Sole traders face a £2.18bn annual compliance bill, equivalent to £753 per business under new MTD rules.
The shift to five tax filings a year will divert 44 million working days away from sole traders and landlords.
Four out of five (83%) affected entrepreneurs are still unaware they must file five times a year, while six in ten (62%) do not fully understand the new penalty regime.
Tide has launched a free, HMRC-recognised MTD tool to help sole traders file correctly and reduce cost, complexity and penalty risk.
London, UK - 24 February 2026: Sole traders and landlords across the UK are facing a mounting compliance crisis as new research from Tide reveals that Making Tax Digital (MTD) will cost those eligible an estimated £2.18 billion, while diverting the equivalent of 44 million working days away from running and growing their business.
The findings come as Tide, the UK’s leading business management platform, launches a new, HMRC-recognised MTD-ready tool, designed to help members file correctly and avoid costly penalties for free. The research surveyed 349 UK sole traders and landlords with annual revenues above £20,000, representing those in scope of upcoming MTD rules.
MTD will require sole traders and landlords earning over £50,000 from this April, £30,000 from April 2027 and £20,000 from 2028, to move from a single annual tax submission to five filings per year. Yet awareness remains perilously low. Tide’s research shows that across those who will be affected in the next two years, four out of five (83%) do not realise how many times they will need to file, and six in ten (62%) do not fully understand HMRC’s new points-based penalty regime. Worryingly, nearly one in five (17%) say they plan to handle MTD filings themselves, despite HMRC stipulating that submissions must be made through approved, recognised software.
On average, sole traders expect to spend 114 additional hours in their first year of eligibility researching the new rules, adapting to digital record-keeping and managing five annual submissions. Across the 2.9 million sole traders in scope, that equates to 331 million hours - or 44 million working days - diverted to compliance. For many, that time must come directly from revenue-generating work, with one in seven (15%) saying they will reduce billable hours to cope with the added administrative load.
The financial impact compounds the pressure. Sole traders expect to spend an average of £753 to become and remain compliant. Multiplied across the eligible population, that amounts to a collective annual bill of £2.18 billion. More than half (55%) expect costs above £500, and one in five (18%) anticipate spending over £1,000.
Against this backdrop, demand for simpler solutions is clear. Six in ten (58%) entrepreneurs say that integrating MTD filings directly into their business bank account would make the process quicker, easier and less stressful.
In response, Tide’s new free MTD tool enables members to manage digital records and submit Making Tax Digital returns using HMRC-recognised software directly within the Tide app. By embedding tax functionality into its banking experience, Tide aims to reduce duplication, prevent avoidable fines and remove the need for multiple disconnected systems. Tide also stands out as the only banking competitor offering three free invoices, alongside more comprehensive accounting and tax functionality within paid tiers, helping members consolidate tools and manage costs more effectively.
George Schmidt, CEO UK/Europe at Tide, said: “With an eyewatering £2 billion in compliance costs and over 40 million working days being wasted on paperwork, the UK’s sole traders are facing a compliance crisis. Every minute spent wrestling with compliance is a minute taken away from growing their business.
“Our research shows that six in ten entrepreneurs believe integrating MTD filings directly into their business bank account is the best way to protect their time and their bottom line. By building HMRC-recognised, MTD-ready software directly into the Tide app, we’re helping sole traders stay compliant without sacrificing the time and money they need to grow.”
Existing members can access the Making Tax Digital tool in the Tide app, and interested sole traders/landlords can sign up for a free Tide account at https://www.tide.co/making-tax-digital/
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Notes to editors:
Contact:
Lloyd Purnell, PR & Communications Lead, Tide / lloyd.purnell@tide.co
Methodology:
Quantilope (on behalf of Tide) surveyed 500 UK sole traders online between 28 January and 4 February 2026; findings cited in this release are based on the 349 respondents with annual revenues above £20,000, reflecting those eligible for upcoming Making Tax Digital requirements.
About Tide:
Launched in 2017, Tide is the leading business management platform in the UK. Tide helps small businesses save time and money by not only offering business accounts and related admin services, but also a comprehensive set of highly usable and connected administrative solutions from invoicing to accounting and adjacent commercial services such as web-site building.
Tide has nearly 800,000 SME members in the UK (14% market share) and more than 1,000,000 SMEs in India. Tide launched in Germany in May 2024 and France in September 2025. Tide has also been recognised with the Great Place to Work certification three years in a row. Tide has been funded by Anthemis, the Apax Digital Funds, Augmentum Fintech, Creandum, Salica Investments, Latitude, LocalGlobe, SBI Group, Speedinvest and TPG, amongst others. It employs more than 2,500 Tideans worldwide. Tide’s long-term ambition is to be the leading business management platform globally.
