In 2017, he suffered a cardiac arrest while serving as a Company Commander in the British Army.
He survived, returned to duty, and served five more years—until the Army changed its employment terms.
Suddenly, he was medically discharged.
After fourteen years in the infantry, he explains he was “ripped from one world and then thrust into another.”
Ross found his civilian footing through the Pathways Programme, a springboard into tech careers that led him to Sage, where he joined as Business Resilience Manager before being promoted to Director of Corporate Security and Resilience.
Here at Sage, he met two others who understood the dislocation of transition: Mark Hendry MBE, who served twenty-three years in the Royal Engineers, and is now our Director of Colleague Performance, and Andy Heaton, who had served eleven, who now is our Director of Strategy and Execution.
Three Directors. Between them: forty-eight years of military experience.
They know how deeply people depend on one another when working side-by-side for long stretches of their lives.
Their time in uniform had given each of them a simple strategy for navigating new terrain: look out for those around you.
It didn’t take long for those instincts to surface again in their new positions—the urge to gather people, steady each other, and build something that could help others find their footing too.
“We knew there was a lot of veterans within Sage, and we wanted to create a space where we could talk about transition and create a sense of camaraderie.”Mark explains.
They worked together to create the Veterans Colleague Success Network—a dedicated space where veterans and other colleagues connected to the Armed Forces could gather to support each other in a community bonded by a sense of belonging and the power of shared purpose.
The business of belonging
From Google’s deep analysis of high-performing teams, to Gallup’s studies of millions of workers, and MIT’s behavioural mapping of workplace interactions—the same pattern keeps surfacing:
The quality of relationships between coworkers is one of the most powerful predictors of performance we have.
These studies show that teams built on trust consistently produce more prosperous results: greater retention, happier customers, and significantly more profit.
Gallup found that those who report having a “best friend at work” are seven times more likely to be engaged in their position.
Google discovered that the highest-performing workplaces were those built around psychological safety—environments where coworkers could speak openly, take risks, and depend on one another delivered superior outcomes overall, consistently outpacing talent-only teams.
MIT’s research revealed that thriving units share specific social dynamics: frequent informal check-ins, balanced turn-taking, energetic face-to-face communication, and dense webs of side-conversations that knit people together.
These findings point to a simple conclusion:
Colleague cohesion is the central mechanism through which companies succeed.
Belonging is fostered when folks feel they have a place.
Mark remembers his turning point vividly: “In the early days, I made the mistake of almost trying to morph myself into a civilian, when actually what my team have helped me do is say, well, actually, the skills you bring from the services—that’s why you’re here.”
Camaraderie is the closeness that grows through shared moments of connection.
Belonging roots us, and camaraderie binds us to one another.
Lesson one: Mutual Reliance is more powerful than individual resilience
Modern workplaces often celebrate individual resilience. Push harder. Bounce back. Hold it together.
But the veterans at Sage learned something very different long before they arrived in corporate life: it’s not the lone individual who endures—it’s the group. Not grit alone, but the people around you.
If you want to understand mutual reliance, you only need to look at what happens when people choose to do something difficult together.
In August 2025, the three of them—Ross, Mark and Andy—along with around twenty other colleagues who joined for parts of the route, decided to take on a challenge many would consider impossible:
Running the full 106 kilometres (65 miles) of Hadrian’s Wall in a single day, to raise money for The Not Forgotten, a charity supporting wounded and sick veterans.
In the run up to the event, Andy grins when he talks about it:
“I’ve always liked to challenge myself, that comes from a bit of that military type-two fun.”
It’s a habit he never unlearned—the instinct to lean into difficulty.
But he knew that the heart of the challenge wasn’t really the enormous mileage.
When people take on something hard together, the real test is whether the group can carry one another through the moments where any individual falters.
That shift from private endurance to shared effort—the “me” to “we”—is exactly what Ross names:
“Everyone’s going to have a bad moment on the run, you need the support, the camaraderie: it’s about the team.”
This is the lesson the military teaches better than any leadership book: people endure more, and do more, when they’re able to lean on one another.
Sociologists call this mutual reliance. Psychologists studying high-performing groups call it interdependence. In military doctrine, it’s the foundation of unit cohesion.
In business it’s the engine behind high-performing teams.
One of the most consistently replicated findings in organisational psychology is that people work harder and stay longer when their effort benefits someone else.
This is prosocial motivation—the instinct to contribute beyond oneself.
In many corporate environments, purpose is often framed as something personal: find your purpose, own your purpose, what motivates you?
The military treats purpose as collective.
You work toward the same mission, and your actions matter because they support others.
Motivation is anchored in interdependence, not individual goals. People show up for the person beside them.
That shared orientation carries directly into the Veterans Colleague Success Network at Sage.
It reflects the instinct these veterans lived with for years: if you’ve walked a hard road, you help the next person walk it with less friction.
You can hear it in the way they describe the Hadrian’s Wall challenge. While the distance was an extraordinary personal test, the meaning was collective.
This mission was a way of raising money for charity, a purpose beyond the self, expressed through shared effort.
It’s fitting that the charity they chose, The Not Forgotten, reflects the same ethos. It focuses on reducing isolation by creating social connection, supporting more than 10,000 sick or injured veterans and serving personnel across the UK.
At the heart of TNF’s mission is restoring community: giving people living with lasting injury or illness the chance to feel part of something again. Day-trips, respite breaks, challenge holidays, concerts, lunches and events are offered free of charge for beneficiaries, who are bonded by these experiences.
Prosocial motivation is a persistent predictor of long-term organisational health, far more powerful than individual ambition alone.
When people are working for something larger than themselves, they carry each other further.
And if prosocial, community-oriented behaviour becomes your company norm, the culture naturally shifts to sustain it.
Lesson three: Connection thrives where structure exists
In many workplaces, belonging is left to chance, unplanned and assumed to arise on its own.
Veterans understand it as something far more deliberate—it’s a structure you build, a rhythm you keep.
In the military, connection is engineered into the day.
Morning check-ins. Shared routines. Informal rhythms. Predictable rituals. A common language that makes coordination effortless.
These elements are implemented structurally; the sentimentality is a bonus.
They create the conditions in which people can steadily settle into the identity of the group.
And the value of shared routines and rituals isn’t confined to the military. Any organisation can use these structures to create steadier, more connected teams, if it chooses to.
That recognition from Ross, Andy, and Mark was what shaped the creation of our Veterans Colleague Success Network.
For leaders, this is the practical lesson veterans offer:
Camaraderie can be cultivated with a system. Community-minded cultures create continuous-growth companies.
It compounds when rituals give colleagues built-in touchpoints for belonging.
When leaders design these structures—even modest ones—something powerful happens. Connection stops being an aspiration and becomes part of the organisation’s operating system.
And over time, that system begins to behave like a living organism: Knowledge moves through it like circulation, reaching the places it’s needed without silos. Support becomes reflexive—people step in before anyone has to ask.
New members are folded in quickly, stabilised by patterns that show them how things work and who they can turn to. Cohesion spreads outward, drawing people in at the edges until the whole organisation feels connected by the same pulse.
This is the deeper lesson the veterans carry with them into corporate life: belonging isn’t the by-product of a good culture—it’s the outcome of deliberate design.
Veterans Colleague Success Network
At Sage, the Veterans Colleague Success Network supports more than our internal colleagues — it extends outward. Our veterans mentor and advise small businesses like British Veteran Owned (BVO), creating a pay-it-forward cycle of veterans helping veterans start and grow their own ventures. It’s service multiplied through community.
Accountants and bookkeepers surely don’t need anybody to remind them that Making Tax Digital (MTD), HMRC’s digital transformation programme for the tax system, reaches a new milestone in April 2026 when it expands to cover Income Tax.
But what if your practice planning isn’t where you’d like it to be?
Or what if you just want to check to ensure you’re doing things right and haven’t missed anything out?
That’s what this blog is all about. Here’s what we discuss:
MTD: The next frontier for accountants
MTD for VAT was made mandatory in 2022 and, with lessons learned, it’s now being rolled out to Income Tax.
The first hurdle for many firms is client communications.
“Awareness has definitely grown since marketing campaigns from both the HMRC and software firms have increased,” says Ryan Anderson of accountants DJH Business Advisors. “But understanding remains surface-level for most affected taxpayers.
“The majority know that ‘something’s changing’ but few truly understand what MTD will mean for them day-to-day and that could build into a sizeable issue for companies in the UK.”
“There is also a need to balance MTD against existing workloads, given that the first submissions will coincide with the beginning of the 2025/26 tax return season—so resource planning and clear communication, both internally and to clients, are key.”
Even if, as an accountant or bookkeeper, you’re aware that this deadline is looming, your clients might not be. You may well have a lot on your plate with Self Assessment work both now and in January.
So, how do you ensure that you and your clients are ready for MTD for Income Tax?
The 4 basic steps to prepare for MTD for Income Tax
Essentially, according to HMRC there are four steps.
First, you need to work out a client’s qualifying income: above £50,000 for the first wave of MTD for Income Tax as of April 2026, then £30,000 as of April 2027, and £20,000 as of April 2028.
Then you need to find out if and when they need to use Making Tax Digital for Income Tax. Digital exclusion rules apply, and there are also some automatic exemptions.
If they do need to use MTD, then thirdly, you’ll have to create an agent services account (ASA) if you haven’t already, before finally buying in the right software.
Some clients might take a do-it-by-myself approach. Others might fall into the do-it-with-me category and will therefore require some help.
You might also have some do-it-for-me clients—those that simply do not or will not use software.
Surprisingly, you can still work with these clients in a post-April MTD landscape.
With this latter group you can use AccountsPrep, an AutoEntry add-on for accountants and bookkeepers that makes reconciliation for non-digital clients quick and easy.
You can use AutoEntry to scan and upload bank statements, or other files like receipts and bills, and then import them directly into AccountsPrep, to then create accounts literally in minutes, ready for import to final accounts software for MTD submission.
