Almost half of UK sole traders feel unprepared for upcoming Making Tax Digital
(MTD) for Income Tax changes, according to research conducted by IRIS Software.
The new MTD rules mandate digital record-keeping and quarterly Income Tax updates
starting April 2026 and non-compliance can lead to significant penalties.
The study found that almost one in three sole traders have never heard of MTD,
MTD for Income Tax will require self-employed individuals, landlords and small
businesses earning over £50,000 to keep digital financial records and submit
quarterly updates using compatible software from April 2026. The threshold drops
to £30,000 in 2027 and to £20,000 in 2028.
The changes could place a significant burden on business owners, who will be
required to submit at least five updates to HMRC each year.
Mark Chambers, Managing Director at IRIS Accountancy, said:
'These findings highlight an important moment of opportunity for the UK's
sole traders. With MTD just around the corner, there's a real chance for
businesses to modernise their financial processes, unlock efficiencies, and
gain better visibility of their income and expenses.
'It's encouraging to see that nearly a quarter feel ready to meet the
requirements, but that leaves a significant portion not experiencing the
benefits of digitalised tax reporting that compliance will bring.'