In this week’s Enews, we look at the readiness of sole traders for the next stage of Making tax Digital. There is also a reminder of the self assessment deadline from HMRC and the cost of Covid fraud to UK taxpayers to update you on.
Most sole traders are not ready MTD changes
The majority of sole traders do not have a clear understanding of Making Tax Digital (MTD) for Income Tax, according to research from IPSE, the self-employed association.
A survey conducted by IPSE found that 70% either have not heard of the initiative or do not realise it requires digital record-keeping and quarterly submissions through approved software.
MTD for Income Tax will come into force in April 2026.
However, IPSE’s survey found that most sole traders are still managing their finances in ways that will not meet MTD requirements. A third continue to use pen and paper for their books, two-thirds rely on spreadsheets, and more than half track income through bank statements.
The timeline for MTD is:
From April 2026: Sole traders and landlords earning over £50,000 must keep digital records and submit quarterly updates through compatible software.
From April 2027: Sole traders and landlords earning over £30,000.
From April 2028: Sole traders and landlords earning over £20,000.
IPSE said:
‘Given the fact that we’ve already had previous delays and considerable resources and time have been invested, HMRC will not be pausing this rollout anytime soon.
‘However, HMRC has a duty to inform as many sole traders as possible – and right now, that awareness campaign is simply not landing.
‘With less than six months until the first deadline, our findings highlight a serious communication gap. Most respondents reported receiving no direct information from HMRC about MTD, which explains why awareness remains so low.’
Internet link: IPSE website
Still time to start self assessment returns, says HMRC
Although there are less than two months until the self assessment deadline there is still time to start an accurate return, says HMRC.
In addition, the tax authority is asking people filing their tax return for the 2024/25 tax year ‘What’s your filing style?’.
HMRC is launching an online poll asking people to pick how they choose to file. Are they an early bird – filing within a few days of the new tax year? A dipper – someone who dips in and out throughout the year? Or, a last minute panicker – rushing to submit their form in the last hours of 31 January?
The poll will run on HMRC’s X, LinkedIn and Facebook channels.
Last year more than 11.5 million taxpayers filed their 2023/24 tax return by the 31 January deadline.
Millions of people have already filed their tax return for the 2024/25 tax year, with 58,000 early birds returning theirs on 6 April 2025 – the first day they could.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said:
‘For customers yet to file, there’s still time to start and submit an accurate tax return. Don’t leave something as important as your tax return to the last minute. Go to GOV.UK to start today.’
Internet link: HMRC press release
Covid fraud cost UK taxpayer £10.9 billion
Taxpayers lost £10.9 billion to fraud and error as the UK government’s pandemic response left the front door open to fraud, according to an independent report.
The Covid Counter Fraud Commissioner, Tom Hayhoe’s, final report to Parliament finds many schemes – including Bounce Back Loans and Eat Out to Help Out – were rolled out with huge fraud risks and no early safeguards – costing the taxpayer millions.
Weak accountability, bad quality data and poor contracting were identified as the primary causes of the £10.9 billion pound losses.
The report highlights that counter fraud controls were ‘inadequate’ and only improved later in the pandemic.
It makes further recommendations to ensure the country is prepared for further crises that need an economic response from government – emphasising that future preparation and robust controls will provide the best value for money for taxpayers.
Chancellor, Rachel Reeves said:
‘Leaving the front door wide open to fraud has cost the British taxpayer £10.9 billion — money that should have been funding our public services, supporting families, and strengthening our economy.
‘We have started returning this money to the British people and we will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.’
Internet link: HM Treasury website