Those using AccountsPrep report it can turn days of work into hours. This level of automation and time saving is going to be vital considering quarterly update schedules for all your clients.
The accountant’s guide to Making Tax Digital for Income Tax
Download this free interactive guide to developing your practice approach to Making Tax Digital for Income Tax.
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Choosing the right technology
As the digital part of the name suggests, MTD is essentially all about automation.
You’ll need to check that you’re using the best technology to speed up processes, ensure compliance, keep costs down and, very importantly, reduce the risk of errors.
Needless to say, artificial intelligence (AI) can help here.
Sage, for instance, has recently launched the UK’s first MTD for Income Tax Agent, tech that will transform quarterly updates into a single, end-to-end workflow for you.
More importantly, it acts like an additional member of staff keeping an eye out for problems and reminding you about deadlines and what you need to do next.
But you need to be ready to consider a range of technologies.
Manual processes are not just outdated. They’re now completely inappropriate.
It’s essential, though, to choose systems that integrate with each other to comply with digital linking rules, which are unchanged from MTD for VAT. It’s still difficult if not nearly impossible to use spreadsheets without breaking the copy and paste prohibition—which literally means you’re breaking the law.
And to move from paper to digital, you’ll need to think about what you want to achieve in your digital transformation and then find the best technology.
MTD compliance and integration should be one key outcome. You might also want to decide whether benefits such as speed and cost cutting are also important to you.
“MTD will require approved software,”says Jeremy Kitson, a director at Prime Accountants Group. “So we need to migrate clients onto software where they’re not currently using a software package.
“This comes at a cost in terms of subscription prices which are relatively inexpensive but also training time. Not everyone is used to using digital software, or may not be IT literate, so the technology may be daunting.
“There will be a requirement to make quarterly submissions as well as an end-of-year return, so there is an additional administrative burden. However, this can give more up-to-date business information and is an opportunity for business planning.”
Once you’ve chosen the most appropriate combination of technology you can start identifying repetitive manual tasks that can be automated before scanning and storing paperwork in the cloud.
You might want to start with one client and use this as a test run—it’s a good way of making sure that your technology integrates with your client’s systems.
It will also allow your clients to get into the habit of using digital technology and digitising their systems. Ensuring that both clients and your own teams understand why and how you’re digitising systems and records is essential.
Anderson says he’s communicating the following to clients about tech systems: “Try the mobile app first. By having access to your records via your phone, you can easily make your bookkeeping part of your lifestyle. Snap a receipt, or send an invoice in seconds, rather than tackling a mountain of paperwork each quarter.”
Managing clients and negotiating fees
Another important issue that you’ll have to discuss with clients is your fee.
Given that the work you’ll be doing for your clients will be changing you might want to suggest that you switch from fees to a retainer.
Technology can help here. Sage’s GoPropoal allows you to create a proposal and letter of engagement for a client with fees that are not only transparent but that work for you and for them. It also allows you to standardise pricing, which can really impact your bottom line.
Does this change mean that you’ll have to drop clients who might struggle with MTD or might not find it directly relevant?
The answer here is no, as this isn’t like MTD for VAT. You can still retain your do-it-for-me” clients. Again, AccountsPrep is a unique and vital solution for this.
On a practical level, they just need to sign their digital tax return, which can be done just as you do it now—perhaps digitally signing in response to an email request you send.
You can still support them in other ways, including quarterly updates and reconciliations even on a daily, weekly or monthly basis. However, the increased work here will obviously impact the fees you charge. You certainly can’t continue to apply the same pricing as for the once-yearly Self Assessment work.
James Mitchell, Head of NCA at Sage business partner Acuity24 recommends a phased approach to managing clients: “Start by segmenting clients according to their readiness: who already uses compatible software, who relies on spreadsheets, and who still works manually.
“For clients still using manual systems, focus on adopting digital-first processes and compatible tools that make MTD compliance simpler. Offer guidance or check-ins to help clients feel confident using these processes; adoption is as much about reassurance as it is about technology.”
The need to take action now
“For accountants themselves, now is also the time to look inward,” continues Mitchell.
“Teams that still rely on manual reconciliations or disconnected systems will struggle to keep up once MTD filing becomes more frequent and detailed. Embracing automation in reporting and record keeping can free up a lot of time to focus on advisory work rather than admin.”
More generally, you might want to think of implementing these changes one month at a time.
In month one, for instance, you’ll want to identify which of your clients falls within the scope of MTD for Income Tax.
By month two you should have thought about choosing the right software platform as well as worked out how you’re going to migrate existing data. This is also a good time to set a budget and start staff training as well as raising awareness of the far-reaching impact of the changes.
“While awareness of MTD has improved in recent times, many business leaders continue to underestimate how much work is involved in truly preparing for it,” explains Vipul Sheth, MD of accountancy outsourcing experts AdvanceTrack.
“Many accountants assume their clients are ‘digital’ because they’re using cloud software. However, that obviously doesn’t mean they’re MTD-compliant. Preparedness is patchy, especially among smaller businesses and landlords.”
The biggest challenge is shifting behaviour, according to Sheth.
“For many clients, MTD for Income Tax means a completely different way of working—moving from annual touchpoints to quarterly updates and being responsible for digital record-keeping.
“For many, this represents a major culture change, and one that accountants will need to guide them through.”
Month three in your action plan should be about starting migration. This involves setting up digital record-keeping, testing transactions and linking client data and submissions.
Finally, in month four you might want to run a test submission, just to check that everything works.
Final thoughts
Accountants need to create a clear timetable of actions. It’s not yet too late to implement a sound MTD practice transformation.
As well as a challenge, you can see MTD as an opportunity to digitise your firm, upskill your teams and even review your whole business strategy.
“The overarching message is simple: don’t treat MTD as a deadline,” says Mitchell. “Treat it as an opportunity. The firms that help clients make the digital leap now will reduce risk later and position themselves as trusted advisors who add real value beyond compliance.”
The accountant’s guide to Making Tax Digital for Income Tax
Download this free interactive guide to developing your practice approach to Making Tax Digital for Income Tax.
Accountants and bookkeepers aren’t panicking about AI.
They’re asking sharper questions.
Recent Sage research shows that many UK firms now expect AI to benefit their practice in the next year, signalling a shift from curiosity to confident experimentation.
Across research, interviews, events, and Sage customer stories, five questions keep coming up that define how accountants and bookkeepers approach AI in practice, and reality.
That’s what we discuss in this article, as follows:
1. Where does AI make a difference?
Across accounting and bookkeeping, the first question isn’t philosophical.
It’s practical.
Where do I start? What’s worth automating?
That recent Sage research shows accountants and bookkeepers are expanding their advisory role and experimenting with new technology, often using multiple platforms.
“Leads came in from everywhere—website, socials, referrals—and no one knew what was happening,” said Jeri Williams, founder of Smooth Accounting, speaking at a keynote session at Leaders in Accounting.
Once we used AI tools to automate and summarise calls, everyone could see what was going on. Conversions shot up.
Jeri Williams, Smooth Accounting
Jeri’s story mirrors many others.
Firms are finding wins in automating repetitive, data-heavy workflows, such as onboarding, reconciliation, and disclosure checks, while keeping humans in control of review and advice.
This is agentic AI in action: systems that operate on behalf of humans but always within defined boundaries.
Accountants set the intent; AI executes the repeatable steps. The professional judgment calls, and the “should we?”, not the “how do we?” checks, stay firmly human.
Across UK SMBs, Sage Copilot is automating busywork like drafting emails, chasing payments, and summarising activity, so teams can focus on judgement calls.
At Watson’s Anodising, for example, Copilot runs in the background, freeing hours each week for production and customer service.
2. How do I stay compliant and trusted?
Trust, reliability, and compliance are the top priorities for accountants when recommending software, further Sage research reveals.
While speed and efficiency are valuable, they mean little without a foundation of trust and clear accountability for AI-generated outputs.
Initiatives like the Sage Trust Label exemplify this approach, showing exactly how AI features are designed, what data they use, and how security is maintained.
When barriers to adoption often stem from unfamiliarity and perceived complexity, the key to overcoming them is to highlight the importance of transparent AI policies and robust human oversight.
Forward-thinking firms are formalising these principles into lightweight digital codes of conduct, creating an easily digestible way to build client confidence.
AI isn’t magic. Be crystal-clear where it helps and where you still need human oversight. If expectations are unrealistic, disappointment follows—and people stop using it.
Mohammed Sidat, associate directoR, Wolters Kluwer
What a simple AI policy should cover
Here are some suggestions of what should be included:
Purpose & scope
Set clear intent for using AI in your firm.
Define approved use cases, such as data analysis, draft preparation, or summarisation.
Establish boundaries so everyone understands what’s in scope, and what isn’t.
Privacy & data handling
Clarify how information moves through your systems and where it’s stored, showing how you comply with local and regional data and privacy laws.
Use only vetted tools and never upload client data to public models.
Maintain a list of approved platforms with data-protection notes.
Accountability & human review
Specify who signs off on AI work and ensure human oversight for all client-facing content.
Show clients there are humans in control. The professional using AI remains responsible for accuracy.
Compliance & ethics
Anchor your policy in existing professional standards, including copyright guidance and record-keeping obligations.
Show your tools stay up to date with changing regulations.
Treat AI prompts and outputs like any other working paper—store data safely, provide version-control, and review them often.
Consent & transparency
Show clients how AI fits into your workflow so they can understand where to expect it and how it helps them.
At Smooth Accounting, Jeri Williams added a simple consent line to all meeting bookings after clients questioned the extra “guest” on their calls.
“We just explain it’s our AI note-taker, and they’ve already agreed when they booked. It’s become second nature.”
A one-page policy is quick to draft and saves hours of uncertainty, strengthening client confidence in your commitment to privacy and professional responsibility.
These principles aren’t theoretical. They deliver real results in practice.
Sage customer British Veteran Owned (BVO) reports saving £15,000 and 36 days per year with Sage automation, all while strengthening client confidence through a transparent process.
