MTD for Sole Traders: Are You Ready?
With less than a year to go until MTD for sole traders becomes mandatory, many remain unprepared. A recent survey found that nearly one-third of sole traders are still unaware of the changes.
Among those who are aware, many have not started preparing. With around three million sole traders in the UK, this could lead to a significant number being caught off guard. (Note: landlords were not included in the survey.)
From April 2026, Making Tax Digital (MTD) will apply to sole traders and landlords with income over £50,000. The threshold will lower to £30,000 in 2027, and again to £20,000 in 2028.
Generational Gap in Preparedness
The self-employed population had declined in recent years but is rising again. Much of this growth comes from people working past retirement age. Nearly a quarter of the self-employed are now over 60.
Older sole traders may struggle the most with MTD for sole traders. In contrast, those aged 25–34 were more likely to be ready. Most in this group believed the new rules would positively change how they manage tax.
Admin Burden and Deadlines
Some sole traders deliberately keep their income under £90,000 to avoid VAT registration. Even so, MTD brings new administrative duties:
- A simplified three-line accounting format is allowed, but extra reporting may still be frustrating.
- Quarterly deadlines are stricter than self assessment: just over a month is allowed per submission.
- Late filings will trigger penalties.
Can MTD Be Delayed?
There is one potential workaround. Instead of hiring a spouse or partner, a trader could make them a junior partner. Changing the business into a partnership may delay MTD requirements for at least three years.
HMRC has published detailed guidance to help you check when MTD applies and what you’ll need to do. Visit their website for the latest updates.