from 105,000 employees across small and medium-sized businesses with 1-500 employees in the UK. 

Data shows wages in June were 1% higher than May and up 1.6% versus three months ago.

This is a more positive picture than recent months, when wages plummeted in October to hit a low in January (-1.1% month-on-month), but have since been recovering slowly. 

Older generations see largest pay increases

Despite a backdrop of increased costs, including the National Insurance hike, small and medium-sized businesses are paying more for experienced new hires, who tend to be Boomers and Gen X workers. 

It is this older generation of workers who have seen the largest pay increases in June – up 4.6% month-on-month for Boomers and 1.9% for Gen X.

Whilst Millennials saw a small increase (0.6%), Gen Z was the only generation to see a month-on-month fall in salaries for new hires (-0.2%).

Kevin Fitzgerald, UK Managing Director of Employment Hero commented: 

“After a rocky few months following the Autumn Budget and tax hikes in April, signs of growth are finally starting to show across the SME industry. This uplift in pay will come as welcome relief to many workers feeling the pinch from cost-of-living pressures. It’s positive to see momentum building and the trend is heading in the right direction. But the challenge now is keeping that growth moving. The focus for small and medium-sized businesses must shift toward sustaining these gains and building long-term confidence.”

“We’re also seeing SMEs investing in older generations like Boomers and Gen X leading the way on salary growth. While that’s encouraging for seasoned workers, it’s a reminder that we also need to ensure younger generations, particularly Gen Z, aren’t left behind. They’re the future of the workforce and now is the time to give them the support and opportunities even amid ongoing cost pressures.”

The Employment Hero Jobs Report offers a monthly snapshot of the labour market in SMEs, based on real-time data from nearly 5,000 businesses and 105,000 employees. From wage growth to employment trends, it provides valuable insights into the evolving UK employment landscape and how small and medium-sized businesses are responding to economic change.

Full-time employment continues to go backwards following the Government’s disastrous decision to go after employers in its budget.

Employment Hero’s SmartMatch Salary Report uses real-time data from 90,000 employees across small businesses with 1-500 employees in the UK. 

Collected at the end of December, the real-time data shows the impact of the Government’s Budget in late October, when employer NICs were increased by 1.2% – just weeks after a raft of other employment reforms were announced.

Employers have immediately reacted to the changes, which are not due to come into force until April, slashing hiring and letting some staff go.

Overall the amount of people in full-time employment shrunk by 0.1% month-on-month, following a 1.7% drop in November, leading to an overall drop of 0.8% across the final quarter of 2024.

DROP CONCENTRATED IN YOUNGEST WORKERS AND HEALTHCARE WORKERS

The UK’s most vulnerable employees appear to be the most likely to lose out as a result of the hiring walkback.

There were 0.7% fewer 18-24 year olds in full-time employment at the end of December compared to November, and 0.3% fewer workers aged 55+.

And the worst retraction was seen in the healthcare sector, where there were 3.5% fewer full-time employees at the end of December than there were in November.

Employment Hero UK MD Kevin Fitzgerald said these figures showed a continued vote of no confidence from employers.

“It’s shocking that the typically strong holiday hiring season has led to a decline in employment. Employers are pre-emptively responding to the barrage of increased costs the Government is about to load onto them – but its workers who are losing out. The fact that young workers and healthcare staff are bearing the brunt of these decisions is particularly worrying, but two months of this drop suggests that more pain is on the way across the workforce. The true impact of the NICs increase could be far more severe than the Government has anticipated. It must reverse its jobs tax decision – or give small businesses some relief from the huge cost coming down the pipe.”

London, XX February: Workers at UK SMEs are not seeing sustained growth in wages as their employers prepare to pay the Government more from April, not their employees, as new legislation announced at October’s Budget kicks in.

Employment Hero’s SmartMatch Salary Report uses real-time data from 90,000 employees across small businesses with 1-500 employees in the UK. 

Data from the end of January showed growth in average monthly pay for the last three months was 0%, taking into account a slight rise in December and a drop in January and November.

This compared to an average of 1.1% median pay growth in the three months leading to the end of October, when the Government introduced a Budget that significantly increased the cost of employing people in the UK.

Full-time employment growth has also been anaemic since the Budget, suggesting employers are both wary to take on new staff and wary to give existing staff raises.

January saw a slight pickup in full-time employment of 1.4%, but this followed drops of 1.7% in November and 0.2% in December.

PAY UNDERLINES NORTH SOUTH DIVIDE

The impact of the Government’s Budget is being felt hardest in its traditional heartlands in the North.

The median full-time worker at an SME in the north of England saw just 1.6% annual wage growth in the year to the end of January – well below inflation. This suggests the region’s SMEs are facing particular challenges in maintaining competitive pay.

Greater London continues to offer the highest median annual rate at £41,175, significantly above the next highest region, the East of England at £36,597.

