Making Tax Digital for Sole Traders is here, and it’s already changing how many self-employed people report their tax. Instead of dealing with your accounts once a year, you’ll need to keep digital records, send quarterly updates to HMRC, and then submit a final declaration by January 31st. 

Now, in theory, that means no more Self Assessment dread where you have to pull together a whole year's worth of invoices and expenses for one submission. However, spreading the work throughout the year doesn’t necessarily mean less of it. Without the right tools, keeping on top of your accounts can still take up a fair chunk of your time as a Sole Trader.

How much time does Making Tax Digital take for Sole Traders?

New research from Tide suggests that Sole Traders expect to spend up to six full days dealing with MTD-related admin over the next year. For someone running their own business, that’s a sizeable chunk of time. When you’re the person responsible for bringing in the work, six days is a lot to lose to admin.

The MTD ITSA research estimates this could represent around £1,778 in lost revenue per qualifying business, based on the average daily revenue of those surveyed. That’s a sucker punch for the average Sole Trader. But across 864,000 affected individuals, that’s an eye-watering £1.5 billion worth of potential revenue tied up in MTD admin.

Now, that six-day estimate comes from a survey of 500 individuals, so it won’t reflect every Sole Trader’s experience. How much time MTD takes will depend on your business and how you currently manage your accounts. But one thing is clear: you don't want to spend six days manually sorting your accounts if you don't have to. 

That’s why Crunch is built to take care of much of the legwork for you. From pulling transactions in through Open Banking to matching them automatically with Auto-Match, our Making Tax Digital software for Sole Traders helps cut down the hours spent on repetitive admin.

If you'd rather not deal with your accounts yourself, you can have a Crunch accountant take care of them for you, too. With Making Tax Digital for Income Tax, the goal shouldn’t be finding more time for your accounts. It should be finding ways to spend less time on them.

Why could MTD for Sole Traders take so much time?

If you’re already using accounting software and keeping your records up to date, MTD may not feel like a huge change. However, if you’re currently relying on spreadsheets, receipts in a drawer, and a frantic January catch-up session, it’s going to be a big change. 

The main MTD requirements for Sole Traders include:

• Keeping digital records of your income and expenses.
• Using MTD-compatible software (like Crunch).
• Sending quarterly updates to HMRC.
• Keeping your records up to date throughout the year.
• Completing your final declaration (sometimes called a final tax return).

The quarterly updates aren’t a replacement for your Self Assessment tax return. You’ll still need to complete your final declaration and pay the tax you owe for the January deadline. However, the difference is that you’ll be keeping HMRC updated along the way, rather than doing all the work in one big annual push.

That way both you and HMRC will hopefully have a much clearer picture of what you’ll owe come payment deadline time. 

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So, how can you keep MTD admin under control?

The good news is that MTD doesn’t have to mean spending six days hunched over your accounts stressing over that missing receipt. The biggest time-saver is avoiding unnecessary admin in the first place. If your MTD-compatible software can capture, organise and match things for you as you go, there’s much less to sort out when a quarterly update comes around.

As Crunch’s product team explains, the key is making the admin easier to manage with the right tools behind you:

“We completely understand that changing how you manage your taxes can feel daunting. But MTD doesn't have to mean endless hours lost to paperwork. We design our software so the admin happens naturally in the background - features like Auto-match handle the tedious sorting, while Luca, our AI-assisted Crunch expert, provides instant step-by-step guidance whenever questions pop up.”

“Combined with dedicated support from our human accounting team, we're making sure business owners can handle MTD seamlessly and get straight back to doing what they do best.”

That way, keeping things up to date becomes part of running your business instead of being a part of the admin you dread.

Keep your records up to date.

Nobody wants to spend a whole afternoon sorting through months of transactions or digging through a drawer full of receipts. With Crunch, you can use the Snap receipt scanner to photograph a receipt as soon as you get it. It’s logged in your account, so you can scan it and forget about it rather than keeping a growing pile of paper to deal with later.

The payoff? Your expenses are captured when they happen, rather than becoming a time-costly job you have to tackle when a Making Tax Digital deadline is looming.

