New research from business platform Tide paints a stark picture for the UK's self-employed: Making Tax Digital (MTD) is set to cost eligible sole traders and landlords a combined £2.18 billion annually — roughly £753 per business — while consuming 44 million working days that would otherwise go toward actually running their businesses.
The findings land as MTD becomes mandatory from April 2026 for those earning over £50,000, with the threshold dropping to £30,000 in 2027 and £20,000 in 2028. Under the new rules, sole traders must shift from a single annual tax return to five filings per year — yet awareness remains alarmingly low.
A Knowledge Gap at the Worst Possible Time
Tide's survey of 349 UK sole traders and landlords with revenues above £20,000 found that:
83% don't realise they'll need to file five times a year
62% don't fully understand HMRC's new points-based penalty system
17% plan to handle MTD filings manually — despite HMRC requiring submissions through approved software
15% say they'll cut billable hours to cope with the added admin load
On average, sole traders expect to spend 114 additional hours in their first year navigating the new rules — from learning the system to managing quarterly submissions and digital record-keeping.
Tide Steps In With a Free Fix
In response, Tide has launched a free, HMRC-recognised MTD tool embedded directly in its app, letting members manage digital records and submit returns without needing separate software. The company is positioning itself as the only banking competitor offering three free invoices alongside broader accounting and tax functionality.
George Schmidt, CEO UK/Europe at Tide, said the scale of the problem is hard to ignore: "Every minute spent wrestling with compliance is a minute taken away from growing their business. 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."
With the April 2026 deadline now imminent, the message for sole traders is clear: the time to get compliant software in place is now, not later.