Kevin Fitzgerald, UK MD of Employment Hero commented:

“While workers at SMEs are still seeing their pay grow faster than inflation year-on-year, the month-to-month momentum in wage growth has completely stalled. This is particularly concerning as we approach April’s rise in employer National Insurance contributions.

“SMEs want to reward their employees and share the benefits of lower interest rates, but the looming jobs tax is forcing them to be extremely cautious with their wage bills. Rather than giving workers the pay rises they deserve, small businesses are having to set aside funds to cover increased tax burdens. This is well set out in the international research on jobs taxes – it is workers who end up losing the most.”

Are you a sole trader or landlord who needs to follow the MTD for Income Tax rules?

Stay on track for the April 2026 deadline with a click-to-tick checklist that turns complex requirements into simple, doable steps—so you’re confident, compliant, and as ready as you can be.

Here’s why you should download this unique PDF:

• Know exactly what to do next: Clear, sequenced actions pull out key action areas, including some lesser-known parts.
• Make progress visible: Unlike a traditional guide to MTD for Income Tax, the click-to-tick interactivity creates momentum and keeps your eye on the ball.
• Avoid last‑minute stress: Get things correct today, to reduce risk of errors and penalties later.
• Share with your team: Spread the word about this once-in-a-generation change, and keep everyone aligned across tasks.

To use the PDF, simply click (or tap) to tick the box alongside each of the six entries in the list as you progress, then save the file. When you open it again, the checklist will be as you left it, and you can complete more steps as you progress.

Alternatively, simply print out the A4 PDF, pin it to a noticeboard, and complete it by hand with a Sharpie each time you achieve one of the steps!

Thinking about a career change in 2026? These days, switching careers isn’t just about a new job, it’s a strategic move to future-proof not just your professional skills, but your earning potential, as well as finding work that truly aligns with your goals.

While a jump into a new career may feel daunting, it’s actually a calculated investment into your long-term growth and adaptability in today’s job market. Here we’ll show you how to make a successful change in career by assessing where you are now, identifying high-growth opportunities and building a clear, strategic plan for a confident career change in 2026.

Why a career change in 2026 is a smart move

It goes without saying that the world of work is changing faster than ever. Trends that were once on the horizon are now shaping today’s roles and industries. The rise of AI and automation is everywhere and is constantly evolving the world as we know it. And thus, we must also evolve, making a change in career more necessary and accessible than before.

At the same time, employers are shifting their focus. The CIPD reported that 83% of UK employers are now prioritising skills-based hiring over traditional qualifications. This has opened new doors for many professionals with transferable skills to move into a new field. Industries including green energy, digital health and advanced tech are creating roles that didn’t exist just a few years ago, offering fresh opportunities to those willing to adapt.

Common fears and risks when making a career change

A change in career may be the logical next step for you as a professional, but that doesn’t stop you from worrying about the what ifs and unknowns. Let’s explore some of the more common fears and why they might not be as much of a problem as you think.

Fear of starting from scratch

The biggest worry you might have is the fear of going back to square one. But in reality, most career changes aren’t a complete reset; your experience, knowledge and transferable skills can still be put to use. Employers are putting more value on adaptability, problem solving and communication which means much of what you’ve already built in your career remains relevant.

Fear of a pay cut

A temporary drop in salary is to be expected, especially when starting in a completely new field. However, a strategic pivot will most likely end up giving you a stronger and higher earning potential in the future. Which is why planning your transition carefully by building skills and targeting roles with clear progression is key in minimising financial risk.

Fear of failure or making the wrong move

You may wonder if you’re choosing the ‘wrong’ career but don’t let this stop you in your tracks. Think of it as an experiment rather than a final decision until you’ve secured a job offer. You could always try freelance work or small projects to test a new direction before committing.

Fear of age or experience working against you

Some worry that they are either too junior or too senior to make the switch. In 2026, age shouldn’t be a consideration when it comes to being hired for a role. Instead an employer should focus on your capabilities, skills and qualifications to decide whether or not you are suitable.

Managing risk with a strategic approach

The biggest risk when changing careers is doing it without a plan. A structured approach that involves research, gradual upskilling, networking and practical experience can significantly reduce uncertainty and increase your chances of success.

How long does a career change take in 2026?

Well the short answer is: it depends. 

Firstly, on how closely your current skills align with your new role and how much retraining is required. For some, a career change can take 3-6 months particularly when moving into roles that value transferable skills such as project management, HR, digital marketing or customer success. These transitions often involve targeted upskilling alongside an active job search.

More technical or specialised career changes typically take 6 to 12 months, allowing time to complete courses, build practical experience and develop a portfolio. Highly regulated or technical careers may require 12 to 24 months of retraining, especially where formal qualifications are essential.

Ultimately, a successful career change isn’t about speed but preparation. A clear plan, realistic milestones and consistent progress are far more important than rushing into the next role.

