Half of UK Adults Unclear on Making Tax Digital as Deadline Looms, Wolters Kluwer Research Reveals

New research from Wolters Kluwer reveals that 50% of UK adults remain unaware of the requirements for Making Tax Digital (MTD) for Income Tax. As HMRC transitions from annual to quarterly reporting for sole traders and landlords, this significant knowledge gap presents both a compliance risk for taxpayers and a major advisory opportunity for fintechs and accountants.

What was announced

The research indicates that 31% of UK adults have never heard of Making Tax Digital (MTD), while an additional 19% are aware of the name but do not understand its requirements. This lack of clarity persists despite the fact that MTD represents the most significant shift in income tax reporting since the introduction of Self Assessment. Under the new rules, sole traders and landlords are required to maintain digital records and submit summaries of income and expenses to HMRC every three months, moving away from the traditional annual reporting cycle.

The rollout is being managed through tiered income thresholds. Those with qualifying income exceeding £50,000 have been required to comply since April 2026. This threshold is set to decrease to £30,000 in April 2027, with a further planned reduction to £20,000 in April 2028. Despite these looming dates, only 9% of adults currently use MTD, and 12% believe the rules apply to them but have yet to take any action. The findings are particularly timely as the next quarterly update for those already in scope is due by 7 November.

Furthermore, the research highlights a lack of confidence in record-keeping; 38% of respondents are not confident they could produce the necessary records if requested by HMRC. To ease the transition, HMRC is providing a "soft landing" period for those joining in April 2027, meaning no penalty points will be issued for late quarterly updates during the 2027/28 tax year, though this does not apply to late year-end tax returns.

"Making Tax Digital is here, and for many people it is closer than they think. Our research shows that a lot of people still don’t know what it involves, or whether it applies to them. The good news is that it is not too late. With the next group of landlords and sole traders joining in April 2027, now is the time to check whether you are in scope, choose the right tool, and start keeping records as you go. Accountants have a central role to play in helping their clients make that change with confidence,"

Bas Kniphorst, EVP and Managing Director of Wolters Kluwer Tax & Accounting Europe.

The companies involved

Wolters Kluwer is a global leader in professional information, software solutions, and services, particularly within the tax and accounting sectors. The company provides specialized tools designed to help professionals navigate complex regulatory environments and improve workflow efficiency. Its Tax & Accounting division is a core pillar of the business, operating extensively across Europe, including the UK, the Netherlands, and Belgium.

The company’s leadership includes Bas Kniphorst, who serves as Executive Vice President for Tax & Accounting Europe, and Marie Costers, the Vice President & General Manager for the UK, Netherlands, and Belgium regions. Wolters Kluwer has a long-standing presence in the market, evolving from a traditional publishing house into a digital-first technology provider. It competes in a high-stakes environment where accuracy and regulatory compliance are paramount. With over 200 mentions in FF News' proprietary data, the firm is established as a primary source of market insight and a key driver of digital adoption in the accounting profession. Its role in the MTD rollout is significant, as it provides the underlying software infrastructure that many accountants use to manage client compliance.

What FF News has reported before

FF News has followed Wolters Kluwer’s expansion into AI-driven compliance and international partnerships closely. Recently, the publication covered how Wolters Kluwer Expands Genya AI Suite to Automate Italian Tax and Accounting Workflows, highlighting the firm's push into conversational AI. In Northern Europe, the company has focused on integration, as seen when Wolters Kluwer and Finago Partner to Streamline Accounting Workflows in Sweden. On the regulatory front, the firm launched the AI-powered OneSumX® Reg Manager to Enhance Regulatory Change Management. Financial performance has also been a key focus, with the publication noting that Wolters Kluwer publishes 2023 Annual Report; reports 6% organic growth, signaling steady expansion in its core digital segments.

What this means

The widespread lack of awareness regarding MTD for Income Tax highlights a significant friction point in the UK’s digital transformation of tax. For the fintech sector, this gap is a clear signal that the "build it and they will come" approach to tax software is insufficient; there is a massive education deficit that incumbents and startups alike must address. The pressure is mounting on HMRC to improve its communication, but the real burden falls on accountants and software providers to bridge the divide before the 2027 and 2028 thresholds bring millions more into scope. This situation raises questions about whether the current market of digital tools is truly accessible to non-professional users or if the complexity of quarterly reporting will lead to a surge in non-compliance once the "soft landing" periods expire.