With around 90 days to go until Making Tax Digital (MTD) for Income Tax goes live, new research suggests many sole traders hope the shift to digital tax reporting will finally ease the end-of-January Self Assessment crunch.
A survey commissioned by Intuit QuickBooks highlights just how concentrated tax admin has become around the January deadline, and why higher-earning sole traders are closely watching HMRC’s long-promised productivity gains from MTD.
According to HMRC, around 3 million people will eventually need to comply with MTD for income tax, with around 860,000 included in the initial launch from April 2026.
January remains the peak stress season for Self Assessment
According to the research, more than four in five people who complete a Self Assessment tax return file it in December or January, with nearly a third submitting during the Christmas and New Year period itself.
Time pressure is a significant factor. Over half of respondents reported spending at least 11 hours per year on tax administration, with higher earners typically spending more. For many, that workload lands right at the busiest time of year.
Against that backdrop, MTD for Income Tax is being framed not just as a compliance change but also as a potential time-release valve.
What the “40-hour gift” actually means
HMRC’s own evaluation of Making Tax Digital for VAT found that businesses using fully functional MTD-compatible software saved between 26 and 40 hours a year on record keeping and tax processes.
The savings did not come from filing tax returns faster on deadline day, but from reducing repeated work across the year, keeping digital records up to date, and cutting time spent correcting errors or chasing missing information.
That evidence, drawn from HMRC’s VAT programme, supports the view that MTD for Income Tax could shift the burden of tax administration away from January altogether.
You can read HMRC’s complete VAT evaluation here.
More than half of survey respondents said a 40-hour saving would fundamentally change the Christmas-to-January rush, describing it as “a very different experience” compared with today’s system.
Why MTD targets the most significant pain points
The survey also identified where most time is lost when completing a tax return:
- managing and categorising income and expenses
- working out which figures go where in HMRC’s online system
- locating missing or incomplete receipts
Under MTD for Income Tax, sole traders will keep digital records and submit quarterly updates using compatible software, rather than reconstructing a full year’s finances in one go.
One-third of respondents described MTD as helpful, a quarter as manageable, and only a small minority as daunting. Nearly one in four said the success of quarterly reporting would depend mainly on the software they choose.
You can read a full breakdown of how the new system will work in ByteStart’s guide to Making Tax Digital for sole traders, including thresholds, deadlines and exemptions.
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Read HMRC’s official guide to MTD for income tax here.
Digital readiness is rising, but not universal
Among sole traders earning over £50,000, who will be brought into MTD first from April 2026, almost three quarters said they already feel ready.
Some are already using MTD-compatible software, while others have chosen a platform but have not yet begun using it. However, nearly one in ten are aware of MTD but have not taken any action, leaving preparation dangerously late.
There is also growing use of automation and AI tools in the tax workflow. Over a third of respondents are already using AI in some capacity, with that share rising to around 40% among higher earners. A further third expect to start using AI tools this year.
When asked where the most significant time savings would come from, most pointed to software first, followed by help from an accountant or bookkeeper.
If you are reviewing your options, try our overview of business accounting software for the self-employed, which includes links to the major providers.
Accountants are still seen as central to time savings
Although MTD is often framed as a significant technological change, professional accounting support remains essential.
Almost a quarter of respondents said their accountant would be key to unlocking the potential 40-hour saving.
That reflects a practical reality. Even with digital records, many sole traders still need guidance on correctly categorising expenses, understanding HMRC rules, and avoiding errors that can trigger follow-up queries or penalties.
We cover this in our recent guide: whether you still need an accountant if you use accounting software.
A shift away from the traditional January bottleneck
Commenting on the findings, Intuit said the research reflects a widespread desire to break the annual cycle of unfinished tax admin spilling into the New Year.
Accountants quoted in the study echoed that view, warning that delaying MTD preparation risks adding stress rather than reducing it. With quarterly reporting and digital records becoming mandatory, the opportunity to smooth tax admin across the year is there, but only for those who prepare in advance.
For sole traders above the £50,000 threshold, the clock is now ticking. April 2026 is less than 90 days away, and the more you prepare in advance, the easier the transition will be.