But the question on everyone’s mind? How to actually pivot into a brand new career in 2026? Let’s find out.

Step 1: Assess your current career

Before you let yourself start daydreaming about your new role, you first need to understand where you currently are.

Identify what’s not working

Think about what’s prompted you to think about switching careers? And try to be specific. Are you feeling unrecognised, like half of UK employees according to our Work That Works Report or is your industry in decline or perhaps do you lack opportunities for growth? All valid reasons for wanting a career change, but your specific reason will be the foundation of your search.

Evaluate your transferable skills

Despite what you may think, you will have more transferable skills than you first thought. It’s not just your technical abilities that will transfer to a new career but also your soft skills, which according to a Marks Sattin GI Group Holding and Thomas report, 51% of HR decision makers place a greater value on soft skills and they also note that there is also a greater shortage of soft skills, around 43% compared to just 17% for hard skills. It’s these soft skills that help you bring yourself as a new hire up to optimal productivity faster.

Some of the top in-demand soft skills according to the World Economic Forum are:

• Analytical thinking.
• Resilience, flexibility and agility.
• Leadership and social influence.
• Creative thinking.

So, think about the soft skills you possess and how they could help in bridging to your new career path.

Use self-assessment tools

It can often help to get a little perspective. And in this case an outside perspective can help aid in your search. Tools like Myers-Briggs personality test or career-fit quizzes could provide you with new insights into careers that you may not have considered before.

Step 2: Set clear career goals

Once you have a good understanding of where you currently are, it’s time to hone in on where you’d like to be. Setting clear career goals will help you be intentional with your search and evaluate the suitability of your new career path against your career goals.

Define success in your new role

What does an ideal workday look like? Think beyond the tasks and responsibilities of the role itself and think about the day to day. Some things to consider could include:

• Do you want more flexibility and remote work options?
• Are you driven by a higher salary or a better work-life balance?
• Do you want to work for a company with a strong social mission?

Answering questions like this will help you envision what your ideal workday looks like and gives you parameters to adhere to in your search.

Align goals with future trends

Don’t just think about roles that are emerging or popular right now; try to think about the roles of tomorrow. Look into what jobs will grow over the next decade or so and think a little outside the box about what those roles could evolve into as well. This will help you align your career change with roles that will increase job security while positioning you as a future proofed candidate.

Create SMART goals

Using the tried and tested SMART goals method now will help turn those dreams into an actionable plan. Here’s an example of how to use the framework to turn your vision into a plan.

• Specific: ‘I want to become a data analyst’ not ‘I want to work in tech’.
• Measurable: ‘I will complete 3 online data analytics projects or courses’.
• Achievable: Set realistic milestones for your learning and job search.
• Relevant: Ensure each step directly supports your goal of becoming a data analyst.
• Time-bound: ‘I will start applying for junior data analyst roles within 6 months’.

Step 3: Research high-growth career paths

Explore industries with growth potential

Once you have your goals defined you can start exploring industries and roles that you think align with your goals, but remember to keep in mind their growth potential as well.

Think about sectors that are expanding and fast like, energy, cybersecurity, artificial intelligence and healthcare technology to name a few. Make sure to read industry reports, read content from thought leaders and generally get a good understanding of the industry and where it’s heading.

Identify skills gaps

A part of your research should include looking at job descriptions that interest you to identify any skills and qualifications required. Some of these you may already have, but some that appear repeatedly, may not.

This will help you identify any skills you are lacking to secure positions like this or similar and you can then put a plan in place to secure them and become a competitive applicant. 

Step 4: Build a strategic pivot plan

Now is the time to put everything you’ve researched into a strategic plan. This plan will act as your roadmap for your career change and outline each step.

Upskill and reskill

Remember those skills gaps identified earlier? Focus on gaining practical knowledge in those areas, whether that be informal learning through online courses and YouTube or formal training in the form of qualifications that are needed for the roles you are interested in.

Network effectively

As the saying goes, it’s not always what you know, but who you know. And networking is a key part of your journey. Making connections in your target industry/s or role can potentially help you be referred for certain roles. But before we get ahead of ourselves, your first point of call should be to ask for informal chats to ask particular people in those industries and roles questions, learn about their experience and ask for advice.

Gain relevant experience

Gaining relevant experience won’t always come from a new job. Most of the time you’ll likely have to find that experience elsewhere and there are a few places to look before you start applying for jobs.

• Freelance opportunities on sites like UpWork and Fiverr can give you a jump start.
• Volunteering for non-profits to add work to your portfolio can help give you an edge.
• Personal projects can also help you to showcase your abilities such as a website, data analysis project and more.

How Employment Hero can help you launch into a new career in 2026

Successfully pivoting your career in 2026 isn’t just about finding the right role, it’s also about joining a workplace that supports growth, learning and long-term progression.

