- IRIS Software program Group analysis reveals half 1,000,000 sole merchants need to hear from their accountants on forthcoming MTD necessities.
- Nearly half of UK sole merchants liable to non-compliance, feeling unprepared for revenue tax modifications due April 2026.
- Low consciousness highlights a well timed alternative for accountants to assist current shoppers and win new enterprise.
Practically half (45%) of UK sole merchants – representing roughly 1.4 million companies* – say they really feel unprepared for upcoming tax reporting modifications, placing them liable to non-compliance. That’s in line with new analysis from IRIS Software program Group**, who surveyed 1,000 UK sole merchants, which highlights a transparent alternative for accountants to step in with well timed assist and recommendation.
With lower than a 12 months to go earlier than new Making Tax Digital (MTD) necessities for revenue tax come into impact, 55% of respondents stated they really feel ready, leaving a good portion nonetheless needing to take motion. Worryingly, nearly one in three (31%) admitted they’d by no means even heard of MTD.
Over three quarters (76%) of these partly or not conscious of the forthcoming necessities wished they had been extra conscious.
Practically a 3rd (29%) of respondents stated their taxes had been already dealt with by an accountant. Practically one in 10 (9%) of these doubting their consciousness of the necessities raised considerations that their accountants had not already suggested them beforehand. Nonetheless, the same proportion (7%) had been extra relaxed, trusting their accountant to advise them on the applicable time.
Many sole merchants pointed to a lack of understanding across the modifications, with a 3rd (34%) believing HMRC might have carried out extra to proactively inform them. Nearly three quarters (74%) of respondents informed IRIS they’d welcome extra assist and steering from HMRC to assist them navigate the modifications.
Different respondents took accountability for his or her lack of understanding. Round a 3rd (32%) stated they need to be extra conscious however deliberate to analysis it after they discovered the time, with 7% not believing they need to be extra conscious as they’d the time to make preparations.
With lower than a 12 months to go, solely 23% of sole merchants believed they had been very ready for the necessities. MTD for Earnings Tax Self-Evaluation (ITSA) would require self-employed people, landlords and small companies incomes over £50,000 to maintain digital monetary data and submit quarterly updates utilizing appropriate software program like IRIS Components from April 2026. The brink drops to £30,000 in 2027 and to £20.000 in 2028.
Mark Chambers, Managing Director at IRIS Accountancy, stated: “Our findings counsel that as many as half 1,000,000 sole merchants would welcome a cellphone name from their accountants to assist advise them on the forthcoming MTD necessities. That’s an enormous retention alternative to deepen practices’ relationships with an essential shopper base.
“The findings level to a key new enterprise alternative too. Many sole merchants are ready on perception and materials from HMRC, which might not be coming. Time poor sole merchants might additionally use a serving to hand to get them in control, with lots of the pattern typically nonetheless utilizing paper-based strategies of managing their taxes. This factors to a chance for SME accountancy practices to fill the hole, interact their native enterprise communities on MTD readiness, and to supercharge their digital bookkeeping – opening the door to new shoppers.”
Generations divided over digital accounting
Youthful sole merchants had been extra prone to really feel very ready for the forthcoming necessities and expressed higher optimism concerning the modifications in comparison with older respondents. This generational divide might replicate broader attitudes towards digitalisation — with MTD representing simply step one within the authorities’s wider push to modernise and digitise tax and accounting processes within the years forward.
Practically two in 5 (37%) of 25–34-year-olds felt they had been very ready for April 2026, in comparison with 23% of these aged 35-44, and solely 10% of 45–54-year-olds. Following the pattern, almost two thirds (64%) of these aged 25-34 felt the modifications would have a optimistic influence on their method to submitting taxes, in comparison with 48% of these 35-44 and solely 30% of respondents aged 45-54.
Youthful generations had been the most certainly to be utilizing third social gathering software program for managing their taxes, and the least prone to be utilizing paper-based submitting methods, highlighting the hyperlink between know-how adoption and compliance.
General, greater than half (56%) of respondents agreed that MTD will assist their budgeting and assist them keep away from surprises when paying their tax invoice — with youthful sole merchants much more prone to agree. Respondents had been additionally extra prone to consider that MTD would have a optimistic influence on their prices than a adverse one.
Mark Chambers continued: “As an HMRC-recognised software program supplier for Making Tax Digital, IRIS is well-positioned to assist each sole merchants and accountants on their journey to compliance. With intuitive instruments and knowledgeable steering, we’re right here to assist customers not solely meet regulatory necessities but in addition embrace the broader advantages of digital bookkeeping – from improved accuracy to higher effectivity.”
For extra info, go to IRIS’ MTD hub.
