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1 in 2 UK small businesses unprepared for new digital tax deadline

Monday, July 13, 2026 — 16:23:45 (UTC)

1 in 2 small businesses unprepared for new digital tax deadline

55% not prepared for new digital tax deadline on 7 August

40% stated new process made them more organised, 28% said it reduced last-minute tax stress

93% want to manage tax admin through their banking app or online banking

London, July 13, 2026—With just weeks remaining until the first Making Tax Digital (MTD) for Income Tax submission deadline, new research[1] from Lloyds suggests more than half of small businesses (55%) still have work to do before they are ready to comply with the new rules.

Based on HMRC estimates of the number of sole traders and landlords in scope, that could mean around 475,000[2] small businesses are yet to complete preparations for the first phase of MTD. The findings come as sole traders and landlords move to HMRC's MTD for Income Tax requirements, which asks eligible taxpayers to maintain digital records and submit quarterly updates using compatible software.

Ramki Sankaranarayan, Head of Business Banking at Lloyds, said: "Making Tax Digital represents one of the biggest administrative changes many sole traders will have experienced for years. Our research suggests that while businesses recognise the benefits of digital record keeping, many are still working through what they need to do before the first submission deadline.”

"With small business owners already balancing multiple demands on their time, simplicity matters. That's why we've built HMRC-recognised Making Tax Digital for income tax functionality directly into eligible Lloyds Business Accounts at no extra cost, helping customers manage tax administration alongside their everyday banking."

Among those already preparing for the first submission on 7 August, 40% said the move to digital tax management had helped them become more organised, while 28% said it had reduced last-minute tax stress.

Nearly all respondents (93%) said it would be useful to manage tax records, deadlines and administration through their banking app or online banking, highlighting demand for simpler ways to comply with the new rules.

Lloyds recently integrated new Making Tax Digital software into its business account. The HMRC-recognised free tool helps sole traders keep digital records, categorise income and expenses, save receipts and prepare quarterly updates.3

The new rules apply to sole traders with annual revenue of £50,000 pa and above, reducing in the next two years to £30,000 and then £20,000.

Ends

Notes to editors

1. Research was conducted by Censuswide among 1,000 UK sole traders with an income of at least £50,000 between 29 June and 6 July 2026. Landlords did not form part of the survey sample.

2. The population estimate is sourced from HMRC's Making Tax Digital for Income Tax business population statistics.

3. HMRC-recognised accounting software for Making Tax Digital for Income Tax is built into Lloyds Business Accounts and available in online banking. There is no additional fee for the software and no subscription. Monthly fees apply for the Business Account Making Tax Digital for Income Tax Software | Lloyds Bank Business

This information is intended for the sole use of journalists and media professionals.

About Lloyds Banking Group

Lloyds Banking Group is a leading UK based financial services group providing a wide range of banking and financial services, focused on personal and commercial customers. As part of the Group, Lloyds provides expert financial support and guidance to the households, businesses and communities of Britain. We help businesses across the regions and nations of the UK, and across all different sectors and sizes, giving them the funding and support they need to grow both at home and abroad.

Our support for businesses

We’re proud to support one million UK businesses with leading digital and relationship banking services, as they start up, grow and thrive. Through a network of relationship teams based across the UK, as well as internationally, we deliver a mix of local understanding and global expertise necessary to provide long-term support to our clients to help them fulfil their growth aspirations.

We offer a broad range of finance beyond term lending, spanning import and export trade finance, structured and asset finance, securitisation facilities and capital market funding.

Our product specialists provide bespoke financial services and solutions, including tailored cash management, international trade, treasury and risk management services.

To see the latest factsheet setting out how we support UK businesses please visit: Supporting British businesses - Lloyds Banking Group plc

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Source: Company press release.

Categories: Reports and research