Employment Hero makes this possible. With tools like SmartMatch for career-fit assessments, streamlined onboarding, learning and development platforms and performance management frameworks, we help businesses create environments where careers can thrive, not stagnate.

Whether you’re stepping into a new career or helping your team grow into their next role, having the right HR, payroll and people management platform in place can make all the difference. 

Workplace stress costs the economy £5 billion, according to the Health and Safety Executive, with 964,000 workers suffering from work-related stress, depression, or anxiety across 2024/25.

Accountants and bookkeepers are amongst them. We’re not superheroes. We need to learn how to identify mental health issues, and take action.

That’s what I talk about in this article, as follows:

But remember, if everything feels like it’s getting too much, you should get help immediately.

It’s never too late to seek help—and nor is it a sign of weakness.

The eye of the storm

With Making Tax Digital and other recent legislative requirements, accountants have been at the centre of a huge storm. They not only have to implement the difficult changes with clients but also act as educators.

Let’s face facts: Making Tax Digital for Income Tax will affect the vast majority of sole trader and landlord clients all the way up until 2030. That’s a massive increase in client activity, even if you undertake the perfect practice digitalisation process.

In other words, things are only going to get worse in terms of workload and requirements.

It’s the accountant who’s expected to act as everything from a shoulder to cry upon, to teacher, and in many cases magician—in that you have to pull off the impossible to make it all work for your clients.

To get through the coming years, accountants need to learn how to create headspace—to protect their mental health by being able to identify when things are too much, and respond appropriately.

This is becoming a vital skill for our profession that’s as important as knowing how to create a spreadsheet formula, or calculate VAT.

It can be simple as knowing when certain warning signs appear.

Below, I take a look at some of the things to watch out for. The more we all talk about this, the better we will be.

1. Know when you’re in trouble

It’s hard to avoid stress in our working lives. Some would even argue that a small amount stress adds flavour to the working day, helping keep us on our toes.

The problem is that it’s impossible to spot when the stress becomes too much. And I don’t need to tell you how easily that happens.

We all vary in the amount of stress we’re willing to tolerate. One person thrives in perpetual chaos during nine to five, while that’s another’s personal hell.

Therefore, my first tip is to learn to recognise the symptoms not just of stress but of other commonplace mental health complains in the workplace, such as burnout and depression.

And measure them relative only to yourself. Don’t compare yourself to others.

Often realising you’re in trouble is surprisingly straightforward.

If you say to somebody that you’re feeling stressed, that’s a key warning sign that can’t be ignored.

But there are symptom checkers online. I know these might feel foolish or a waste of time, but why not spend just five minutes while having a coffee checking yourself out using one of them?

If you find there is a problem, it’s vital that you take your mental health seriously and look at how you can manage it.

We tend to stigmatise and ignore mental health in a way we just wouldn’t ignore a physical illness or condition.

And the temptation to ignore a mental health issue is often incredibly strong in our profession.

But stress, depression, burnout, and more won’t just go away if they’re ignored. The only way for things to get better is to make changes for the better, and do so immediately.

2. Know your working hours

You may be surprised at just how many hours you’re working.

It might feel to you as if you’re only working a 40-hour week. But we ignore those times when we decide to go into work early to catch up on tasks or stay maybe an hour or two later than usual for the same reason.

You might find your working life begins to stretch into the weekend in ways that at first seem reasonable—perhaps a few hours on a Sunday evening to prepare yourself for the working week.

But this often turns into spending half of Sunday working.

This then turns into the whole of Sunday.

And don’t think you’re not actually working the whole day if you decide to spend an hour in the morning with the kids before burying yourself in work.

It’s amazing how we try and trick ourselves into thinking we’re not overworking.

Count the hours.

Imagine you’re a contractor working for yourself, and maintain a timesheet from Monday to Sunday. This can be done using apps if you don’t want to mess around with paper.

How many hours are you working?

Employees legally can’t work more than 48 hours a week. And that limit was decided based on very good evidence and research into workplace health.

Ok, so you might be self-employed or the owner of the practice, so the 48-hour week might not be a legal limit.

But work more than that and you’re literally creating an unsafe working environment for yourself that’s proven to lead to mental or even physical health issues.

3. Know when to delegate

In a specialised industry such as ours, certain people have key knowledge that can be difficult to transfer to others.

Therefore, you might find yourself becoming a go-to person for a certain kind of problem or client.

You may have close relationships with clients that you don’t want to jeopardise by handing them off to others.

But there’s no heroism in having work piled upon you. It’s just going to use you up and leave you burned out.

You have to know when to delegate to others.

Sometimes this feels counterintuitive because you might have to spend what feels like even more time training somebody, or showing them the ropes.

But in every single case, I promise you that this will be worth it in the long term. Not only will you feel better but sharing skills creates a more equitable working environment, and allows others to progress.