3. What does this mean for my role?
As AI becomes an integral part of daily operations, your AI-inclusivity and use visibility, is increasingly viewed as a competitive advantage.
The biggest question for accountants and bookkeepers is personal: if AI can handle the admin, what’s next on the list? The answer is up to you, as you’ll have more time to prioritise client care and relationships, or simply finish work on time.
AI gets you 90 percent of the way. That last 10 percent—the context, the empathy, the credibility – is where we earn our value.
Jared Goodrich, director of innovation, Moore Kingston Smith
Walter Dawson & Son, a Yorkshire-based firm, demonstrates how embracing Sage and AutoEntry has freed their team from manual admin and helped them prepare early for the shift toward Making Tax Digital for Income Tax.
The result is more time for client-facing advisory work rather than form-filling and data chasing.
Managing Director Julie Young notes in the success story: “The time saving from Sage and AutoEntry is used back with the clients. It allows us to reflect on the information and talk to our clients more about how they’re performing.”
Walter Dawson & Son accountant Hannah Hall, adds, “Sage Copilot is going to allow us more time to go out and see our clients, listen to their needs, and be more people-facing rather than behind the computer.”
Together, their experience shows how AI and automation free up time for deeper client engagement and strategic advice.
As roles evolve, the opportunity is to move beyond simple automation into tools that amplify your judgment, where you set the direction and technology accelerates the work.
4. How do I go from automation to agency?
You’ve seen that automation saves time.
You know that agency creates value.
Agentic AI connects the two, giving you systems that can act independently, but always under your instruction and with your judgment in control.
This is the shift that turns tools into teammates, moving from assistance to action while keeping the professional firmly at the wheel.
Think of Sage Copilot: it draws from accounting data to draft, suggest, and surface insights, but the practitioner remains at the controls.
You decide the goal. Copilot handles the legwork.
The same principle applies to MTD submissions, reconciliations, or reporting workflows. When professionals set the intent and validate the output, AI becomes an extension of expertise, not a substitute for it.
The new Sage MTD Agent, for example, simplifies compliance by automatically preparing and submitting updates to HMRC while flagging exceptions for review.
This practical example of Agentic AI is built for real-world accounting. It offers automation that works within defined professional boundaries and strengthens human oversight rather than replacing it.
Other Sage Ai Agents—including the new Finance Intelligence, Close, and Assurance Agents—are built to operate autonomously within clear, trusted boundaries. They focus on gathering data, generating summaries, or reconciling figures, then presenting the results for human review.
Agentic AI builds on the foundation laid by Making Tax Digital—moving from simply connecting systems to pre-emptive action, so your software anticipates what should happen next while you stay in control.
For a deeper dive into how this shift is transforming accounting workflows, read our companion piece Authentic intelligence in action: How Agentic AI will shape the future of accounting.
5. How do I start?
Accountants and bookkeepers often say the same thing: the hardest part of AI isn’t using it—it’s starting.
Ease of use, familiarity, and value for money are key factors in sifting through software recommendations, while cost and feature limitations remain common obstacles.
You don’t need a full-scale strategy or a new tech stack—just try one contained experiment to prove what’s possible.
These agentic principles also apply at firm level: start small, act with intent, learn fast.
“Progress beats perfection,” said Mohammed Sidat, speaking in a keynote at Leaders in Accounting. “Try one repetitive task, learn from it, then repeat. You’ll discover what works for your firm instead of waiting for the perfect solution.”
Think of it as your 30-day AI sprint—a safe, structured way to see what human-plus-machine collaboration looks like in your own workflow:
Week 1: Pick one repetitive workflow
Choose one repetitive, measurable workflow—like onboarding, invoice chasing, or disclosure checks—and record your current time or cost baseline.
Week 2: Pilot an automation or AI feature
Test an AI feature or automation using tools you already trust.
As Jeri Williams put it, “Half the time, you’re already paying for AI. You just haven’t switched it on yet.”
Week 3: Add review and consent gates
Decide where human sign-off is required and how client consent is captured.
Week 4: Measure the impact and share the learning
Track the impact—hours saved, quality improved, errors reduced—and share results internally to encourage further experimentation.
Each small experiment builds your firm’s collective intelligence and demonstrates how, by setting intent and AI executing safely, you can deliver real client value.
Final thoughts: The real future of AI in accounting
Accountants who understand AI—its boundaries, biases, and potential—will shape the future of the profession. So, by just getting started, you’re already halfway there.
Throughout history, innovations like double-entry bookkeeping, spreadsheets, and cloud technology have expanded accountants’ agency.
More recently, initiatives such as Making Tax Digital have accelerated the shift to digital workflows, giving accountants greater control and insight over their work.
Agentic AI is the next chapter: where software is your teammate, assistant, or coach, not simply a passive tool.
Accountants and bookkeepers have always led through change; now, AI offers a new way to demonstrate that leadership to your firm and your clients.
The accountant’s guide to Making Tax Digital for Income Tax
Download this free interactive guide to developing your practice approach to Making Tax Digital for Income Tax.
Filing your tax return is one of the many important tasks you have to carry out as a self-employed business owner. And the one for 2024/25 is now due, following the end of the tax year in April 2025.
If you’re submitting it via the paper SA100 form, the deadline was 31 October 2025. So, you’ve already missed it. Sorry!
Opting to do it online? Then you’ve got more time—that deadline is 31 January 2026.
To help you get this done on time, and so you avoid a penalty, Jonathan Wingfield from Wingfield Accountancy Services shares seven pieces of tax return advice for self-employed business owners.
Here’s what the article covers:
1. Get into good habits early on
As soon as you start your business, keep accurate, up-to-date records of your income and expenditure as you move through the year.
Using accounting software to automate your record keeping can make life much easier, especially when it’s time to complete your Self Assessment tax return.
2. Carry out a monthly reconciliation
Compare your income and expenditure with business bank statements to ensure your records are correct. In other words, make sure your bank balance as per your records tallies with the actual bank statement.
This will ensure any errors are easily and quickly identified and you can be sure at year-end all the figures you send to HMRC are correct and complete.
3. Complete your tax return as soon as you can
If you realise you are missing some information that is needed to complete your Self Assessment tax return, you’ll be able to save the work you’ve done and come back to completing your return online once you’ve collected the information you need.
You may also want to get Self Assessment tax help from a qualified professional.
And completing your tax return in good time will also mean you’ll know how much tax you owe early enough to budget for the payment. Note that depending on the level of tax you need to pay, you may also have to make payments on account.
4. Don’t be late with your tax return
Make sure you submit your Self Assessment tax return before the deadline.
Any late submissions are likely to result in an immediate £100 penalty and this increases after three months.
You’re also liable for interest on outstanding sums, so it’s better to pay your Self Assessment tax bill on time.
5. Claim all expenses to which you’re entitled
If you’re using HMRC’s online software to do your Self Assessment, these will have their own declaration section as you move through the form online.
It’s wise to know the expenses you can claim for when you’re self-employed before you start filling in the form, especially if it’s your first time.
6. Avoid mistakes and inaccuracies while filing your Self Assessment tax return
Don’t try to claim expenses to which you are not entitled, whether deliberately or not. The penalties for false claims can be severe, as can failure to declare income (which can lead to prosecution).
Using accurate records that are up to date helps to ensure the accuracy of your Self Assessment tax return and bill. Take your time when inputting figures and double-check them.
If you make a mistake on your return, you normally get 12 months from 31 January after the end of the tax year to correct it (called “an amendment”).
7. Get an accountant to do it for you
I would say that–wouldn’t I? There’s no shame in asking for tax return help. An experienced accountant will make sure things are done correctly, promptly, and with far less hassle for you.
In addition, they’ll ensure you claim for everything you’re entitled to claim, which will help to minimise your tax bill.
It’s time to get ready for MTD for Income Tax
In April 2026, income tax for some sole traders and landlords becomes even easier because of MTD for Income Tax.
For sole traders or landlords earning over £50,000 per year from their work or rental property, Making Tax Digital promises to revolutionise how they handle their tax.
In April 2027 the threshold drops to £30,000 and more sole traders or landlords will have to use MTD. Then in April 2028, the threshold drops to £20,000. By that point, a large portion of those previously using Self Assessment will have to use MTD for Income Tax instead of Self Assessment.
Here’s some articles from Sage Advice about getting ready for MTD for Income Tax if you’re a sole trader or landlord:
Final thoughts on completing your tax return
There’s few things better than the feeling of satisfaction that comes from knowing you’ve taken care of your tax for another year.
Putting in the effort sooner rather than later means you can do more of what you love—growing your business and serving your customers or clients. And, as we explain above, it’s actually not that difficult—especially if you get expert help with Self Assessment tax.
Editor’s note: This article was first published in January 2019 and has been updated for relevance.
Get Self Assessment right each time
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Do you need to file a tax return online by Self Assessment deadline of 31 January? Does the thought of how to do a tax return online make you quake in your boots? Are you new to Self Assessment and wonder where to start?
While some people start early and file their tax returns on the first day of the new tax year, if that doesn’t sound like you, don’t worry.
The easiest way to file a Self Assessment tax return is online because it cuts out postal delays and extends your deadline a little into January.
Filing it online can seem daunting, especially if you’re not technically minded, but good preparation can make it easier thank you think. It’s worth getting it done a little earlier too, so it doesn’t become too big or too urgent a task.
If you need to file a tax return, this article will offer some tips on how to fill in a Self Assessment tax return online form.
We’ll also provide you with details about dates, penalties, and allowable expenses, and look at why many businesses use an accountant.
That last part is important because we’re not claiming to offer legal or professional advice. If you’re in any doubt, contact HMRC or a tax professional who be able to offer specialised assistance.
Is it easy to do tax return online taxes? Actually yes, so let’s get started.
This guide to filing a Self Assessment tax return covers the following topics:
What is Making Tax Digital and does it affect me?
Making Tax Digital (MTD) for Income Tax will soon replace Self Assessment tax returns for many sole traders and landlords who fall within its scope—although it’s important to note that Self Assessment will continue and still be used by many people.
