SumUp launches free MTD income tax tool with Sage tech

SumUp has entered the UK accounting market with a free Making Tax Digital for Income Tax (MTD for IT) product, integrating Sage technology into its merchant platform.

The tool sits within the SumUp web interface and targets sole traders preparing for new HMRC rules requiring digital record-keeping and quarterly submissions for those with annual income above £50,000. The regulations also apply to landlords with qualifying property income.

MTD deadline

Under MTD for IT, affected taxpayers must keep digital records of income and expenses and submit quarterly updates, rather than relying only on an annual Self Assessment return. The change raises the stakes for smaller businesses and independent workers, many of whom still manage accounts outside dedicated software.

Research commissioned by Sage found 70% of sole traders were not prepared. The survey, conducted by IPSE among 1,000 UK sole traders on Sage's behalf, pointed to continued reliance on paper records and spreadsheets.

SumUp's product aims to turn activity already captured through its payments, banking and invoicing tools into compliant submissions. SumUp offers card readers, point-of-sale tools, invoicing, business accounts and an expense card for smaller merchants.

Inside SumUp

The accounting functions use Sage's embedded accounting technology. The product records and categorises income and expenses in real time within the SumUp interface, aiming to reduce rekeying across systems.

The platform captures cash transactions as well as digital transfers, drawing on data generated through SumUp's merchant tools. SumUp contrasts this with bank-led approaches that focus mainly on account transfers. New users who have not previously processed transactions through SumUp can import historical bank data for continuity.

Expense capture links to the SumUp card and receipt uploads. Receipts can be stored against each transaction, creating an audit trail. The interface also supports quarterly submissions and provides a running estimate of tax liabilities based on recorded activity.

Users can file to HMRC from within the SumUp interface. SumUp says the product is free for its merchants and is designed for sole traders who want to manage day-to-day trading and compliance in one system.

Embedded partner

Sage provides the underlying accounting and tax functions through embedded services delivered via APIs that other platforms can integrate. Sage sells accounting, payroll and related business software and has expanded partner distribution through embedded and fintech relationships in recent years.

The collaboration includes AI-driven auto-categorisation of transactions, which assigns income and spending to categories used for reporting. Both companies position the approach as fitting into the tools merchants already use to manage payments and cash flow.

For SumUp, the launch extends its expansion beyond payment hardware and acquisitions. Payments-first fintechs have increasingly added business banking and admin tools to deepen relationships with micro-merchants and increase switching costs.

MTD for IT has also created a deadline-driven market for software providers and platforms serving sole traders. HMRC already requires MTD for VAT for many businesses, which has increased familiarity with digital reporting for some traders while leaving others outside the software ecosystem.

Felix Lamouroux, SVP Global Banking at SumUp, said the launch responds to the growing compliance burden on small merchants.

"At SumUp we are committed to building a world where every merchant can thrive. Merchants don't start a business for the administrative side of things, yet they are increasingly having to adapt to stay on top of new regulations. We already have the data that is required for tax assessment purposes; our payments services integrate seamlessly with our point-of-sale systems, and together with our invoicing solution, provide our merchants with detailed income data. Our expense management and business account products provide a detailed overview of all business costs. This puts us into a unique position to help our merchants comply with MTD for Income Tax effortlessly and at no extra cost. With Sage as a technology partner, and their innovative embedded accounting built into SumUp, we can offer our merchants a trusted accounting and tax compliance proposition that benefits from Sage's deep industry expertise and is credible from day one," said Lamouroux.

Gordon Stuart, SVP, Fintech & Embedded Services at Sage, said readiness remains an issue as the rules come into force.

"Making Tax Digital for Income Tax represents a significant shift for sole traders, and too many are still unprepared for the change ahead. By embedding Sage's accounting and tax capabilities, including AI-powered autocategorisation of transactions, directly into the SumUp interface and experience, we're removing complexity where small businesses already manage their money. This collaboration brings income tax reporting into everyday workflows, helping sole traders stay on top of their obligations without needing specialist knowledge or additional software. It's a clear example of how embedded accounting technology can meet small businesses where they are and make compliance simpler, more intuitive and more accessible," said Stuart.

The integrated accounting product will be available to SumUp merchants ahead of the start of MTD for IT reporting for sole traders and landlords above the £50,000 income threshold.