20 May 2025
Almost half of UK sole traders feel unprepared for upcoming Making Tax Digital for Income Tax (MTD) for Income Tax changes, according to research conducted by IRIS Software.
The new MTD rules, which 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.'