MTD for Income Tax is being rolled out across several phases. When and if you have to start will depend on your gross qualifying income, as follows:
April 2026: If your gross qualifying income is over £50,000.
April 2027: If your gross qualifying income is over £30,000.
April 2028: If your gross qualifying income is over £20,000.
Anybody outside of this will continue to use Self Assessment.
We’ve covered MTD for Income Tax in-depth here at Sage Advice. These blogs will give you superb explanations of what the requirements are, and what you need to do if it affects you:
Do you need to file a tax return?
For employees and pensioners, tax is typically deducted automatically at source from wages and pensions.
But people and businesses with other income not deducted at source and above a certain level, like income from shares, collecting rent from property lets, or if you’re a freelancer must report it in a Self Assessment tax return.
If you were self-employed as a sole trader in the last tax year (6 April 2024 to 5 April 2025) and earned more than £1,000, you need to file a tax return.
This is still true if you have done any additional work around a full time job, like freelancing, or earned more with a side hustle, like selling on eBay, on top of any earnings from a PAYE job. This is regardless of whether your total income exceeds the Income Tax Personal Allowance of £12,570.
You must also file one if you were a partner in a business partnership or director of a limited company whose income is above the Personal Allowance, and which was not taxed at source. Examples typically include benefits or dividends.
Even if your primary income is from your wages or pension, you may still need to send a return if you work in specific sectors, were paid more than £100,000 via a PAYE salary scheme, or have any other untaxed income, such as from:
Savings, investments, and dividends
You can also file a tax return online to claim some income tax relief or prove you are self-employed, for example, to claim Tax-Free Childcare or maternity allowance.
HMRC offers this decision tree if you are still not sure whether you need to file a return.
Former Head of Enterprise at the Institute of Chartered Accountants in England and Wales (ICAEW), Nick Levine, offers some further advice: “If HMRC has sent you a notice to file a return, you must complete one.
“Even if you have not received such a notice, you may still need to file a tax return if you had a new source of income or capital gains in the last tax year on which you need to pay tax—if so, tell HMRC straight away.”
You also need to register for Self Assessment well before the 5 October deadline after the tax year you’re declaring for.
So, if you are declaring for the April 24-April 25 tax year, the deadline to register for Self Assessment is 5 October 2025.
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Tax return dates and deadlines
Assuming you register for Self Assessment by the 5 October 2025 deadline, for the 2024/25 tax year, there are a few key dates to remember.
For filing paper tax returns, the filing deadline is midnight on 31 October 2025.
The online filing deadline is midnight on 31 January 2026.
Payments on account
Once you’ve completed your first tax return, in addition to whatever tax and National Insurance (NI) is due for the previous tax year, you may also have to make two payments towards your upcoming tax bill for the current tax year we’re in right now.
This is known as payments on account, and you’ll have to do it every year moving forward.
The exception is if your last Self Assessment tax bill was less than £1,000, or you’ve already paid more than 80% of all the tax you owe at source in the previous year (note that underpaid tax collected via PAYE in the following year also counts as being deducted at source).
The first deadline for paying the tax you owe on account is also midnight on 31 January for the first payment on account and 31 July for the second.
How to register and file a tax return online
Most tax returns are filed online because, according to HMRC, it’s easy, secure, available 24 hours a day, and you can sign up for email alerts and online messages to help you manage your tax affairs.
If you’ve not completed a tax return online before, you must register for an HMRC online account.
When you’ve signed up, HMRC will post you an activation code, which can take 10 working days to arrive—or up to 21 days if you are abroad—so do this well in advance. You’ll also receive a user ID and Unique Taxpayer Reference (UTR).
If you’ve filed a return before, but not last year, you will need to register again.
Before applying online for Self Assessment, gather all the information you need in advance.
You’ll need your UTR, National Insurance number and employer reference if you have one. You may need your P60 end of year certificate, P11D expenses or benefits, P45 details of leaving work, payslips, and/or your P2 PAYE coding notice.
Now you’re ready to tackle how to fill in a tax return online form itself. (Here is the pdf version of the printed form if you want to familiarise yourself with the sections and information you’re likely to need to supply.)
You’ll need your bank or building society statements at hand, and if you work for yourself, you will need your profit or loss account, or other business records too.
The Self Assessment form
The first section asks for personal details.
The next asks about where you have received income or gains from, for example, employment or self-employment, a company or partnership, properties, trusts, capital gains, or from overseas.
Answer “Yes” to any of the boxes in this section to show that you did receive income from any of these sources. This will cause further questions to appear asking about these sources of income.
The third section asks about income from bank or building society interest, pensions, share dividends, and benefits. It’s important to mention these even if you’re completing Self Assessment because you’re a sole trader. HMRC needs to know about all your income, no matter where it comes from.
The form then asks for other information such as student loans, pension contributions, gifts, charitable donations, child benefit, and marriage allowances.
How to fill in your tax return explains all these pages, including supplementary pages, in more detail.
But if anything is not clear, contact HMRC to ask for help.
Don’t send any receipts, accounts, or other paperwork to HMRC supporting your Self Assessment return unless HMRC asks explicitly for them. Even then, you should only send copies and keep the originals safe.
You’re responsible for the information provided, so take your time filling in your information on your return. Enter the figures carefully and double-check everything before you click submit.
Nick Levine advises: “Fill in as much information as you can on your return. You can save the information you enter on each screen as you go along, allowing you to continue later.
“You can go back and correct figures at any time before you hit the final submit button. Save a copy of your final return and print a copy of the receipt.
“If there are significant changes to last year’s return, explain why in the section for further information.”
Record keeping
Assuming you file on time, you must keep records of all information used to complete your Self Assessment tax returns—which is to say, your accounts and other information. Self-employed businesses should keep this for up to five years after the 31 January deadline each year.
A significant penalty can apply for each failure to keep or preserve adequate records should HMRC come knocking at your door.
Furthermore, you should keep digital or paper copies of all tax return submissions and supporting documentation for at least 5 years after the 31 January filing deadline for that year, as required by HMRC.
Allowable expenses
If you are self-employed, your business will have various running costs.
You can deduct some of these costs to work out your taxable profit providing they are allowable expenses.
These can include:
Costs of running an office, for example, stationery or phone bills.
Uniforms or protective clothing – although you generally can’t claim for clothing such as business attire or shoes.
Staff costs, for example, salaries or subcontractor costs.
Financial costs, for example, insurance or bank charges.
Some or all of the fees paid to professionals, such as accountants or lawyers.
Costs of your business premises, for example, heating, lighting, and business rates.
Advertising or marketing, for example, website costs (but not entertaining costs, such as buying a client lunch!).
Charlie Walker, a senior partner at TaxAssist Accountants in Bedford, says HMRC’s online filing system will calculate your tax liability, but it will not check whether your figures are correct or that you have claimed your full entitlement to expenses, reliefs and allowances.
“Allowances are a very broad area,” he says. “A few of the common or generous deductions and allowances are for research and development; use of home as an office, within certain limits; buildings bought for business use; and travel and accommodation when working away from home.
“Don’t forget capital allowances such as expenditure on business equipment. Thanks to the annual investment allowance, many capital allowances for SMEs such as plant and machinery offer up to 100% tax relief.”
As an alternative to claiming individual expenses, you may be able to claim simplified expenses, which are flat rates that you can use to calculate tax relief on vehicles, working from home and living on your business premises.
This saves time but may mean you don’t claim for all you might be able to.
Another option is to use the trading allowance instead of expenses to reduce your tax bill. The government allows sole traders to claim up to £1,000 as a tax-free trading allowance, but if you use it, then you’re not allowed to claim expenses or capital allowances.
Charity donations on tax returns
Donations by individuals to charity or community amateur sports clubs (CASCs) attract tax relief, so make sure you include all charitable donations in your return.
The tax relief goes to you or the charity depending on whether you donate through Gift Aid; straight from your wages or pension through a Payroll Giving scheme; give land, property, or shares; or donate in your will.
There are different rules for limited companies as they pay less corporation tax when they give to charity.
To qualify for tax relief, you must keep a record of your donations.
Read more on Self Assessment:
Penalties for filing late and appeals
You’ll usually have to pay the penalty if you file after the deadline or pay late. However, you can appeal against a penalty if you have a reasonable excuse.
Expect a fine of £100 if your tax return is up to three months late or if you pay your tax bill late. You will have to pay more if it is later, and HMRC will charge interest on late payments.
Beyond three months, there is a more complex system of fines based on daily penalties, late filing surcharges, and potential additional penalties for deliberate errors. HMRC also provides a penalty estimation tool.
Charlie Walker says if you are doing your tax return and are concerned your online access to the HMRC website won’t be active in time to file before 31 January, all may not be lost—an accountant or tax adviser could be able to file your return for you via their special agent logins with HMRC.
Bear in mind you will need to grant them explicit permission to do so, which can add time.
Nick Levine adds: “Filing late also increases the chances of HMRC taking a closer look at your return. So, complete the form as early as possible to avoid stress and a missed deadline. If you expect to miss a tax payment deadline, contact [HMRC] immediately.
“You may be able to get more time to pay or to make ad hoc or monthly payments. Keep in mind that, as 31 January approaches, the online service gets busier as do tax advisers.”
How to pay your tax
When filing online, once you have completed your Self Assessment return, HMRC will tell you how much tax you owe.
Payments on account are usually 50% of your previous year’s tax bill (after accounting for tax already deducted at source). You’ll normally make two instalments: one by 31 January and one by 31 July. Any remaining balance for the tax year must be paid by 31 January following the end of that tax year.
If you’re paying your tax bill by debit card, allow two working days for the transaction to clear.
If you prefer to pay more regularly throughout the year—such as weekly or monthly—you can use HMRC’s budget payment plan, but only if your previous payments are up to date and if you are paying in advance.
Ways to pay
The ways to pay your tax are via online or telephone banking (faster payments), CHAPS, debit, or corporate credit card online, your bank or building society, BACS, direct debit (if you have set one up with HMRC before), or by cheque through the post.
