- IRIS Software Group research reveals half a million sole traders want to hear from their accountants on forthcoming MTD requirements.
- Almost half of UK sole traders at risk of non-compliance, feeling unprepared for income tax changes due April 2026.
- Low awareness highlights a timely opportunity for accountants to support existing clients and win new business.
Nearly half (45%) of UK sole traders – representing approximately 1.4 million businesses* – say they feel unprepared for upcoming tax reporting changes, putting them at risk of non-compliance. That’s according to new research from IRIS Software Group**, who surveyed 1,000 UK sole traders, which highlights a clear opportunity for accountants to step in with timely support and advice.
With less than a year to go before new Making Tax Digital (MTD) requirements for income tax come into effect, 55% of respondents said they feel prepared, leaving a significant portion still needing to take action. Worryingly, almost one in three (31%) admitted they had never even heard of MTD.
Over three quarters (76%) of those partly or not aware of the forthcoming requirements wished they were more aware.
Nearly a third (29%) of respondents said their taxes were already handled by an accountant. Nearly one in 10 (9%) of those doubting their awareness of the requirements raised concerns that their accountants had not already advised them beforehand. However, a similar proportion (7%) were more relaxed, trusting their accountant to advise them at the appropriate time.
Many sole traders pointed to a lack of awareness around the changes, with a third (34%) believing HMRC could have done more to proactively inform them. Almost three quarters (74%) of respondents told IRIS they would welcome more support and guidance from HMRC to help them navigate the changes.
Other respondents took accountability for their lack of awareness. Around a third (32%) said they should be more aware but planned to research it when they found the time, with 7% not believing they should be more aware as they had the time to make preparations.
With less than a year to go, only 23% of sole traders believed they were very prepared for the requirements. MTD for Income Tax Self-Assessment (ITSA) 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 like IRIS Elements from April 2026. The threshold drops to £30,000 in 2027 and to £20.000 in 2028.
Mark Chambers, Managing Director at IRIS Accountancy, said: “Our findings suggest that as many as half a million sole traders would welcome a phone call from their accountants to help advise them on the forthcoming MTD requirements. That’s a huge retention opportunity to deepen practices’ relationships with an important client base.
“The findings point to a key new business opportunity too. Many sole traders are waiting on insight and material from HMRC, which may not be coming. Time poor sole traders could also use a helping hand to get them up to speed, with many of the sample generally still using paper-based methods of managing their taxes. This points to an opportunity for SME accountancy practices to fill the gap, engage their local business communities on MTD readiness, and to supercharge their digital bookkeeping – opening the door to new clients.”
Generations divided over digital accounting
Younger sole traders were more likely to feel very prepared for the forthcoming requirements and expressed greater optimism about the changes compared to older respondents. This generational divide may reflect broader attitudes toward digitalisation — with MTD representing just the first step in the government’s wider push to modernise and digitise tax and accounting processes in the years ahead.
Nearly two in five (37%) of 25–34-year-olds felt they were very prepared for April 2026, compared to 23% of those aged 35-44, and only 10% of 45–54-year-olds. Following the trend, nearly two thirds (64%) of those aged 25-34 felt the changes would have a positive impact on their approach to filing taxes, compared to 48% of those 35-44 and only 30% of respondents aged 45-54.
Younger generations were the most likely to be using third party software for managing their taxes, and the least likely to be using paper-based filing systems, highlighting the link between technology adoption and compliance.
Overall, more than half (56%) of respondents agreed that MTD will support their budgeting and help them avoid surprises when paying their tax bill — with younger sole traders even more likely to agree. Respondents were also more likely to believe that MTD would have a positive impact on their costs than a negative one.
Mark Chambers continued: “As an HMRC-recognised software provider for Making Tax Digital, IRIS is well-positioned to support both sole traders and accountants on their journey to compliance. With intuitive tools and expert guidance, we’re here to help users not only meet regulatory requirements but also embrace the wider benefits of digital bookkeeping – from improved accuracy to greater efficiency.”
For more information, visit IRIS’ MTD hub.
