TL;DR

A Starling Bank survey of 1,000 UK sole traders found that 26% have used an AI platform for guidance on Making Tax Digital, 20% use AI regularly for tax and accounting support, and 88% say they trust the answers. Speed, not cost, is the primary motivator.

Why sole traders are turning to AI

The survey points to convenience over cost as the main driver: 39% said they chose AI because they wanted information quickly, compared with 32% who cited the expense of professional advice. More than half (55%) expect to rely on AI more over the coming year.

Importantly, most sole traders are using AI as a supplement rather than a replacement. Some 26% had used AI for a second opinion on advice they had already received, suggesting a “check-then-verify” pattern rather than blind reliance on AI outputs.

The Making Tax Digital pressure

The findings coincide with HMRC’s Making Tax Digital for Income Tax requirements, which mandate compatible software for digital record-keeping and quarterly reporting for self-employed people and landlords with qualifying income above £50,000. New compliance steps are driving sole traders toward digital tools for tasks they previously managed on paper or in spreadsheets.

Starling launched a free accounting software package alongside the research, including an HMRC-recognised Making Tax Digital tool that lets users manage tax reporting, categorise transactions and track finances in real time. A paid tier for VAT-registered businesses costs £7 per month until April 2027, then £14.

The trust question

The 88% trust figure stands out. While AI tools can handle routine tax queries competently, they can also produce confidently wrong answers — a risk heightened by HMRC compliance requirements where errors carry financial penalties. One customer cited in the research found AI useful for initial checks but not for more substantive advice, suggesting users may be calibrating their trust appropriately despite the headline figure.

Looking forward

For UK sole traders, the combination of new compliance obligations and accessible AI tools is reshaping how they manage tax administration. The pattern is clear: AI for speed and initial orientation, professionals for complexity and sign-off. Whether this division holds as AI tools improve will determine how deeply the profession is affected.