Sole traders face £2 billion bill and 44 million working days wiped as Making Tax Digital lands

Sole traders and landlords across the UK are facing a mounting compliance crisis as new research from Tide reveals that Making Tax Digital (MTD) will cost those eligible an estimated £2.18 billion, while diverting the equivalent of 44 million working days away from running and growing their business.

The findings come as Tide, the UK’s leading business management platform, launches a new, HMRC-recognised MTD-ready tool, designed to help members file correctly and avoid costly penalties for free. The research surveyed 349 UK sole traders and landlords with annual revenues above £20,000, representing those in scope of upcoming MTD rules.

MTD will require sole traders and landlords earning over £50,000 from this April, £30,000 from April 2027 and £20,000 from 2028, to move from a single annual tax submission to five filings per year. Yet awareness remains perilously low. Tide’s research shows that across those who will be affected in the next two years, four out of five (83%) do not realise how many times they will need to file, and six in ten (62%) do not fully understand HMRC’s new points-based penalty regime. Worryingly, nearly one in five (17%) say they plan to handle MTD filings themselves, despite HMRC stipulating that submissions must be made through approved, recognised software.

On average, sole traders expect to spend 114 additional hours in their first year of eligibility researching the new rules, adapting to digital record-keeping and managing five annual submissions. Across the 2.9 million sole traders in scope, that equates to 331 million hours – or 44 million working days – diverted to compliance. For many, that time must come directly from revenue-generating work, with one in seven (15%) saying they will reduce billable hours to cope with the added administrative load.

The financial impact compounds the pressure. Sole traders expect to spend an average of £753 to become and remain compliant. Multiplied across the eligible population, that amounts to a collective annual bill of £2.18 billion. More than half (55%) expect costs above £500, and one in five (18%) anticipate spending over £1,000.

Against this backdrop, demand for simpler solutions is clear. Six in ten (58%) entrepreneurs say that integrating MTD filings directly into their business bank account would make the process quicker, easier and less stressful.

In response, Tide’s new free MTD tool enables members to manage digital records and submit Making Tax Digital returns using HMRC-recognised software directly within the Tide app. By embedding tax functionality into its banking experience, Tide aims to reduce duplication, prevent avoidable fines and remove the need for multiple disconnected systems. Tide also stands out as the only banking competitor offering three free invoices, alongside more comprehensive accounting and tax functionality within paid tiers, helping members consolidate tools and manage costs more effectively.

George Schmidt, CEO UK/Europe at Tide, said: “With an eyewatering £2 billion in compliance costs and over 40 million working days being wasted on paperwork, the UK’s sole traders are facing a compliance crisis. Every minute spent wrestling with compliance is a minute taken away from growing their business.

“Our research shows that six in ten entrepreneurs believe integrating MTD filings directly into their business bank account is the best way to protect their time and their bottom line. By building HMRC-recognised, MTD-ready software directly into the Tide app, we’re helping sole traders stay compliant without sacrificing the time and money they need to grow.”

Existing members can access the Making Tax Digital tool in the Tide app, and interested sole traders/landlords can sign up for a free Tide account at https://www.tide.co/making-tax-digital