Hundreds of thousands of self-employed tradespeople will need to introduce new processes under the government’s Making Tax Digital (MTD) reforms, adding to growing pressure from rising day-to-day costs, new research reveals.
A survey of 650 tradespeople by specialist insurance provider Tradesman Saver suggests that 6 in 10 (61%) tradespeople currently manage their accounts themselves, while only one in five (21%) use an accountant or bookkeeper. A further 17% rely on a partner or spouse to handle their finances. The research highlights how unprepared many in the sector may be for the shift, which will require many sole traders to keep digital records and submit quarterly tax updates.
The changes come during a period of wider financial pressures. Tradesman Saver’s data shows that rising fuel and transport costs (45%), household inflation (39%) and energy bills (34%) are the biggest financial pressures facing tradespeople today. Meanwhile, one in five (20%) say late or missed payments from customers are impacting their cashflow.
Alongside everyday expenses, tradespeople are also dealing with rising tool and equipment costs (29%) and income tax (26%).
Dean Laming, MD of Tradesman Saver, comments: “Making Tax Digital comes at a time when many tradespeople are already stretched, facing rising costs and ongoing cashflow challenges, and fitting admin into evenings and weekends.
“There are around 700,000 self-employed workers across construction. Our data shows that for many, the shift won’t just be a process change, it will mean adding another layer of financial responsibility, increasing the pressure on them in the short-term. However, those who adopt the right digital tools early are likely to benefit from greater visibility over invoices, payments and business expenses like insurance, which could ultimately put them in a stronger position.”
Find out more about what you need to know about Making Tax Digital.