You can no longer pay at the Post Office.
Pay your Self Assessment tax bill has more details on each option.
If the deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC on the last working day before the deadline, unless you are paying by faster payments or by debit or credit card.
Charlie Walker says: “Make sure you put something aside for your tax bill each month—particularly if it’s your first year of being self-employed.
“As a rule of thumb, we recommend setting aside a quarter of your profits for tax. If you’re a higher rate taxpayer, increase that to a third.”
You might choose to create a separate saving account for the money. And, yes, you get to keep any interest.
Why business owners may use an accountant and how much they cost
The main reason for doing your tax return yourself is to save money on accountancy bills.
However, many business owners are too busy to do it themselves or lack a detailed understanding of the different allowances they can claim and find that using an accountant pays for itself quickly.
Glenn Collins, head of strategic engagement and technical, at the Association of Chartered Certified Accountants (ACCA), says: “People can come unstuck if they cut corners to save money. Consulting an accountant should save money in tax savings, and in avoiding mistakes and penalties.
“Tax rules change regularly, so using an accountant is a good way to ensure you are up to date. Plus, professionally qualified accountants have codes of conduct and ethics, continuing professional development requirements, and you will also have recourse if something goes wrong.”
Glenn recommends shopping around to ensure you are paying the correct amount for an accountant. A typical fee would be between £100 and £200 an hour for a small to medium-sized practice.
Charges can also depend on where the business is situated and the complexity of the work. A smaller accountant might charge around £250 to £300 all-in for a straightforward tax return.
Sole traders and other self-employed people might be able to claim the costs for their accountant as an expense, and, appropriately, the accountant themselves will know if this is allowable.
Although strictly not allowed, by concession, it’s considered OK only if the accountant “wholly and exclusively” calculates tax owed for the self-employed income.
If the Self Assessment includes calculations for any other income (such as capital gains), the accountant might decide that it’s not an allowable expense or that only part of their fees can be claimed.
Nick Levine says an accountant can help clients understand income tax rules and be fully aware of the rules and timings. He says using an accountant to file a Self Assessment tax return can ensure all allowable expenses are correctly claimed.
As well as helping avoid errors, they can also help handle any disputes with HMRC,” says Nick.
“Your accountant should always keep in touch, not just at the year-end,” he adds. “This will be even easier if you use cloud accounting software, which will allow your accountant to keep track of how the business is performing in real time.”
The ICAEW and ACCA websites allow you to search for members in your area.
How an accountant helps strategist Kerry Needs focus on her core strengths
Kerry Needs, a writer and marketing strategist at kerryneeds.com, set up her business as a sole trader in 2015 and works remotely with clients worldwide.
She did her tax return in the first year but then started using an accountant from the second year.
“I could do it myself, but I like to focus on my craft rather than things that I’m not strong at,” says Kerry. “And as my business gets more complex, it’s a lot easier to outsource and one less administrative task to do.
“My accountant is knowledgeable. I send my books to him, and he completes my Self Assessment and submits the returns for me. He keeps on top of things, chases up information and provides me copies of everything.
“The cost is reasonable at £250, and it pays for itself in saved time. Using an accountant also minimises the risk of making a mistake.”
Doing her Self Assessment in the first year also means she has a good understanding of the process. To anyone doing it themselves, she recommends doing HMRC’s free training and webinars on Self Assessment.
“It’s important to get to know HMRC and what they require in as much detail as possible, including allowable expenses and things like how to record mileage,” she says.
“Make sure that you document everything, file your receipts carefully, and pay for as much as you can on your business card. You must keep copies of receipts as HMRC can ask for them.”
Final thoughts on filing a tax return online
By now, you should be feeling a little more confident when it comes to filling in and sending your tax return online.
If you decide to do it yourself but are still not sure of anything, you can always contact HMRC and ask them to ensure that you have the correct answer.
This is worth doing because you could be subject to fines and penalties if you complete your tax return incorrectly.
While many small businesses switch to using an accountant at some point, it could well be worth doing your Self Assessment for the first year at least—as you will save some money and have a better understanding of how the tax system works in future.
The key to filing on time is planning. Squeezing in some Self Assessment preparation now will lead to a less stressful experience.
Frequently asked questions about Self Assessment tax returns
What is Self Assessment?
Self Assessment is how the UK government asks for details of sole trader or partnership income so it can calculate the appropriate tax due. You usually either fill out a paper form or complete one online via the HMRC website.
It also covers income from sources such as investments, savings, rental, and capital gains, and not just sole trader/partnership income.
When should I complete a Self Assessment tax return?
If you have any earnings from jobs that aren’t taxed at source i.e. PAYE on your main job, things such as freelancing work, being a landlord (even on a room in your house or holiday let), or a sole trader business or side hustle, that exceeds £1,000 annually, you’ll need to declare them to HMRC. Note that dividend and savings allowances are separate from this.
This also includes any interest you earn on taxable assets e.g. any dividends you receive from investments or interest from savings accounts.
Depending on the amount, this could also affect your tax bracket on PAYE earnings, and any benefits you may claim. So you need to make sure you provide an accurate record of your total taxable earnings to HMRC.
For example, let’s say you work part time in a PAYE job and earn £10,000 a year, but rent out a room in your house for £5,000 a year. You’ll need to declare your rental income on a Self Assessment form as this takes you over your personal tax-free allowance of £12,570.
Another example would be if you earn £35,000 a year in your PAYE job, but have money in savings that accrue interest, each month or year, and shares in a company that pay dividends into your bank account each quarter beyond the tax-free threshold, currently at £2,000. You’ll need to complete a Self Assessment tax return on this extra income.
When are the key dates for Self Assessment tax returns?
Until 2027, the main dates to remember are:
5 April 2026 is the end of the 2025/26 tax year, 6 April 2026 is the start of the new 2026/27 tax year.
31 January 2026 is the deadline to declare the previous tax year’s earnings. It’s also the deadline for the first payment on account if you earn above a certain threshold.
31 July 2026 is when you may have to pay the second instalment of the payment on account.
31 October 2026 is the deadline for posting a paper-based SA100 tax return for the 2025/26 tax year.
Editor’s note: This article was originally published in December 2018 and has been updated for relevance.
Get Self Assessment right each time
Download your free copy of this essential guide and get the support you need with your Self Assessment tax returns.
If you’re a self-employed tradesperson or landlord who’s not ready for Making Tax Digital (MTD) for Income Tax yet, the alarm clock’s ringing. It starts in April 2026.
MTD is a new, legally-required way to report your income tax if you’re a sole trader or private landlord (including with properties abroad). It’s being rolled out over several years, with start dates defendant on your gross income.
There’s a legal requirement to keep digital financial records. This means it’s no longer going to cut it if you use duplicate invoice or receipt books, for example, or stash receipts in the glove box of the van.
And you’ve got to use software to tell HMRC about your income and expenditure at least every three months.
It’s a big change but one that’s not just manageable but also hugely beneficial.
In this article we dig down into the specifics of what tradespeople need to know—builders, carpenters, plasterers, plumbers, and all other construction and home improvement sole traders and landlords.
Here’s what we cover:
What is MTD for Income Tax?
It’s a new HMRC regime that requires sole traders and landlords to:
Keep Income Tax-related income and expenditure records digitally, using accounting software that’s approved for MTD by HMRC.
Provide quarterly updates about the above income and expenditure to HMRC, again using the software (although you can make updates more frequently if you wish—each time you do, HMRC will estimate how much tax you owe).
Send an annual tax return through the software, which finalises your tax liabilities. This effectively replaces the traditional Self Assessment tax return you’re already using, and has the same deadline of 31 January.
You will need to do this from:
6 April 2026 if you’re earning over £50,000 of qualifying gross income.
6 April 2027 if you’re earning over £30,000 of qualifying gross income.
6 April 2028 if you’re earning over £20,000 of qualifying gross income.
Digitising your tax is a great idea. It’ll help provide insight into your cash flow and efficiency, enabling you to spend more time serving customers and getting more profit from each job.
There’s lots of help available to get MTD sorted. If you’re just too busy, you can even hand all or part of the task to a bookkeeper or accountant (see below).
And with modern MTD-ready accounting software that features automation and AI-powered productivity assistants like Sage Copilot, you can easily manage your financial records on-the-go via your phone or a tablet, meaning you can avoid having to do it all at the weekend.
What does MTD for Income Tax apply to—and can I opt out?
Making Tax Digital replaces Self Assessment for those affected, and the switch is not voluntary.
If your income is above the thresholds mentioned earlier, and HMRC contacts you to say you need to follow the MTD rules, you cannot opt out and must start from the next full tax year (e.g. 2026/27 for those with qualifying income over £50,000).
To get started, you’ll need to register for MTD with HMRC, ensure you’re using MTD-ready software, and then activate MTD in the software (so that it doesn’t assume you’re still using Self Assessment).
There will be points-based penalties for late registration, plus late submissions and payments (although, for the four quarterly updates across 2026 and early 2027, HMRC has said it won’t penalise late submissions; this is not true for the digital tax return, though.)
Once you earn a number of penalty points, financial penalties will begin to apply, and possibly interest charges on anything you owe.
So, what does it actually apply to? MTD for Income Tax only applies to earnings and expenses for self-employment, such as the fees you charge for work, and property income, such as rents.
To be clear, it does not apply to:
Profits or dividend income from an incorporated company (e.g. corporation tax for a Ltd company, or director dividends, although the latter should be reported on your MTD digital tax return).
PAYE on salaries for company employees.
Pensions or savings income or interest (although, again, this should be reported on your MTD digital tax return).
Chargeable gains (although this can be reported on your MTD digital tax return).
Some people can apply from an exclusion from MTD for Income Tax but these are for specific reasons that make taking part in MTD impossible.
Examples of digital exclusion include disabilities, remoteness of location (e.g. you can’t get an internet connection), or religious beliefs (e.g. you’re prohibited from using the necessary technology).
