Sole Traders in the Dark: A Third Unaware of Looming MTD Updates

Making Tax Digital (MTD) for Income Tax is just around the corner, but a worrying number of sole traders are still in the dark about the changes. And many accountants aren’t ready either.

From April 2026, sole traders earning above £50,000 will need to file quarterly tax updates digitally under MTD. Yet a new survey by IRIS Software shows that 31% of sole traders have never even heard of the scheme, and nearly half (45%) of those who have heard of it admit they’re unprepared.

Since an estimated three million sole traders are in the UK, that means up to 1.4 million could be caught off guard with less than a year to go before the rules kick in.

"Why Haven’t I Been Told?"

The lack of awareness is causing frustration. One in 10 sole traders who didn’t know about MTD were surprised their accountants hadn’t filled them in. Even more troubling is that only 7% of those in the dark trust their accountants to guide them when the time comes.

But it’s not only sole traders who are scrambling. A separate survey by Accountex found a third of accountants feel unprepared for the first MTD deadline, with 8% admitting they’re ‘very unprepared.’

Communication Breakdown When It Comes to MTD

Three-quarters (74%) of sole traders say HMRC needs to step up its game with better communication. Many are waiting for official guidance that may never arrive.

Time-poor sole traders could use a helping hand to get them up to speed. Many are still using paper-based methods.

Interestingly, younger sole traders feel more confident about the update. 37% of 25-34-year-olds say they’re optimistic, compared with 23% of 35-44-year-olds and a mere 10% of 45-54-year-olds.

Under Pressure

For accountants, MTD is a big operational pain. 80% say it’s their biggest hurdle this year, far ahead of tax changes (44%) or AI adoption (39%).

Although some firms may see a fee boost from providing MTD services, the workload will be intense. Instead of one annual tax return, accountants will have four quarterly deadlines plus a year-end submission, all squeezed into the same months each year.

Conclusion: What Happens Next?

HMRC has started sending letters to affected sole traders and landlords, urging them to join its testing programme ahead of the 2026 rollout.

But given that so many are still unaware and accountants are racing to adapt, they are running short on time.

With less than a year to go, too many sole traders are still unaware of tax changes that will affect them. Accountants, already stretched, must step up communication and support. And HMRC needs to better inform those at risk of being left behind. Don’t wait for a letter. Start preparing now.