And you have to know how to delegate, too.

This involves realising that delegating might not achieve the quality of results you personally would deliver. You may have to allow more time for completion of the task, and build in the potential for failure.

But all of this is still better than attempting to take on the load yourself.

Put simply, if you find yourself delegating then you’re probably doing the right thing. It’s not always a magic cure but it’s a step in the right direction.

4. Know when to say no

If you own a practice or are a partner, it can be incredibly hard to turn down new clients or new work. It’s feels like you’re turning away money. This is especially true with MTD for Income Tax, which may surface a lot more landlord clients, for example.

But you and your practice have limited capacity. There might be 10% to 20% that you can squeeze in beyond this, but only for a short while.

However, short of serious expansion plans, there comes a time when you just have to say no.

You know your business model and unless your income is short of that stated in your projected profit and loss, there’s nothing to be worried about.

And you have to enforce rules, too.

The individual who arrives on 30 January with a carrier bag full of receipts, asking to be signed on as a new client, isn’t somebody you want to be dealing with at that point.

It’s unfortunate for them but they undoubtedly knew the Self Assessment requirements, and the deadline.

Somebody else’s lack of planning can’t become your impossible deadline.

Saying no is another skill that has to be learned. But ultimately, it’s a blow that can be cushioned by being proactively helpful.

For example, when turning down new client enquiries, why not suggest a fellow practice nearby that might be able to help?

If a sole trader is making enquiries, why not direct them to HMRC’s website, which helps them understand Self Assessment requirements?

Why not create a list of potential new clients and let them know you’ll take them on as soon as you can?

5. Know when (and how) to get help

If you’re facing a mental health crisis right now then get help as soon as possible.

Speaking to people is the first step, whether that’s your GP, colleagues, or friends and family. You may choose to directly consult a therapist or counsellor.

Don’t forget that some workplace wellbeing programmes offer self-referral.

You’re never alone and help is always much closer at hand than you might think.

The major accountancy bodies offer terrific mental health support, and should be another port of call:

Final thoughts on creating headspace

We live in a world where seeking help for mental health issues is much easier than it used to be, although there’s still a stigma attached.

It’s still an act of bravery to make the first steps. But I want to invite you to do so, and to do so now.

If you’re suffering then this is something that must be done. You can’t continue working if it’s unsustainable, for whatever reason.

Consider colleagues and family too.

If you’re stressed, it will inevitably rub off on to them in some fashion, and they too may have their own issues for which they might want to seek help.

Editor’s note: This article was first published in March 2022 and has been updated for relevance.

The purpose of Making Tax Digital is, well, to ensure that businesses digitalise their VAT and Income Tax data and processes.

In order to ensure your taxes are digital, you also need to ensure transferring key accounting data from one place to another is not just done digitally. It must be done in a way that complies with the MTD digital linking rules.

Most notably, this means the following breaches HMRC’s MTD requirements and is not allowed:

• Manually cutting/copying and pasting key Income Tax or VAT accounting data after you’ve first entered it into software.
• Writing down this kind of data and then rekeying it into software.

Getting caught doing the above, along with a few similar gotchas, could invite penalties from HMRC. The most typical example sure to catch out most people is copying certain kinds of accounting data from a spreadsheet to your accounting software.

Are you one of the businesses doing digital linking the wrong way? And, if so, what can you do about it?

Read this article to find out. Here’s what it covers:

What are MTD digital links?

To be compliant with Making Tax Digital for VAT, businesses typically needed to shift their accounting to MTD-ready software. And this is now true for MTD for Income Tax, too, as of April 2026 for businesses with gross income over £50,000.

But what if you use more than one piece of software? Perhaps you use one for record keeping and one for submission. Or what if you use spreadsheets for part or all of your accounting. How do you make everything work together in a legal way?

A digital link is the solution.

It occurs when the accounting records required for MTD are transferred between two digital places, such as software or computing devices.

The rule is that key accounting data should only be entered once. After that, it should move in an automated, digital way.

A digital link also applies to recapturing or modifying the data when moving it between two digital places.

For example, a digital link exists when a business digitally transfers VAT accounting data to their accountant so a partial exemption can be calculated.

It also occurs when a business retains all transactions in a spreadsheet and uses a formula to calculate a total.

There are strict rules on what defines an MTD digital link. According to HMRC, they have two characteristics:

• Data is transferred electronically between software programs, products, or applications. This could include linked cells in a spreadsheet, such as a formula.
• The transfer is automated. It doesn’t need manual intervention such as copying over the data by hand or manually moving data between two or more pieces of software. But you can, of course, click a button to initiate the process.