If you’re already excluded from MTD for VAT for one of these reasons, and nothing’s changed since, then this will be carried across to MTD for Income Tax (although it’s a good idea to check with HMRC).
Can MTD for Income Tax help tradespeople?
Short answer: Yes. That’s the whole point of MTD. HMRC genuinely wants to make life easier for everybody.
One change for busy tradespeople and landlords used to filing annual Self Assessment returns will be meeting the quarterly MTD deadlines for updating records and filing submissions with HMRC.
Another will be ensuring income and expenditure data is recorded digitally. MTD-ready accounting apps like Sage Accounting can help with both:
Receiving payments: Issue invoices electronically using the accounting mobile app while still on site, and take payment immediately. Or you can include a Pay Now button on the invoice itself, or a QR code to let people pay via their phones. Any payment received at that point, or at a later date, will be automatically reconciled thanks to bank feeds and automated rules. You can also automatically chase-up unpaid invoices. Crucially, the data is always digital from start to finish.
Making purchases: Mobile apps for accounting software let you take a snapshot of any printed receipt or bill using your phone and transfer the data into your accounting automatically. Dedicated data entry automation tools like AutoEntry do all this and more, such as reconciling end of month statements from suppliers like wholesalers. Again, once the data is digitalised then you’re compliant with that aspect of MTD.
A new mindset is required, but it brings so many benefits.
Ami Copeland, CEO of the Institute of Bookkeepers, underlines this: “One person I’ve heard about only knew what expenses to claim when his wife grabbed the receipts out of his jeans pocket before they went in the wash.
“Others leave them on their dashboard so long they fade in the sun. Digital bookkeeping systems solve these problems. And they can help you get paid faster with one tap payments on your phone or QR codes.
“This is empowering for small business owners, improving cash flow and saving you lots of time chasing payments. Automating supplier information will also help you settle invoices from your wholesalers and subcontractors on time so you don’t face interest payments or jeopardise those relationships.”
And if you use cloud-based accounting software, you can store and access your financial information from anywhere—even when you’re out on a job.
Jackie Watson, Senior Manager in full-service accountancy firm Wbg’s Business Advisory Team, explains some more details about how the tech can be a game-changer:
Receipt capture and auto-entry, as mentioned earlier, not just reducing manual entry but also errors.
Bank feeds and auto-categorisation for different types of expense and payment, reducing time spent on bookkeeping.
Job costing integration, so you can track your profit per job.
Mileage tracking apps, enabling more accurate expense claims.
Auto-matching receipts to payments to reduce errors.
Jackie says quarterly summaries will also prevent the build-up of tasks that typically happens with year end bookkeeping.
And regular tax calculations from HMRC mean you’ll know much earlier in the year how your finances look and what tax you will likely owe each January: “This will help you decide immediately whether you can buy a new van or tools, for example, rather than waiting till the end of the year.”
What about MTD for VAT—how does it affect MTD for Income Tax?
If you’re VAT registered, you’ll already know how the basics of how MTD works, as it came into effect for VAT between 2019 and 2022.
Like with MTD for Income Tax, you’re required to use MTD-ready software to record your VAT records, and use the software to submit your VAT Returns to HMRC.
However, it’s important to note that MTD for Income Tax is not related to MTD for VAT in any way. It’s a totally different system, with different reasons for using them.
You’ll need to register for MTD for Income Tax separately, activate it within your accounting software, and follow its unique set of rules. Penalties for MTD for Income Tax and MTD for VAT work in the same way, but aren’t linked. So, you could run up points and penalties for lack of VAT compliance while MTD for Income Tax is unaffected.
However, there are many tradespeople and landlords who have to use both MTD for VAT and MTD for Income Tax.
This will mean you have to make quarterly updates for MTD for Income Tax in addition to your quarterly VAT Reports.
The dates for MTD for VAT returns fall on the 7th of the month in August, November, February and May. If your VAT Returns match this then you can take care of both at the same time. However, if they do not match then you can speak to HMRC to request your VAT stagger is adjusted to match MTD for Income Tax quarterly update timing.
A further issue might still arise around accounting periods, because the VAT period (covering three calendar months) will not quite align with the Income Tax quarter (which starts and ends on the 6th of a given month).
If this is an issue, you can apply to HMRC to move your MTD for Income Tax quarters to calendar months (e.g. your first yearly Income Tax quarter for MTD will run from 1 April to 1 July).
What if I have multiple businesses for MTD?
What if you have more than one income stream from different trades or rented property?
MTD requires you to make a quarterly submission for each of your trades, plus one for all your UK property income, and one for any overseas property income.
Helen Wood, technical content writer at TaxAssist Accountants, explains: “The MTD income threshold is based on the total income from your self-employed trades, but you need to make a separate quarterly return for each one. So if you have a decorating service, a separate plastering service, and some buy-to-let property, you need to make three separate updates each quarter.”
To be clear, you don’t need to provide individual quarterly updates for each property. One suffices for all your property in the UK, and then one for overseas property.
There’s a requirement for just the one digital tax return by 31 January, bringing together all your sources of income. You might’ve heard differently, and there had been a requirement for individual End of Period Statements (EOPS) in January each year for each trade and landlord income. However, this requirement has now been dropped by HMRC.
The good news is accounting software will enable you to keep your records such as receipts separately, making these updates easy, even for people with many trades and properties. Modern AI-powered tools like Sage Accounting will prompt you when you need to make the submissions, and have all the data ready for you to check.
Yes, it really can be that easy.
How to get ready today for MTD for Income Tax
Getting organised now will give you more time to try and install new software, making things a lot smoother when your due date arrives.
Here’s a suggested action plan.
Check if you need to use MTD. HMRC should write to you if you do, but letters and emails can easily be lost in the post or within spam filters. So, it’s down to you to be sure.
Decide if you’ll manage it yourself, handle record-keeping but outsource submissions, or have your accountant or bookkeeper manage everything.
Register for MTD with HMRC before April, or get your advisers to do this for you. You can start immediately, or set 2026/2027 as your starting tax year.
Look for a software solution that fits your budget and technical comfort level. Sage offers a free plan, which is unique amongst software vendors, along with Sage Accounting plans that scale with your business as it grows.
Open a separate business bank account if you don’t have one. This separates personal and business finances, easing bank feed integration—a key step for smooth MTD compliance.
Start using the software to get comfortable with the process, including capturing invoices, receipts, and bank feeds. If you start MTD as soon as possible, rather than waiting until you have to in April, you can do a few test submissions to HMRC to get the hang of it. This is a terrific idea.
Should you use an accountant or bookkeeper for MTD for Income Tax?
If you use a bookkeeper or accountant to handle your accounting then there’s no reason for that to change with MTD.
The difference with MTD for Income Tax is that they’ll now have to:
Help you digitise your accounting data at least quarterly, rather than yearly—everything from getting data from receipts and invoices, to supplier and bank statements.
Create and submit the quarterly updates. But even more frequent monthly updates make a lot of sense because you’ll get a view of your tax position and cash flow.
Prepare the digital tax return for you to review and sign.
If you only see your accountant once a year and hand them a load of paperwork, you’ll need to speak to them about a new schedule.
There’s no way around this, although data automation tools can help—AutoEntry can send your bookkeeper or accountant the data immediately after you take a snapshot, for example.
But increased touch points can also lead to a new kind of relationship that you can take advantage of for advice in areas such as:
Tax planning, such as when to buy a new van or equipment for maximum tax relief.
Checking affordability, and legal and tax requirements before taking on subcontractors
Reviewing your finances to help improve profits and cash flow
Complying with tax or regulatory changes in areas such as waste management, or the Construction Industry Scheme (CIS).
How to find the right MTD for Income Tax software
Decide what you want your software to do, such as automatically connecting to bank feeds, and integrating with your payments, job tracking, and receipt snapping tools, such as AutoEntry.
Also consider:
Do you find it easy to use?
What UK-based support and training is available?
Subscription costs and whether the software can handle your business needs as you grow. Sage Accounting has plans ranging from free for businesses with very simple needs, all the way through to plans for growing, more sophisticated businesses, for example.
Jo Gibson, a business services partner and head of Hurst’s specialist digital team, says: “Recent advances in technology should help reduce your admin burden significantly. For example, you should be able to use your phone as your main or sole accounting tool, and even log receipts, cost jobs, track mileage, issue invoices and make HMRC submissions on it during your lunch break.”
All this information can feed directly into your accounts to reduce paperwork and accelerate cash flow, she says. “It should also give you real-time insight into your profit to drive business decisions.”
Stacey Harland, accounting & business services senior manager at UHY, says another benefit is that, “MTD software can estimate your tax liabilities based on real-time data, so you can manage your budget accordingly, then it can automatically generate quarterly updates based on your records.”
Final thoughts: MTD is a productivity boost
MTD will be a big change for some, but you’re not alone—lots of tradespeople are going through the same thing. You still have time to find and install a compatible software system, and reach out to an accountant or bookkeeper for help.
Once in place, your software will give you clearer, faster, more reliable financial processes with far less year-end stress. It should immediately start driving a more streamlined business, allowing you to focus more on doing a great job for your customers and boosting your earnings.
So, stay positive and think about how digitising your tax will boost your finances. With the right software, it could happen sooner than you think.
Agentic AI is transforming accounting and bookkeeping right now.
Across Sage, intelligent agents are already planning, reasoning, and acting alongside professionals—amplifying their expertise and unlocking new capacity.
In simple terms, agentic AI refers to software that doesn’t just analyse data. It can plan actions, make decisions, and carry them out autonomously under human guidance.
The launch of the MTD for Income Tax Agent marks a decisive step change: routine work handled in the background, more time for strategy, clients, and growth.
And that’s what we explore in this article, as follows:
Why AI agents are a game-changer for MTD
MTD is exposing a truth the profession already knows: accountants are running out of capacity.
Quarterly updates, digital record-keeping, and client demands are set to stretch firms further than ever before.
