While 91% of UK self assessment tax payers have heard of Making Tax Digital (MTD) for income tax, new data reveals a critical gap between awareness and readiness. Alarmingly, 21% of taxpayers with untaxed income over £50k don’t believe they’re affected by MTD, despite being required to comply by HMRC.
Confusion over MTD for income tax, which comes into force in April 2026, is widespread. Of the 2000 self assessment tax payers with untaxed income over £50k surveyed, 41% wrongly believe MTD is already mandatory or will be by April 2025, while 8% believe the deadline is as late as 2027. 47% also intend to still complete their tax return manually, despite HMRC’s legal requirement for this to be done digitally.
As one of the biggest tax shifts in a generation, it is critical that all self assessment tax payers fully understand how to be compliant with MTD for income tax. This is especially true of the 2.8 million tax payers who will be directly affected by these changes.
Even more concerning, 1 in 4 self assessment tax payers aren’t sure if MTD for income tax applies to them at all—and just 59% say they’re fully aware of their tax compliance obligations. Among those who expect to be affected, only 36% are somewhat aware of what they actually need to do.
That uncertainty is fuelling rising anxiety:
- 35% are concerned about submitting tax returns correctly and keeping digital records
- 33% don’t know if they have the right software
- 30% aren’t clear on what MTD for income tax actually means for their business
- Only 3% say they have no concerns at all
The message is clear: MTD for income tax education isn’t keeping pace with awareness, and self assessment tax payers are at risk of falling behind in their preparation.
There are many well known business benefits to digital accounting and for many self assessment tax payers, it will be a catalyst for greater clarity and control of their financial affairs. Using software to keep financial records, while keeping them compliant, undoubtedly encourages them to keep up to date with their business finances, better managing cash flow, gaining a better view of profitability, and knowing when to chase up customers for payment.
Despite these important benefits, around 50% of small businesses still don’t have an appropriate software system in place.
Says Rob Smith, founder and sole operator of Amber Electrical Services NE, “Adopting Making Tax Digital for income tax early was a game-changer for me. As a one-man business, staying organised is crucial, and MTD has given me the peace of mind to focus on my craft. I participated in the QuickBooks’ testing phase scheme, which has helped me get ahead of the changes. It’s simplified my finances, reduced stress, and has been invaluable as I move towards planning for my retirement.”
With one year to go until MTD for income tax, and its associated quarterly submission cycle, comes to fruition, now is the time for urgent action.
Says Nick Williams, UK Product Director at Intuit, “We’re committed to helping sole traders navigate the changes brought by Making Tax Digital for income tax. Our support packages include essential tools to streamline tax preparation, manage financial records, and simplify compliance. We are confident that this will help people to save time and enable smarter decision-making when it comes to growing their business ventures. If those meeting the criteria for MTD for income tax next April are unsure of what to do, we have a wealth of resources available. Professional accountants and bookkeepers are a great source of help, and also provide excellent and independent advice on software as well as helping with set up.”
Intuit is here to support customers through their MTD journey, details of which can be found at https://quickbooks.intuit.com/uk/blog/making-tax-digital-for-income-tax/
For those looking for a trusted accountant or bookkeeper, our regional directory of QuickBooks-certified ProAdvisor accountants is a helpful resource. https://quickbooks.intuit.com/uk/find-an-accountant/
