Not surprisingly with several hundred thousand sole traders and self employed not signed up for HMRC’s MTD yet, there is a significant chasm between awareness and readiness among tradespeople and sole traders in the building trade, one of the key target audiences for MTD. The extension to the £30,000 plus qualifying income limit, due to start from next April, is set to create more problems. 

The latest Wickes Mood of the Nation survey found that 79% of sole traders are ‘unprepared’ for MTD, with only 21% of trade professionals stating they were ‘fully prepared’. While they may have heard of MTD, they are not signed up in sufficient numbers yet, despite the 8 August deadline long past for the first wave of £50,000 plus income.

There is also low uptake of software among this group and many are unrepresented. Nearly three in five sole traders handle their own taxes and do not use an accountant, while half (49%) still use paper records and only 41% use spreadsheets. Many accountants were reporting a scramble on the first August deadline day from clients wiho had tried to file MTD themselves but found it too complicated and reached out for help.

Recognising the problem, trade and DIY giant Wickes has signed a deal with Xero to offer free TradePro members six months of free access to Xero’s MTD software. This is worth at least £96 excluding VAT for the entry level package.

The extension to £30,000 qualifying income is raising alarms bells as nearly two million sole traders and self employed are going to be dragged into MTD in less than eight months’ time.

The move means an end to paper records and chaotic invoices scattered on email, with great concern among tradespeople about how they will cope with 20% of respondents to the Wickes survey saying they ‘do not feel ready at all’ for MTD.

Almost one in three (29%) sole traders have concerns about MTD, and nearly two thirds (63%) cite increased admin as their key concern while 48% worry about potential mistakes and as many cite greater tax complexity.

Gary Kibble, chief marketing officer at Wickes said MTD was ‘a significant change’ creating quarterly admin filing requirements for hard pressed tradespeople, when there’s already ‘a lot for tradespeople to juggle alongside getting the job done’. In addition, three in five sole traders manage their finances themselves and do not use an accountant or agent.

‘We know that running a successful trade business involves much more than the work itself,from keeping customers happy to managing materials, costs and paperwork,’ he added. ‘We’re committed to giving our TradePro members practical support that makes life a little easier, both on and off the tools.’

While HMRC’s MTD for Income Tax currently only affects those with qualifying income over £50,000 as of tax year 2024-25, this is only the beginning.

HMRC is going to quickly roll out the quarterly reporting requirements down the earnings ladder to other income brackets with phase 2 hitting those above £30,000 threshold from 6 April 2027, and phrase 3 down as low as £20,000 from 6 April 2028.

Top tips for MTD compliance

Wickes’ experts have also outlined five practical steps to prepare for the changes, with TradePro members also able to access guides, webinars and content to support them through the transition. 

1. Adopt MTD-compatible software early

The single biggest shift for sole traders is moving away from spreadsheets and paper invoices to an HMRC-recognised MTD-compatible software platform. Starting early allows business owners to test workflows without pressure.  

2. Ditch paper and embed digital record-keeping

With 39% of tradespeople spending up to three hours a month manually managing receipts, digitising day-to-day records is increasingly important.

Sole traders should photograph or scan physical receipts, use digital invoicing tools and keep transactions categorised throughout the year. Under MTD, digital records must support quarterly submissions, so waiting until the end of the tax year is no longer practical.

3. Connect automated bank feeds

With nearly three in five (58%) sole traders managing their business finances entirely on their own rather than outsourcing to an accountant, the risk of a last-minute admin crunch is high.

To eliminate the fear of increased admin, sole traders should open a dedicated business bank account and sync automated bank feeds directly to their accounting software. Bank feeds automatically pull daily income and expenses into the system, reducing manual data entry and human error

4. Practice a quarterly financial rhythm now

MTD will move many self-employed people from a single annual self assessment tax return to four quarterly digital updates and a year end update, with the first submission deadline already missed for many on 7 August for those earning over £50,000 in qualifying income.

Getting into the habit of running a quarterly financial review now can help avoid a last-minute scramble, provide clearer visibility over cash flow and reduce the risk of unexpected tax bills.

The rules will then extend to those earning over £30,000 in 2027-28 and over £20,000 in 2028-29.

5. Re-examine allowable trade expenses

While MTD changes how tax is reported, it doesn’t change what can be claimed. However, stricter quarterly digital categorisation means sole traders must be clearer on allowable expenses. Key claims tradespeople frequently overlook include tools, protective equipment, ongoing trade material costs, and home-office running expenses.

Wickes Xero TradePro offer