Self-employed brace for digital tax as deadline looms

Intuit QuickBooks has published survey findings that point to heavy year-end pressure among UK self-assessment filers, as HM Revenue & Customs prepares to introduce Making Tax Digital for Income Tax from April 2026.

The company said its research suggests most sole traders leave filing until December and January, with many working through the festive period. It also highlighted interest in digital accounting tools and artificial intelligence among higher earners who will face the first wave of the new reporting rules.

HMRC has said that millions of people used the Christmas period to submit returns, but 5.65 million still had not filed by early January, ahead of the 31 January deadline. The annual rush has become a recurring feature of the UK personal tax calendar, particularly among sole traders and those with more complex income streams.

Year-end rush

Intuit QuickBooks said 83% of respondents file their self-assessment return in December and January. It said 32% file during the festive period between Christmas and the first week of the New Year.

The research focused on individuals who complete UK self-assessment returns and have untaxed income over £20,000. It found that 51% spend at least 11 hours on tax administration annually, with higher earners spending more on average.

Respondents identified several tasks that take the most time. Intuit QuickBooks said 22% cited calculating and managing income and expenses accurately. It said 19% pointed to working out how to populate the information in the right sections on HMRC's website. It said 14% cited finding receipts or sourcing missing receipts.

Digital change

Making Tax Digital for Income Tax will require some taxpayers to keep digital records and submit updates quarterly using compatible software. Intuit QuickBooks said 864,000 UK taxpayers will fall into scope at the start, based on those with qualifying income over £50,000 in the 2024/25 tax year. The company said that figure will rise to 2,900,000 by 2028.

The research also asked how people perceive the upcoming change. Intuit QuickBooks said 33% see Making Tax Digital as helpful and 26% see it as manageable. It said 15% find it daunting. It said 24% think the success of quarterly updates will depend on the software they choose.

HMRC has previously analysed Making Tax Digital for VAT. Intuit QuickBooks cited HMRC analysis that suggests VAT-registered individuals and businesses using "fully functional MTD-compatible software" save, on average, between 26 and 40 hours a year on business finances and record keeping. The analysis attributes the savings to more efficient digital record keeping, reduced repeated work, and a more streamlined preparation and submission process.

Time dividend

Intuit QuickBooks said its survey tested how significant those potential time savings feel for people who file self-assessment returns. It said 55% of respondents report that a 40-hour saving would make the Christmas-to-January self-assessment rush "a very different experience". It said 53% describe the time as "precious time".

When asked how they would use 40 extra hours, respondents pointed to personal and professional goals. Intuit QuickBooks said 34% would use the time to catch up on hobbies. It said 31% would start a side project. It said 30% would build habits. It said 29% would take a holiday. It said 24% would reconnect with friends.

Software and AI

Among those earning over the initial £50,000 threshold, Intuit QuickBooks said 74% feel ready for Making Tax Digital. It said 38% already use MTD-compatible software. It said 30% have chosen software but have not started. It said 22% are still exploring options. It said 9% are aware of MTD but have yet to take any action.

The survey also pointed to rising use of artificial intelligence tools. Intuit QuickBooks said 36% of respondents already use AI tools, rising to 40% among higher earners. It said a further 34% plan to use AI in some capacity this year.

Respondents also expressed views on where the time saving might come from in practice. Intuit QuickBooks said the top answer was software at 31%. It said 24% pointed to their accountant or bookkeeper, and 20% pointed to themselves.

"Anyone who has a tax return to complete knows that January doesn't feel like a fresh start, just more unfinished admin. What this survey shows is that Making Tax Digital offers a chance to break that cycle, and the potential 40-hour time saving is a rare gift. With 90 days to go, our goal is to ensure the technology clears the path," said Nick Williams, International Product Director, Intuit.

Amy Hancock commented on readiness among sole traders and the implications of inaction. "It's encouraging that the majority of sole traders are prepared for MTD, but the 9% who haven't yet taken action risk creating additional stress for themselves down the line.

With sole traders set to gain 26-40 hours by using MTD-compatible software, the reality is clear: time will be saved, and stress reduced, when tax goes digital on 6th April," said Hancock.

Abul Nurujjaman said advisers will remain central as the reporting model shifts. "It's great to see that almost 1 in 4 sole traders view their accountant as the key to unlocking a 40-hour saving. Up-to-the-minute digital know-how is essential: we're seeing our clients grapple with challenges such as managing income and expenses, sourcing receipts, and navigating HMRC's online systems.

By bringing the right digital tools to the table, accountants can streamline processes, reduce errors and enhance decision-making for their clients. During the festive period, this matters more than ever - it's the difference between spending time celebrating with family and spending time filing taxes at a computer," said Nurujjaman.