The UK’s self-employed and landlords are hurtling toward a sweeping tax overhaul, Making Tax Digital (MTD) for Income Tax, yet a worrying number still don’t realise it applies to them.
From April 2026 sole traders and landlords with a turnover above £50,000 will have to file quarterly tax updates under MTD, followed by those earning more than £30,000 in 2027, and £20,000 in 2028. Yet despite the quickly approaching deadline, many still don’t understand the rules, or worse, even know they exist.
A recent Intuit QuickBooks survey shows the gravity of the situation, revealing just how unprepared taxpayers are.
- 21% of those affected don’t believe MTD applies to them.
- 25% have no idea whether it does.
- Only 36% of those who do know they’ll need to comply understand what’s actually required.
The knowledge gap is fuelling apprehension. More than a third of self-assessment taxpayers worry they’ll file incorrectly, and another third aren’t even sure if their current accounting software will work with HMRC’s MTD system.
Perhaps most telling is that a dismal 3% feel fully confident about their obligations once MTD kicks in.
“A Game-Changer” But Only If People Understand It
Self-employed taxpayers who joined MTD for income tax early through a pilot scheme say the system has been “a game-changer” for their businesses. They add “as a one-man operation” staying organised is crucial. And in that regard, MTD has simplified their finances and even helped them plan for retirement.
But there are hundreds of thousands still in the dark.
Why the Confusion?
HMRC’s awareness campaigns aren’t cutting through. With less than a year until the first wave of mandatory filings, education isn’t keeping pace with rollout plans.
Nick Williams, UK Product Director at Intuit, warns: “Now is the time for urgent action”. And it’s not just MTD causing headaches. The survey also found:
- 43% of sole traders don’t know their correct tax rate.
- 31% have no clue which tax band they fall into.
- Over a third don’t even know when advanced tax payments are due.
Experts say that isn’t surprising: the rules can be complex when you’re just trying to run your business.
How to Get Ready
Experts suggest four practical steps for small businesses to prepare.
- Check for Discounted Business Rates – Many miss out on savings they’re entitled to.
- Overestimate Costs by 10% – A buffer helps absorb unexpected bills.
- Stay on the Lookout for New Deals – Prices fluctuate; better rates could be out there.
- Negotiate with Suppliers – There’s occasionally wiggle room.
Conclusion
With 800,000 taxpayers set to be affected in the first year alone, HMRC and businesses need to step up efforts to spread awareness. MTD could modernise tax reporting but only if people know how it works. And right now too many are flying blind.
As a taxpayer, don’t wait until 2026 to figure this out. Start preparing now or risk getting caught out.