When MTD for VAT was introduced, HMRC listed the following less obvious examples as digital links, although there are others too:

• Emailing a spreadsheet so it can be imported into software.
• Using a memory stick or pen drive, even if you physically hand this to somebody else who then imports the data into their software.
• CSV or XML import and export, including the downloading and uploading of files.
• API: This is the technology used when software or computers talk to each other to transfer data. It’s how accounting software talks to HMRC’s computers in order to submit your VAT return, for example.

HMRC is keen on digital links not because it wants to make things more difficult. It wants to reduce the potential for errors.

Fewer errors mean a reduced possibility of penalties for businesses and, of course, it means HMRC gets all the taxes it’s due.

The introduction of MTD digital links shows that HMRC was also pointing to how automation can help businesses.

The more of your accounting that’s automated, the more you can focus on building your business. In this way, HMRC hopes to address the productivity gap that businesses are struggling with.

What is not considered an MTD digital link?

As mentioned, what is considered a digital link is perhaps surprisingly inclusive.

But when MTD for VAT was launched back in 2019, HMRC said one thing is definitely not a digital link: ‘cut and paste’ or ‘copy and paste’ to select and move information, either within a software program or between software programs.

There are slightly different rules for making VAT input/output adjustments, as we’ll explain in a minute.

But it’s otherwise correct to say that cut/copy and paste must never be used in the presence of the accounting records required for MTD for Income Tax, or VAT.

Adjustments to the input or output tax are treated differently with VAT (notably, the specific adjustments are outlined in section 4.4 of the official VAT Notice).

The total of the adjustment must be kept as a digital record but the calculation you use to create it in a spreadsheet does not need to be digitally linked (although it should be retained for your VAT record keeping).

Adjustments can be manually journaled into your VAT accounting.

In other words, the above is the one instance in the world of MTD where it’s OK to manually type figures or cut/copy and paste (provided the data isn’t pasted directly into one of the nine boxes of the actual VAT return, which isn’t allowed under the MTD rules).

How does the digital linking requirement affect MTD for Income Tax?

HMRC emphasises that, to be compliant with MTD for Income Tax, you’ll need to ensure the following is in place:

• Digital records: Depending on your type of business, and its turnover, HMRC says you need to keep certain key accounting records relating to Income Tax in a digital format.
• Using MTD-ready software: You must create, store and correct digital records and send quarterly updates and a tax return via software that works with MTD for Income Tax.
• Spreadsheets: HMRC’s guidance explicitly says if you “prefer to stick to spreadsheets or software you already use”, you’ll need to add-in bridging software to make it work with MTD for Income Tax—although it recommends dedicated accounting software for “timesaving, user-friendly features”.

However, while the emphasis from HMRC for MTD for Income Tax is on ensuring digital record keeping is in place, the rules around digital linking still apply.

It does not comply with MTD requirements to copy and paste key Income Tax records between spreadsheets, for example. It does not comply with MTD requirements to scribble down records from one place, and rekey them into software.

MTD digital links: misunderstandings and myths

Perhaps understandably, there’s been some confusion about the ongoing MTD digital links compliance and the digital linking requirements. Let’s clear up some misunderstandings, as follows.

Spreadsheets

Put simply, MTD does not mean the end of spreadsheets in your accounting.

Spreadsheets can be used alone if they’re MTD API-enabled so they can record and submit digital transactions. Bridging software is what provides this.

Or spreadsheets can be used as part of a larger software suite, assuming there are digital links in place between all the software used. Remember: No copy and paste for the key accounting tax data!

However, using spreadsheets for all of your VAT or Income Tax accounting can be problematic, as explained below—see “MTD digital linking for MTD and spreadsheets”, below.

Manual adjustments

As mentioned earlier, getting digital linking right does not mean the end of manual adjustments for things like the VAT capital goods scheme, partial exemption and so on.

Manual adjustments prior to submission are completely acceptable as long as digital links are in place.

Here’s a basic example.

Based on the underlying transactions, my software records VAT box 1 as £1,000.

I then make a manual adjustment in my accounting for £100 (for which I have supporting evidence/calculations), and the software automatically calculates that the revised box 1 figure is £1,100.

This is acceptable.

What would not be acceptable is if, based on the underlying transactions, my software records VAT box 1 as £1,000 and I then manually overwrite this figure with £1,100.

What to do if your MTD digital links aren’t legal

What do you do right now if you’re using cut/copy and paste for your MTD-related accounting?

The answer might not be as drastic as simply avoiding the good old cut and paste.

First, check if the data you’re cut/copying and pasting is that specified as a digital record for the purposes of either MTD for Income Tax, or VAT. Remember that MTD only affects your tax records, such as income and expenditure for MTD for Income Tax. It doesn’t affect all of your accounting data, such as sales records if yours is a retail business, or payroll records if you employ staff.

Another example: VAT retail schemes only need to keep a digital record of their daily gross takings (DGT). The supplies that make up the DGT are outside the scope of MTD’s record-keeping requirements. In other words, if you cut/copy and paste data relating to these supplies then you can continue to do so.