Practices are already under immense pressure. Rising client expectations, increased regulatory complexity, and squeezed margins leave little room for error. Finding enough time to maintain service levels is a daily challenge.
MTD for Income Tax brings a step change in workload: quarterly submissions, continuous data capture, and tighter reporting timelines. Practices must rethink how they manage client data, ensure accuracy, and deliver advice, at scale and speed.
And 2026 is only the start.
In 2027, payrolling Benefits in Kind replaces P11Ds, while Companies House reform will make digital filing and more detailed accounts mandatory.
Practices will face an unprecedented surge in client queries and additional admin, all while talent remains tight and margins thin.
Without automation and AI support, many small and mid-sized firms risk reaching breaking point.
This is where agentic AI makes the difference.
It takes on the repeatable, rules-based work—reconciliations, submissions, and follow-ups—freeing up human capacity for judgement and strategy.
As Chris Downing, Director for accountants and bookkeepers at Sage, said at Accountex North:
“In a few months, MTD for Income Tax will become a reality. More deadlines, more conversations, but also an opportunity—an opportunity to simplify, create capacity, anticipate and automate the work we do.”
AI agents for MTD matter because it lays the groundwork for an AI-first future, helping firms build confidence in automation, spot anomalies faster, and create capacity when they’ll need it most
Simplify, create capacity, automate
“Twelve months ago, we were convincing people [MTD] was happening,” said Emma Rawson, Director of Public Policy at the Association of Taxation Technicians, also speaking at a keynote at Accountex North.
“Now the conversation has shifted to readiness: software choices, client planning, and thorny real-world questions.”
Accounting and bookkeeping face key collision points on the horizon:
Reporting requirements: The first quarterly update is due 7 August 2026 for sole traders and landlords with gross income over £50,000.
Threshold expansion: New bands of £30,000 as of April 2027, and £20,000 as of April 2028, bringing hundreds of thousands more clients into scope. (Plus, don’t forget that clients can sign up to MTD voluntarily.)
Payrolling of benefits-in-kind: Mandatory from April 2027, increasing reporting frequency.
Companies House digital filing: Full transition to software-only submissions, ending web form filing.
Ongoing VAT cycles: Overlapping workloads, most often quarterly, that test practice capacity year-round.
Quarterly updates are a digital handshake to HMRC. They don’t crystallise a tax liability, but they build a habit of working digitally and keep clients closer to real-time information.
Chris Downing, Director for accountants and bookkeepers, Sage
Downing calls out the “hidden work” that clients never see—the chasing, corrections, and compliance housekeeping that consume hours every week.
These aren’t side issues. They’re the silent drain on growth and service quality.
The takeaway:
Accountants aren’t short on deadlines. They’re short on capacity.
Capacity creation isn’t a side effect of automation. It’s the strategy.
Agentic workflows are how you get there
Meet the MTD for Income Tax Agent
The MTD for Income Tax Agent, announced at Accountex North, is built to automate setup, quarterly updates, and submissions while ensuring accountants remain at the helm.
It uses guardrails so accountants decide how far automation runs. High-confidence tasks are handled automatically, while anything ambiguous is routed for review.
Here, AI thinks in workflows rather than single tasks:
Preparation and authorisation: The agent anticipates what needs doing and prompts action, such as reminding you to move client authorisations into the HMRC Agent Services Account (ASA), linking organisations to individuals, and verifying authority. Authorisation with HMRC is then completed manually through the official ASA.
Guardrails by design: You decide how far the Sage MTD Agent runs on its own. It automates where confidence is high, but routes anything ambiguous for human review.
Quarterly updates with context: Instead of repetitive data entry, the Sage MTD Agent reviews incoming information, highlights anomalies, requests missing items, and can submit updates once the accountant gives the green light.
A guided client experience: For do-it-for-me clients who won’t adopt software, the agent provides simple, repeatable approval and upload flows, while your default motion remains bringing clients into software for full visibility.
As Georgina Timothy, Director of Product Management, Sage for Accountants, explained: “We’ll automate the end-to-end workflow, but you stay in control. The agent takes care of the heavy lifting so you can focus on your clients.”
This isn’t testing the waters. It’s a real leap into agentic workflows purpose-built for MTD, a signal of what the next decade will look like.
Intelligent systems handle background processes such as authorisations, checks, and submissions, while accountants can move up a layer into proactive, insight-driven work.
The shift goes deeper. As HMRC redefines how tax is calculated and reported, automation will change not just how work gets done, but what “doing the work” really means.
The first release of the MTD for Income Tax Agent focuses on reliable, rules-based automation, streamlining set-up, updates, and submissions with precision.
From Spring 2026, Sage plans to enhance these capabilities with AI-powered learning loops, enabling the agent to reason and adapt to client workflows over time.
What changes in client tax returns
MTD digitalises and redefines the tax return.
In the new model, HMRC generates estimated tax calculations based on quarterly data submitted through the software.
It’s essential to remember, however, that humans are ultimately responsible for preparing and validating the final tax returns, ensuring accuracy and compliance.
You will need to accept your role shifting from generating the numbers to validating and interpreting them.
“The software providers aren’t doing the tax calculation,” explained Downing. “HMRC is. Your job becomes validating and reconciling that information, making sure what HMRC holds matches what your clients have.”
A fundamental change in accountability
Software will surface missing information, reconcile PAYE, CIS, and other data sources, and support end-year adjustments through the business source adjustable summary (BSAS)—the mechanism that ties quarterly updates to final tax adjustments so client records and HMRC’s view stay in sync.
That means less time keying in figures and more time shaping what those figures mean.
The tax return era is evolving into a continuous data exchange—a living process rather than a one-time event.
And that shift sets the stage for the next evolution: agentic workflows that not only automate but anticipate how and when that work gets done.
Your agentic AI playbook: 5 steps to take
Whether you’re already experimenting with AI assistants or preparing for MTD for Income Tax, the steps are the same: segment clients, digitise early, test your workflows, and measure where automation genuinely adds value.
1. Segment and sequence
Start with your £50,000+ sole traders and landlords for pilot testing:
Segment clients by their preferred working style.
This segmentation isn’t only operational. It’s strategic. It determines how far you automate, how you price, and where you’ll free the most capacity.
2. Digitise records early
Don’t wait for MTD to force the issue:
Move laggards onto digital bookkeeping as soon as possible: cloud ledgers for sole traders, bridging or prep tools for CSV and bank-only clients.
Every early migration compounds the benefit: smoother quarterly updates, fewer manual reconciliations, and a cleaner testing ground for AI-driven workflows.
3. Automate the quarterly cycle
Start shaping how automation will fit into your workflow – even before full configuration features arrive.
Identify which tasks your team can safely hand over to automation when available: data reviews, report generation, and client chases.
Use HMRC’s defined windows around quarter-end to flatten peaks and establish a repeatable rhythm.
Remember, automation isn’t about speed; it’s about flow – turning four mini tax seasons into one.
Block out your quarter-end weeks now. This isn’t four mad months and eight quiet ones—it’s a continuous rhythm.
Rebecca Benneyworth, Rebecca Benneyworth & Co
4. Price your new service model
MTD isn’t simply a compliance shift. It’s a pricing one:
Package quarterly reviews and year-end reconciliations into modern, data-driven service tiers.
Publish clear scope, service levels, and value communication so clients see the benefit of your automation investment.
Update letters of engagement and schedules of work now, while the transition window allows flexibility.
5. Reinvest the capacity you create
This is where automation pays off:
Ring-fence the hours you free for cash flow check-ins, tax-planning nudges, and advisory conversations.
Use quarterly cycles as the backbone for more frequent, proactive engagement, of the kind that builds client trust and long-term revenue.
Protect that dividend: calendar the time you win back, or it will vanish.
Real clients love quarterly tax forecasts. They know it’s indicative, but it stops the ‘I haven’t got the money’ conversation – and turns forecasting into an advisory moment.
Rebecca Benneyworth
By getting ahead of MTD, you’re not only getting ahead of April 2026. You can use it as a test to perfect agentic AI processes.
Start small, document what works, and keep that one principle in mind: capacity creation isn’t a by-product of automation; it’s the goal.
Final thoughts: Authentic Intelligence, in practice
This isn’t AI for AI’s sake.
It’s authentic intelligence—people and agents, each doing what they’re best at.
Agents give you back time. You decide how to use it, whether that’s for judgment, relationships, or growth.
The question isn’t how we cope with more deadlines. It’s what we do with our capacity. Spend more time with clients. Spend more time thinking about strategy. Use that time to grow your practice.
Chris Downing
That’s the real promise of agentic AI: not replacing accountants and bookkeepers, but expanding what you can achieve.
MTD is the test case. Authentic Intelligence is the destination.
The accountant’s guide to Making Tax Digital for Income Tax
Download this free interactive guide to developing your practice approach to Making Tax Digital for Income Tax.
The job interview has changed. The days of rushing across town for a 30-minute chat are fading. In their place is a new kind of screening: the AI-powered virtual interview. For many, the idea of talking to a camera instead of a person feels strange, even intimidating. But what if this change wasn’t a barrier, but a breakthrough?
AI interviews are levelling the playing field, giving every candidate a fair and equal chance to prove their worth. Forget about biased first impressions or the stress of scheduling conflicts. This is about giving you the stage to show what you can do, on your terms.
We’re introducing the Recruitment Agent, an AI-powered colleague that helps companies conduct their first-round interviews. It’s designed to be fair, consistent and transparent. Understanding how it works is your key to not just participating, but excelling. This guide will show you how to master the virtual interview and turn technology into your greatest career advantage.
What is an AI-powered virtual interview?
An AI-powered interview, like the one managed by our Recruitment Agent, is a structured, recorded video interview. Instead of a live conversation, you’ll be presented with a series of pre-set questions on your screen and you’ll record your answers one by one.
It’s not a secret test designed to catch you out. It’s the opposite. It’s a system built to remove inconsistency and unconscious bias from the hiring process. Every applicant for a role answers the exact same questions and is evaluated against the exact same criteria. Your success depends on the substance of your answers, not on how well you clicked with the interviewer on the day.
