It can be nice to have an excuse to put something off. Need to paint the garden fence but a sudden downpour scuppers your plans? Oh no. That’s a shame. Put the kettle on.
But really, we know a painted fence is a good thing. And when it’s done, you’ll wonder why you waited so long. This, in a roundabout way, brings us to HMRC. At the end of last year, the start date for Making Tax Digital for Income Tax Self Assessment (ITSA) was delayed to 2026.
Small business owners are under pressure on a number of fronts, from soaring bills to broader economic uncertainty, so this delay to the Government’s push to digitise taxes would have been a welcome relief to many sole traders and small businesses. And let’s be clear – it’s a good thing, giving them, and their accountants and bookkeepers more time to prepare for this change.
But the fence still needs to be painted. Digitalisation isn’t going away, and neither are the benefits it offers for small businesses now and in the future.
Here’s why small businesses shouldn’t treat this delay as a stay of execution, but as an opportunity to embrace digital change, and to be better prepared for the years to come.
The current digital landscape
First, what exactly does the MTD for ITSA delay mean for you? When it eventually comes into effect, self-employed individuals and landlords with turnover above £50,000 annually will need to comply with MTD rules from April 2026.
Meanwhile, those with turnover above £30,000 have until April 2027 to become compliant. This means those affected will need to send quarterly updates to HMRC via MTD-compatible software, as well as an End of Period Statement (EOPS) and a Final Declaration once a year.
MTD isn’t going away, and the Government’s plans to digitise tax will eventually come to fruition. But filing tax digitally isn’t an endpoint for small businesses. Instead, this is a springboard for wider adoption of digital tools, which can drive efficiencies throughout your business – far beyond submitting your quarterly returns.
Undertaking the digital journey
Make no mistake, improving the efficiency and accuracy of the tax process is a boon to small businesses. But owners are faced with far more pressing concerns. Take late payments, for example, which are costing UK small businesses £684 million every year.
And the impact is massive, impeding small business owners’ ability to meet their obligations – such as rent or wages – in time, and damaging cash flow. With so many businesses failing to pay smaller suppliers on time, this is an issue that demands the attention and action of government, trade bodies and bigger businesses themselves.
But in the meantime, digital tools can help small business owners minimise cash flow risks. For example, there are solutions available, such as online invoice payments and eInvoicing, that can enable owners to stay on top of expenses and revenue.
And importantly, incorporating digital tools into a business can help achieve faster payments. Whether this is providing online payment options for customers on invoices, or setting up reminders that are automatically sent to customers when invoices are overdue.
These benefits, alongside the ability to automate onerous manual tasks and make businesses more efficient, demonstrate the importance of embracing digital technology, rather than bucking against it. MTD for ITSA may feel like a speck on the horizon, but the rewards of digital tools loom large.
This is why small businesses should look to adopt compatible accounting software now, turning to their accountant or bookkeeper for support if needed. In doing so, they can undertake their digital journey without delay, and enjoy the satisfaction of a freshly painted fence.