Connect your business bank account.

If you're manually importing transactions or worse still typing every single one into a spreadsheet, you're spending time on something a good MTD software could be doing for you. For example, Crunch's Open Banking connection pulls transactions from your business bank account into your accounts automatically, so there’s less copying and pasting or manually important meaning far less time is wasted. 

Then Auto-Match can match transactions for you, leaving you to check and confirm them rather than working through each one yourself. For a Sole Trader with a busy business account, that can take a pretty tedious job off your hands.

Don’t let questions interrupt your workflow.

Sometimes the thing slowing you down isn't the numbers, but it’s wondering what you need to do next. Can you claim that expense? What do you do if there’s a doubled-up transaction in your account? When’s your next tax deadline? What do you need to do in a particular situation?

That’s where you need a 24/7 AI-driven Crunch expert. Luca, Crunch’s AI assistant, can help you find the answer whenever you need it. Meaning you won’t have to step away from your software to understand a tax rule or figure out what to do next. 

With Luca, you can keep moving forward instead of breaking off from your accounts to hunt through help pages or trawl the dreaded HMRC articles yourself.

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Got a backlog? Don't enter everything manually.

If you've got a pile of transactions waiting to be added, entering them one at a time isn't going to make MTD for IT any more enjoyable. Crunch's Bulk Importer lets you bring in multiple transactions at once, so you can get your accounts up to date without working through every transaction individually.

That’s particularly useful if you've fallen behind and need to get everything in order before your next quarterly update.

Don't leave everything until the deadline.

Making Tax Digital for Income Tax means keeping your accounts in shape throughout the year, rather than having one enormous accounting job waiting for you at the end of it.

Scan receipts as you get them. Let your bank transactions come through automatically. Match them as you go. If you have a question, ask Luca rather than putting it off until you have time to investigate it. For anything more complicated, or when you need specialist advice on your tax, you can also get help from a certified accountant.

So, if you're looking at MTD requirements for Sole Traders and wondering how you're going to keep on top of it all, remember that you don't have to do everything yourself. The right MTD-compatible software can take care of a lot of the admin, while having an accountant behind you means there's someone to turn to when things get more complicated.

Because with MTD for ITSA, the aim shouldn't be to find more time for your accounts. It should be to make your accounts take less time.
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Six days wasted on Making Tax Digital? No thanks.

You don't have to spend days wrestling with your accounts just to keep up with MTD. Crunch gives you the tools to cut down the admin yourself, with accountant support available when you want or need it.

Pick the level of help that suits you:

I've got this.

You can manage your accounts yourself with our MTD-compatible software with handy tools that take care of the repetitive stuff. Think of it as bookkeeping on fast-forward. 

I need a hand sometimes.

Got a question, a tricky bit of tax or something you're not sure about? Get one-off, ad-hoc support from an accredited Crunch accountant when you need it, without committing to ongoing accountant support. As online accountants, we make it easy to get expert help when you need it, wherever you are. No having to travel to speak to an expert, it’s all done through a one-to-one video call that suits your schedule.

I'd like more support.

Sometimes you just want to be able to ask an accountant, “Am I doing this right?” That's where Crunch comes in. Your Making Tax Digital accountant can help with your accounts, answer the tricky questions, keep you on top of your tax, and spot legitimate ways to reduce your tax bill. They work alongside your Crunch software, so your accountant has the context they need, and you don’t have to juggle everything yourself.

Crunch’s Making Tax Digital software helps take care of the day-to-day bookkeeping, and our experts help you make the most of your money. 

Ready to stop tackling tax alone? Get an instant online accounting quote and see how much expert MTD support could cost.

Not sure which level of support is right for you? Check out our article on how software-only MTD accounting compares with full-service accounting, including an in-depth breakdown of what you get with each option. Or if you’d rather speak to a real expert, book a call with our advisors and get some advice on which option would work best for you.

Please note: Our MTD for Income Tax software currently supports individuals with a single income source and no property income. We can still support MTD for Income Tax for other income streams, get in touch to learn more.