For candidates, this means:
A fair shot: Your skills and experience are measured on a level playing field.
Total flexibility: You can record the interview when and where it suits you, within a set timeframe (usually seven days). No more juggling work or personal commitments.
Complete transparency: You know exactly what’s being asked and can prepare accordingly. No surprise questions or trickery.
This process gives you the power to present the best version of yourself, free from the pressure of a traditional face-to-face meeting.
How to prepare for your AI interview
Preparation is everything. Just because you’re not meeting someone in person doesn’t mean you can just wing it. Use the flexibility of the process to your advantage and get ready to shine.
1. Understand the technology and setup
First, get your technical setup right. A poor connection or bad lighting can distract from your brilliant answers.
Check your gear: Test your webcam and microphone beforehand. Make sure you’re happy with the video and audio quality.
Find your space: Choose a quiet, well-lit location where you won’t be interrupted. A neutral background is best—a blank wall is better than a messy room.
Master your framing: Position the camera at eye level. Sit straight and look directly into the camera lens when you speak, not at your own image on the screen. This creates a direct and engaging connection.
2. Decode the job description
The questions you’ll be asked aren’t random. The AI generates them based on the job description. This is your cheat sheet. Break down the role into key skills, responsibilities and company values. Your answers should directly connect your experience to these points.
The Recruitment Agent typically asks a mix of four question types. Prepare examples for each:
Motivational: “Why do you want this job?” They want to see genuine enthusiasm and alignment with their mission.
Behavioural: “Tell me about a time when you faced a difficult challenge.” Use the STAR method (Situation, Task, Action, Result) to structure your answer.
Situational: “How would you handle an unhappy customer?” They’re testing your problem-solving skills and judgment.
Role-specific: “What experience do you have with [specific software/skill]?” Be direct and provide clear evidence of your expertise.
3. Practice, don’t memorise
Record yourself answering practice questions. You can use your phone or computer. Watch it back and ask yourself:
Am I speaking clearly and at a good pace?
Is my body language confident and open?
Am I looking at the camera?
Is my answer concise and directly addressing the question?
The goal isn’t to create a perfect script. That will sound robotic. The goal is to get comfortable with the format so your natural confidence and personality can come through.
Nailing the interview: Tips for recording day
When it’s time to record, you’ve done the hard work. Now it’s about execution.
Speak with clarity and confidence
The AI will transcribe your words, so clear articulation is vital. Speak at a measured pace, not too fast, not too slow. Use pauses to add emphasis and enunciate your words. Your tone matters, too. Let your passion for the role come through. Show energy and enthusiasm.
Structure your answers for impact
Don’t ramble, make sure you’re providing direct and helpful answers. The best answers are clear, structured and to the point. The STAR method is your best friend for behavioural questions.
Situation: Briefly describe the context. (e.g., “In my previous role as a project coordinator…”)
Task: Explain what you needed to achieve. (e.g., “…my task was to resolve a budget shortfall.”)
Action: Detail the specific steps you took. (e.g., “I initiated a full audit of expenses and renegotiated with two key suppliers.”)
Result: Outline the positive outcome. (e.g., “As a result, we came in 10% under budget and the project was delivered on time.”)
This framework provides concrete evidence of your abilities, which is exactly what hiring managers want to see.
Let your personality shine
An AI interview isn’t a robot test. The hiring manager will still watch your videos. They want to see who you are. Smile, use natural hand gestures and let your personality come through. This is your chance to show them why you’d be a great addition to their team culture.
When you’re ready for a virtual interview with the hiring manager, we’ve got you covered with our 13 Virtual Interview Tips.
Embrace the future of hiring
The recruitment landscape is evolving, and technology is breaking down old barriers. AI-powered interviews are designed to make the process fairer, more efficient and more respectful of your time. By giving every candidate an equal opportunity to be heard, they empower you to compete on merit alone.
This isn’t just another hoop to jump through. It’s an opportunity to take control of your narrative and present your skills with clarity and confidence. Stop fearing the new and start using it to your advantage. Prepare, practice and show them what you’ve got.
Ready to find your next role?Embrace the power of AI and discover a better way to get hired.
Running a small business shouldn’t feel like a battle against paperwork. Yet for many SMEs, managing finances, handling invoices, and dealing with tax reporting still consume hours every week.
And these frictions aren’t minor irritations—they directly delay cash flow, limit growth, and drain resources.
The message from our experts is clear: the system isn’t working, and e-invoicing is the most effective way to fix it. That’s what we look at in this article.
Here’s what we cover:
What e-invoicing actually is (and why it’s different from PDFs)
As of 2025, Sage’s global research—Unlocking growth: Frictionless trade for SMEs powered by e-invoicing and AI—shows the following:
37% of UK invoices are paid late.
65% of US SMEs experience significant friction getting paid.
UK SMEs spend £15.4bn per year on tax admin.
EU SMEs spend €204bn annually on compliance.
These challenges often force otherwise healthy businesses to take out loans just to cover payroll or keep operations moving.
International trade creates even more pressure. A single trading process can require up to 36 documents and 240 copies, slowing exports and adding unnecessary cost.
E-invoicing is the solution.
It’s legally defined as the transmission and storage of invoices in an electronic format without duplicate paper documents, using either a structured format such as XML or an unstructured format like PDF. But this can sound more complex than it is.
Put simply, e-invoicing is the digital exchange of invoice data. It’s not just emailing a PDF. It’s a fully digital, machine-readable invoice format that software can interpret and process instantly, enabling faster, more accurate, and automated financial workflows.
How e-invoicing solves your everyday business problems
As explained in the video above, e-invoicing solves key problems by:
Creating invoices in a structured electronic format, not PDFs.
Using a common dictionary so every field is universally understood.
Applying a verified digital identity to confirm who sends and receives each invoice.
This means your system, your customer’s system, your accountant, and your bank can all read the same data automatically. There’s no manual entry, no guessing, no re-keying, and no errors.
It’s simple, secure, and removes the layers of human and AI effort currently needed to interpret a PDF.
Open networks such as Peppol then allow invoices to travel securely between businesses, forming the foundation for safer, faster trade.
E-invoicing isn’t just a tech upgrade. It solves real, everyday problems for SMEs.
Here are the key advantages that make the biggest impact:
Get paid faster: Businesses using e-invoicing typically get paid 5–7 days sooner, improving cash flow and reducing reliance on short-term credit.
Reduce errors at the source: Today 53% of UK SMEs struggle to gather correct invoice data and 52% receive invoices containing errors.With e-invoicing, data is validated before it’s sent, cutting out common mistakes entirely.
Lower fraud risk: 79% of SMEs received a fraudulent invoice in the past year. Verified digital identities significantly reduce the risk of fraudulent invoices by confirming the identity of the sender, though businesses should still maintain internal controls and checks.
Cut time spent on tax and compliance: Structured invoice data can automatically pre-populate tax returns, reduce manual adjustments, boost accuracy, and support real-time reporting. This frees time and reduces costs while helping governments close tax gaps more efficiently.
Why e-invoice standards and mandates matter for SMEs
Here’s a frustration many SMEs share: Every customer wants you to invoice differently.
Different formats. Different portals. Different processes.
It’s confusing and inefficient. Common standards would solve this problem by ensuring everyone uses the same language and structure.
Sage’s research shows awareness is still low:
Only 7–11% of UK leaders are familiar with e-invoicing.
Just 3% of US leaders know about it.
However, support for mandates is also on the rise, with 42% of UK CEOs/COOs and 30% of SMEs supporting B2B e-invoicing mandates
The reason is simple: Businesses are tired of reinventing the wheel with every customer. They want clarity and consistency, not a new process for every customer.
Where AI fits in: Turning clean invoice data into smarter decisions
Once invoices are digital, all have the same structure, and can be verified before being sent, then AI can unlock new value that the current process simply can’t match.
AI can:
Detect unusual payment patterns
Automate approvals and workflows
Improve fraud detection
Generate real-time financial insights
Speed up cross-border trade by matching invoice data with customs requirements.
E-invoicing, combined with tools like Sage Copilot, puts these capabilities in the hands of small businesses without requiring advanced technical skills.
AI isn’t replacing people. It’s removing low-value admin work so owners and finance teams can focus on the things that matter to them.
At the same time, SMEs still remain responsible for accuracy and compliance with tax and reporting obligations, even when using e-invoicing or AI tools. AI supports the process, but accountability still rests with the business.
What needs to happen next for e-invoicing?
Real transformation will only happen if governments and SMEs take coordinated steps toward adoption.
Here’s what each group should prioritise next:
For governments
Governments play a crucial role in setting the foundations for widespread e-invoicing adoption.
Key actions include:
Treating e-invoicing as essential digital infrastructure
Rolling out phased B2B mandates
Adopting a single, harmonised standard
Embedding digital identity to prevent fraud
Connecting e-invoicing with tax, customs, and procurement systems.
For SMEs
SMEs can prepare for future mandates and improve efficiency today by taking a few simple proactive steps.
These include:
Prepare early rather than waiting for a mandate
Lean on accountants: 86% recommend e-invoicing
Get familiar with digital standards and tools.
Final thoughts: Small change, big impact
E-invoicing isn’t just about speeding up payments, it’s about building a smarter, more connected way of doing business. A way that frees up time, reduces stress, and gives small businesses access to tools and insights that once only big enterprises could afford.
What looks like a small shift actually delivers big impact: Reducing admin, accelerating payments, strengthening fraud prevention, and creating clean, consistent data that unlocks AI-powered insights.
It also paves the way for broader improvements across customs, tax, procurement, carbon tracking, and more.
And the potential is enormous, as widespread adoption across Europe could save SMEs €14 billion every year.
For small businesses already stretched thin, that’s a meaningful transformation, and one that makes growth feel not just possible, but achievable.
Frictionless trade report: Powered by e-invoicing and AI
Discover how e-invoicing and AI can remove friction, reduce admin, and unlock new growth opportunities for SMEs.