If you’re using the VAT Flat Rate Scheme, you don’t need to keep digital records of your purchases (unless they’re capital expenditure goods on which the input tax can be claimed). So, you can happily cut/copy and paste data relating to these purchases.

A rule of thumb for VAT is that MTD record-keeping requirements cease at the invoice or receipt level. For example, you can handwrite invoices, if you like, provided the transactional data is transferred to your digital VAT accounting solution as soon as possible.

You need to transfer the tax point date, the value of the sale, the VAT rate applied, and the VAT element from the invoice.

However, you should seek expert advice from an accountant or HMRC if you’re uncertain about what constitutes digital records in your business. Remember, you could get penalised by HMRC if you get it wrong.

Of course, the simple solution is to use MTD-ready software, like MTD for VAT-compatible accounting software. If you issue invoices from the software or log your supplies using it, then you don’t even have to think about record keeping.

Somebody else has sweated the details for you.

When the time comes for your tax return to be submitted, you can simply click a button and, in most cases, everything will be filled in and ready to go.

MTD digital linking for MTD and spreadsheets

Spreadsheets are computing’s greatest gift to the world of accounting. But their use for accounting has obviously become problematic since the introduction of MTD.

Some businesses have attempted to get around this by using bridging software that hooks into the spreadsheet and is able to submit updates or tax returns to HMRC digitally.

Experts say bridging software has a limited life, ideally to ease transition to MTD processes, even though HMRC suggests it can be used indefinitely.

Here’s an example. Let’s say you track your invoices using one spreadsheet and calculate your VAT using another spreadsheet. Getting data from one spreadsheet to the other is problematic if you can’t use cut/copy and paste.

Spreadsheet formulas are considered MTD digital links, so you could build one to take the data from the invoice sheet automatically.

But any experienced spreadsheet user will know this is a recipe for frustration. This kind of formula can break too easily. And it’s extremely easy to accidentally overtype cells, meaning the data or formula is instantly lost.

Finding a new accounting system that can cope with this analysis would be a better long-term solution.

Final thoughts about MTD digital links

If you need expert advice, consult an accountant, VAT specialist or HMRC sooner rather than later.

Penalties for incorrect accounting are very real and could end up costing your business. Any expense you might resent spending upfront should be considered alongside this.

Is it really worth the risk of thousands of pounds, or even more, when you can not only fix things right now with a full accounting solution but also transform the way you work and make life so much easier?

Editor’s note: This article was first published in December 2019 and has been updated several times for relevance.

Making Tax Digital (MTD) for Income Tax is one of the most significant changes to the UK tax system in decades.

But as the April 2026 start date approaches for many, misconceptions about what MTD actually involves are still widespread.

If you’re a sole trader or landlord, understanding the truth is essential. Misunderstanding the rules could lead to non-compliance, unnecessary stress, wasted costs, and even penalties.

In this article, we’ll tackle five common misconceptions about MTD for Income Tax—and explain what you really need to know.

Misconception 1: Each quarterly update is a mini tax return

One of the most persistent myths is that quarterly updates under MTD are equivalent to submitting a full tax return every three months.

This is just not the case.

Quarterly updates are details of business income and expenses to that point, sent to HMRC via MTD-compatible software. If your income is less than £90,000, you can send just a total income and expenses summary.

That’s all that’s required. The purpose of quarterly updates provide you and HMRC with an in-year snapshot of your tax position, but they don’t replace the annual tax return.

Nor do you have to pay tax quarterly. The way you make tax payments doesn’t change with MTD for Income Tax. Most people will pay on account by 31 July and 31 January, with any additional balance payable by 31 January, too.

Quarterly updates aren’t legally binding and you won’t get penalised if they’re not 100% correct. All you need to provide are the running totals of your income and expenditure. If you’re using accounting software, the data for this will already be there, so it’s going to be little more than pressing a button to submit.

You’ll still need to provide a digital tax return on 31 January, and only there will you need to include things like the following that are usually found on tax returns:

• Adjustments for reliefs and allowances
• Other sources of income (e.g., employment, dividends)
• Any corrections to earlier estimates

Think of quarterly updates as progress reports rather than the full story. They help HMRC—and you—stay on top of your tax position throughout the year, but the tax return remains the definitive calculation.

Misconception 2: MTD only applies to me if I’m VAT registered

Because the MTD rollout from the government started with VAT, many assume MTD for Income Tax only applies to VAT-registered businesses.

That’s not true.

In fact, MTD for Income Tax is a separate mandate. Whether or not you’re already using MTD for VAT is irrelevant. Many businesses will use one, or both.

If you’re a sole trader or landlord with qualifying income, you’ll need to comply—even if you’re not VAT registered.

