Freelancers rethink self-employment as MTD readiness comes under scrutiny

According to data from Taxfix, the stress caused by tax returns is leaving one in six freelancers reconsidering whether self-employment is really worth it.

The dreaded Self-Assessment tax return deadline is a tale as old as time, and as most sole traders and freelancers will tell you, so is the system. Every year, it’s the same story of last-minute panic, frantic inbox searches for that one receipt, and a mad rush fuelled by cold coffee and the HMRC countdown clock.

And with complaints around poor customer service and complicated processes, concerns are growing over whether HMRC is prepared to roll out Making Tax Digital (MTD) in April 2026 without adding further strain to freelancers who are already under pressure.

Tax headaches are making freelancers reconsider self-employment

Becoming self-employed may sound like a dream for some, but the stresses around tax returns are turning this dream into a horror story for many sole traders.

According to research from AI accounting platform Taxfix — which surveyed 2,000 freelancers — the stress around tax returns is making 16% of sole traders question whether they want to work for themselves anymore.

And for those who once thought about going freelance, the reality of the system is prompting a rethink — with the proportion of people considering self-employment falling from 50% to 38% between 2024 and 2025.

HMRC has warned that 5.65 million people are yet to file their tax return this year, but Taxfix’s survey found that 19% of self-employed Brits would rather pay the £100 fine than deal with the stress of filing their tax returns on time, while 25% admit to leaving their return later than usual this year.

“Doing a tax return as a sole trader feels way more complicated than it needs to be,” says Connor Gani, a freelance producer in London. “Every year, I’m forced to navigate the same system a limited company uses — scrolling through endless pages that don’t apply to me with anxiety-inducing warnings about penalties if I get it wrong.”

Is HMRC ready for Making Tax Digital?

Ongoing problems with HMRC’s systems could pose a risk to the implementation of Making Tax Digital (MTD) in April 2026.

A majority of respondents from Taxfix’s survey (54%) cited poor customer service and HRMC’s “confusing” website as the main reason for putting off their tax return. Complicated forms (29%) and anxiety around the process (27%) were also highly reported reasons.

And with MTD on the horizon, this data raises serious questions about whether HMRC is truly ready for its rollout — particularly when 81% of freelancers are calling for a simpler process, while 27% want mobile-friendly filing.

Oliver Harcourt, Senior Director at Taxfix, says: “MTD is a structural change requiring quarterly reporting that may benefit the tax system long term. But it currently risks increasing complexity for sole traders, rather than reducing it.

“We’re seeing that the current system is a huge pain point for tax filers, raising questions about HMRC’s preparedness for a quarterly reporting process.

“Whilst I’m confident that the technology for MTD will go live, I’m not confident that the user experience will be seamless in the immediate term.”

How freelancers should prepare for MTD

The most important step for sole traders and freelancers is to start keeping digital records as soon as possible and ditch the pen and paper methods for good.

That means organising income, expenses and receipts completely digitally. This will make Self-Assessment less stressful and lay the groundwork for MTD ahead of April.

MTD-ready accounting software can make the process much easier, with 71% of small businesses already relying on it to manage their taxes. Tools like Xero, QuickBooks and Sage allow you to track expenses in real-time, generate reports automatically, and even submit data directly to HMRC once MTD becomes mandatory. 

Overall, the key is to get into the habit of recording records digitally. The earlier you start, the smoother your tax filing will be, and the less stressful quarterly reporting under MTD will feel.