Most sole traders are not ready for MTD changes

09 Dec 2025

The majority of sole traders do not have a clear understanding of Making Tax Digital for Income Tax (MTD for IT), according to research from the Association of Independent Professionals and the Self-Employed (IPSE).

A survey conducted by IPSE found that 70% either have not heard of the initiative or do not realise it requires digital record-keeping and quarterly submissions through approved software. MTD for IT will come into force in April 2026.

However, IPSE's survey found that most sole traders are still managing their finances in ways that will not meet MTD requirements. A third continue to use pen and paper for their books, two-thirds rely on spreadsheets and more than half track income through bank statements.

The timeline for MTD is:

• From April 2026: sole traders and landlords earning over £50,000 must keep digital records and submit quarterly updates through compatible software.
• From April 2027: sole traders and landlords earning over £30,000.
• From April 2028: sole traders and landlords earning over £20,000.

IPSE said: 'Given the fact that we've already had previous delays and considerable resources and time have been invested, HMRC will not be pausing this rollout anytime soon.

'However, HMRC has a duty to inform as many sole traders as possible – and right now, that awareness campaign is simply not landing.

'With less than six months until the first deadline, our findings highlight a serious communication gap. Most respondents reported receiving no direct information from HMRC about MTD, which explains why awareness remains so low.'