The rollout of MTD for Income Tax is phased as follows:

• April 2026: Businesses and landlords with qualifying income over £50,000
• April 2027: Qualifying income over £30,000
• April 2028: Qualifying income over £20,000 (subject to legislation)

If you fall into these brackets, start preparing now. Waiting until the last minute could leave you scrambling for software and support.

It’s worth adding that the penalties for both MTD for VAT, and MTD for Income Tax, are entirely separate—although they work in the same way. In other words, a penalty for getting something wrong to do with MTD for VAT will have no impact on any penalty count you might have for MTD for Income Tax.

Misconception 3: Penalties don’t apply in the first year

This one’s got some truth to it, but care needs to be taken.

HMRC announced a soft landing for penalties in the first year of MTD for Income Tax. This means late quarterly submissions won’t attract penalty points initially.

However, this doesn’t mean you can ignore the rules. It doesn’t mean you can be late with other deadlines, such as that of the digital tax return on 31 January.

The soft landing is designed to ease the transition—not to delay compliance. You’ll still need to:

• Keep digital records
• Submit updates on time
• Use MTD-compatible software

Penalties will apply from the following tax year, so use the first year to build good habits and avoid future issues. Don’t use it to avoid your responsibilities.

Misconception 4: MTD Is just more red tape from HMRC

It’s understandable to view any changing mandatory requirements as yet more red tape. But the truth is that not only is there no extra red tape once MTD is up and running for you, but the existing red tape around doing your taxes will be hugely reduced. That’s the whole point.

HMRC is introducing MTD for Income Tax to help businesses do their taxes better, and to have superior insight into their taxes.

For example, upon submitting each quarterly update, HMRC provides an estimate of your tax bill. There’s no need to set aside a nebulous amount of cash to pay your bill. This helps cash flow enormously.

By enforcing the use of MTD-ready software, HMRC is ensuring that all benefits benefit from modern digital advances such as:

• Reduced errors: Digital records minimise mistakes.
• Time savings: Automated processes cut down paperwork.
• Better visibility: Quarterly updates give you a clearer picture of your tax position throughout the year.

Furthermore, modern cloud accounting software like Sage Accounting brings AI to small businesses in the form of Sage Copilot. This is like having your own dedicated AI-powered productivity assistant, monitoring your accounting 24/7 and telling you about things you need to know and do.

Rather than seeing MTD as a chore, think of it as an opportunity to modernise your financial processes. It’s finally time to get away from paperwork and go digital. The vast majority of businesses find that adopting digital tools improves efficiency and decision-making.

Misconception 5: Spreadsheets are banned under MTD for Income Tax

This is incorrect. You can use spreadsheets for MTD as much as it helps you, provided you understand the digital linking rules, and add-in a way to submit data to HMRC.

While spreadsheets can play a role in your business tax accounting, they must use bridging software that connects to HMRC’s systems.

In other words, using a spreadsheet to input manual tax records without this connection won’t cut it.

MTD is about digital record-keeping and direct submission. This means using software that can:

• Maintain digital records of income and expenses
• Submit quarterly updates automatically
• Handle end-of-year adjustments

Investing in compliant software now will save headaches later. It’s also an opportunity to streamline your processes and reduce errors.

Making Tax Digital for Income Tax: What you need to do now

Preparing for MTD for Income Tax doesn’t have to be overwhelming, but it does require planning. Here are the key steps to take:

1. Choose MTD-ready software

Identify MTD-compatible software that suits your business size and complexity.

Consider whether you need bridging software for spreadsheets or a full accounting solution.

Look for features like automated quarterly submissions, expense tracking, and integration with your bank feeds.

2. Start digital record-keeping

Move away from manual records now. Begin capturing income and expenses digitally.

Ensure your records include dates, amounts, and VAT details (if applicable). Use data entry automation tools to extract data from receipts and bills without hassle.

The earlier you start, the easier the transition will be when MTD becomes mandatory.

3. Educate your team

If you employ people, ensure they understand what MTD for Income Tax requires. While it’s solely your responsibility to get MTD right, and not theirs, they obviously feed into the way you work.  

This isn’t just about educating those who work with numbers. It can mean educating team members who make purchases, for example, because they’ll need to ensure digital records are created for expenditure. You might need to change the way team members issue invoices, too, in order to be MTD compliant. For example, if you provide services, then team members can issue invoices electronically, on-site, once the job is complete. They can even collect payment there and then, which can be a huge boost to cash flow. Sage Accounting empowers both these two breakthroughs.

Share resources, run meetings, or create emails to dispel common myths about MTD for Income Tax.

Final thoughts

MTD for Income Tax is a fundamental shift in how tax is reported. By understanding what’s required—and avoiding these misconceptions—you can stay compliant and even improve your business processes.

The key takeaway is that quarterly updates aren’t full tax returns, spreadsheets need bridging software, and preparation starts now. Don’t let myths derail your compliance journey.