Only One in Five Tradespeople Is “Fully Prepared” for MTD: Is Your Business Ready?

MAKING TAX DIGITAL

3K Financial & Accounting Services Ltd  |  Keeping Klient Knowledgeable

Making Tax Digital (MTD) for Income Tax is no longer a distant idea. The first wave, covering sole traders and landlords with qualifying income over £50,000, has already had its first quarterly deadline on 7 August. But new research suggests that many self-employed people, particularly in the building trade, are not yet ready for what is coming.

What the survey found

The Wickes Mood of the Nation survey found that 79% of sole traders feel unprepared for MTD, with only 21% of trade professionals saying they are fully prepared. Around 20% said they do not feel ready at all.

•     Nearly three in five (58%) sole traders manage their own finances without an accountant.

•     49% still rely on paper records and only 41% use spreadsheets.

•     Almost one in three (29%) have concerns about MTD. Increased admin was the leading worry at 63%, while 48% worried about mistakes and the same share about extra tax complexity.

•     39% of tradespeople spend up to three hours a month manually managing receipts.

The report also notes that many accountants saw a scramble on the first deadline day, with clients who had tried to file themselves finding it too complicated and asking for help.

The timetable is getting closer

•     From April 2026: sole traders and landlords with qualifying income over £50,000 (the first wave).

•     From 6 April 2027: qualifying income over £30,000. The report says this will bring nearly two million sole traders and self-employed people into MTD.

•     From 6 April 2028: qualifying income over £20,000.

Under MTD, many self-employed people move from one annual Self Assessment return to four quarterly digital updates plus a year-end update, all based on digital records.

A free software offer for some

Wickes has signed a deal with Xero to give its TradePro members six months of free access to Xero’s MTD software, worth at least £96 excluding VAT for the entry-level package. It is a welcome move for members, but remember that any software needs to suit your business and be recognised by HMRC. If you are unsure which product fits, ask us before you commit.

Five practical steps to prepare

1.      Choose MTD-compatible software early. Moving away from spreadsheets and paper invoices is the biggest shift, and starting early lets you test your workflow without pressure.

2.      Go digital with your records. Photograph or scan receipts, use digital invoicing and keep transactions categorised through the year. Waiting until the tax year ends is no longer practical.

3.      Connect your bank feeds. A dedicated business bank account feeding into your software pulls in income and expenses automatically, cutting manual entry and errors.

4.      Practise a quarterly rhythm. Run a short financial review every quarter now. It gives you better visibility of cash flow and helps avoid surprise tax bills.

5.      Revisit your allowable expenses. MTD changes how you report, not what you can claim, but quarterly categorisation means being clear on what is allowable. Items often overlooked include tools, protective equipment, ongoing materials and home-office running costs.

Whether you are already in MTD or about to be, you do not have to do this alone. Our team can set up compatible software, tidy your records and file your quarterly updates for you, so you can focus on the work you do best.

KEY TAKEAWAYS •     79% of sole traders say they are unprepared for MTD. •     The income threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. •     Start now: digital records, bank feeds and a quarterly routine.