Millions of sole traders in the UK are being urged to act now as a major tax change approaches, with new research revealing widespread confusion over the requirements. The government's Making Tax Digital (MTD) initiative, which comes into force this year, requires eligible sole traders and landlords to keep digital records and submit quarterly updates to HMRC using compatible software.
Low Awareness of Deadline
According to research by accounting software company Sage, seven in ten sole traders do not understand what they need to do under the new rules. Only 37% are aware that the first deadline for quarterly submissions is August 7, 2026. Furthermore, just 8% are currently using software to manage their tax records, despite the rules being in effect.
Campaign to Raise Awareness
Sage has teamed up with former Manchester United footballer and commentator Gary Neville to launch a campaign targeting sole traders in the construction industry. The initiative aims to raise awareness of the looming deadline by distributing 10,000 free high-visibility workwear items, including jackets, polo shirts, and work trousers. Recipients will also gain access to Sage Sole Trader, the company's free MTD-compatible accounting software.
Gary Neville commented: 'There's already enough admin pressure on sole traders trying to run a business day to day. A lot of people still don't realise these tax changes are coming, so this is about helping tradespeople get ready with the right support and tools before the deadline hits.'
Who Is Affected?
Under the new rules, sole traders and landlords with gross income exceeding £50,000 must maintain digital tax records and send quarterly updates using MTD-compatible software. They must also submit a final end-of-year declaration. There are approximately 4.3 million sole traders in the UK.
Expert Views
Lisa Ewens, SVP Product for Small Business and Accountants at Sage, added: 'Many sole traders are still unaware of how significant this change will be. Making Tax Digital is designed to modernise the tax system, but for many businesses the biggest challenge is simply knowing what they need to do next. We wanted to create a campaign that cuts through, helps sole traders understand what is needed from them, and takes them to places where they can get support.'
Key Questions About Making Tax Digital
What is Making Tax Digital (MTD)? MTD is a UK government initiative requiring eligible sole traders and landlords to keep digital records and submit tax updates using MTD-compatible software.
Who does MTD apply to? From April 6, 2026, sole traders and landlords with gross income over £50,000 must comply with MTD for Income Tax.
What changes for sole traders? Instead of one annual Self Assessment return, affected individuals must keep digital records and submit quarterly updates to HMRC using compatible software.
When is the first MTD submission deadline? The first quarterly deadline for many sole traders is August 7, 2026.
Is MTD compulsory? Yes, MTD is a legal HMRC requirement for those within scope.
What is MTD-compatible software? It allows users to keep digital records and submit required updates directly to HMRC in line with MTD rules.
Sole traders can claim their free high-vis work gear and access to Sage Sole Trader software at www.sage.com/hi-vis ahead of the deadline.
