79% of Sole Traders Say They're Not Ready for Making Tax Digital

The latest Wickes Mood of the Nation survey found that 79% of sole traders describe themselves as "unprepared" for MTD, with only 21% of trade professionals saying they feel fully prepared. One in five said they don't feel ready at all. Most have heard of MTD by now, but hearing about it and being signed up for it are two very different things — and HMRC's first compliance deadline for the highest earners has already been and gone.

The deadline has already passed for some

Making Tax Digital for Income Tax became mandatory on 6 April 2026 for self-employed people and landlords with total gross income over £50,000 from self-employment and/or property. That group had a first quarterly update deadline of 7 August 2026,  which means anyone in that bracket who hasn't yet moved to digital record-keeping has already missed a statutory submission.

If your income sits below £50,000 for now, you're not off the hook , you're on the clock. The next income threshold is expected to be brought into MTD in a later phase, and HMRC has made clear the direction of travel is toward every sole trader and landlord filing digitally, every quarter, rather than once a year.

Why so many sole traders are behind

The same survey gives a good clue as to why the readiness numbers are so low:

Nearly three in five sole traders (58%) manage their business finances entirely themselves, without an accountant. Around 49% are still keeping records on paper, and only 41% use even basic spreadsheets, neither of which satisfies HMRC's digital record-keeping requirement on its own. Tradespeople reported spending up to three hours a month just handling receipts manually.

On top of that, sole traders told the survey their biggest concerns about MTD were increased admin (63%), the risk of making mistakes (48%), and the sense that their tax affairs are about to get more complicated (48%). None of that is unreasonable, moving from one submission a year to four, using MTD-compatible software, is a genuine change in how you run your books. But it's a change that has to happen either way, and putting it off only shortens the runway.

What happens if you don't comply

HMRC isn't switching on full penalties overnight. There's a "soft landing" period for the first 12 months of MTD (April 2026 to May 2027), so late quarterly updates in that window won't rack up points. After that, missed submissions start to accumulate penalty points, and reaching four points within a two-year period triggers a £200 fine, with further fines for each late submission after that.

Late payment is treated separately and is less forgiving from day one: a 30-day grace period in year one, then a 3% penalty on tax still outstanding, doubling and adding a daily charge if it drags on further, plus interest at the Bank of England base rate plus 4%. In short, the payment side of MTD has real teeth even while the filing side is still easing people in.

What to do now if you're a sole trader or small business owner in Northampton

If any of the above sounds like your business, the fix isn't complicated, but it does need to start now rather than closer to the next quarterly deadline:

Get onto MTD-compatible software (we work primarily with Xero) so your income and expenses are recorded digitally as you go, not reconstructed from a shoebox of receipts once a quarter. Set a regular time each week or month to keep records current, rather than letting three months build up. And most importantly, talk to an accountant who already has clients through their first MTD cycle, so the quarterly submissions become a routine handover rather than a fire drill four times a year.

That's exactly where we come in. At Harris & Co, we're helping sole traders and small businesses across Northampton get set up on Xero, bring their record-keeping up to MTD standard, and take the quarterly submissions off their plate entirely. If you're one of the 79% who knows MTD is coming but hasn't got the systems in place yet, get in touch and we'll get you compliant before the next deadline, not after it.