The countdown to Making Tax Digital (MTD) has reached its final stages, with less than a month remaining until the first quarterly submission deadline. Alarming numbers suggest that over 200,000 landlords and sole traders across the UK are still in the dark regarding their digital tax obligations, according to recent research commissioned by business management platform Tide.
Specifically, our study reveals that a quarter of those earning over £50,000 – an estimated 216,000 individuals out of the 864,000 mandated for MTD compliance – have yet to register with HMRC. This is a concerning trend, as it leaves these businesses vulnerable to potential penalties and fines.
A separate issue at play here is the widespread confusion surrounding reporting frequency. The survey revealed that an astonishing 85% of respondents were unaware that MTD entails four quarterly updates followed by a final annual submission – in total, five filings per year. Furthermore, nearly one-third (31%) mistakenly believed they would need to make at least eight submissions, highlighting a persistent knowledge gap that has shown little improvement since our February research.
The administrative burden of MTD is also a pressing concern for businesses. A significant 44% anticipate completing MTD tasks during regular working hours, while 32% expect to dedicate personal time off to compliance. On average, respondents estimated this new tax requirement would consume the equivalent of six full working days over the next 12 months, underscoring the potential economic implications.
Tide's analysis indicates that the time spent by businesses on MTD compliance could result in an estimated £1.5 billion in lost business revenue during the first year. This substantial figure underscores the potential economic drag if businesses divert significant resources from core operations to manage their digital tax obligations, particularly for smaller enterprises and sole traders who may have limited administrative support.