Freelancers Won’t Quit Over Tax Shake-Up Just Yet

Despite dire warnings, freelancers are unlikely to abandon self-employment en masse because of Making Tax Digital. While some may rethink their workload or consider returning to employment, most will stay the course. For many, freelancing is a conscious trade-off — flexibility and independence in exchange for uncertainty and risk — and a new layer of tax admin is unlikely to outweigh the appeal of being their own boss.

The Daily Telegraph’s claim that freelancers will stop freelancing because of Making Tax Digital for Income Tax Self-Assessment, which has come into force for those earning £50,000 or more, has raised eyebrows.

Photo by Marten Bjork on Unsplash

Some will seriously consider quitting, reducing their workload, or going back to employment but most won’t. There are reasons why people take all the risks of setting up as a freelance. It’s not the easiest option, can be isolating, leaves you very exposed to the vagaries of the market you’re working in, gives you no time off sick, on holiday, parental leave that you don’t have to pay for yourself. But if you don’t want to be an employee, want the flexibility of being your own boss and are willing to deal with the uncertainty of where the next piece of work is going to come from and when, it’s ideal for many people.

Matt Dowling founder of The Freelancer Club says: “The idea that freelancers will pack in their business because they have to file updates five times a year is wildly out of touch with reality.

Freelancers aren’t in this because it’s easy or admin-free. They’ve chosen it because they value control, autonomy, and building something on their own terms. A bit more structure in reporting doesn’t change that. If anything, once the process is in place, it gives them a sharper, more consistent view of their finances, which is exactly what serious independents want. This says more about how poorly freelancing is understood than how freelancers behave. People who’ve already opted out of traditional employment are not going to walk away from that lightly because of a few extra submissions.”

Some freelancers will quit, especially low earners, older workers, and side‑hustlers, many of whom were possibly already on the cusp given all the other business uncertainty they’ve had to put up with over the past few years coupled with rising costs and reducing customer demand because of the cost of living. Others will have an opportunity to find new customers because businesses facing uncertainty would rather take on a freelancer than a permanent employee while they see how the new Employee Rights reforms bed in.

The bigger risk is reduced capacity, burnout, and widespread non‑compliance. The transition will be painful unless:

• awareness improves

• software becomes easier

• HMRC provides clearer guidance

• support is targeted at microbusinesses

MTD is survivable and with the right support freelancers will survive the change. However, the transition will be messy, stressful, and could push thousands of freelancers to the brink.

1. Awareness and readiness are extremely low

Only 5% of freelancers who will be required to join MTD in April 2026 have registered so far.

Millions are:

• unaware of the rules

• confused about software requirements

• unprepared for quarterly reporting

• worried about penalties

Low awareness increases the risk of panic, non‑compliance, and drop‑out.

2. MTD increases admin five‑fold which is a major burden for freelancers

MTD replaces one annual tax return with:

• 4 quarterly submissions, plus

• a final declaration

That’s five reporting events instead of one.

For freelancers already juggling multiple clients and irregular income, this is a major shift.

3. Some freelancers will quit but not the majority

Based on current evidence, three groups are most likely to quit or scale back:

A. Low‑earning freelancers close to the £30k threshold

From 2027, MTD will apply to those earning over £30,000. Many in this group already operate on thin margins and may decide the admin isn’t worth it.

B. Older freelancers nearing retirement

Some will choose to retire early rather than learn new systems.

C. Side‑hustlers and part‑timers

Quarterly reporting may feel disproportionate to their income.

But most full‑time freelancers will adapt, even if reluctantly, because they rely on the income.

4. The bigger risk isn’t quitting. It’s chaos

Experts such as accountants are warning of a “chaotic transition” because so few freelancers are prepared.

Likely consequences:

• missed deadlines

• penalties

• stress and burnout

• increased accounting costs

• temporary drop in freelance capacity

This could disrupt supply chains, especially in:

• creative industries

• IT contracting

• care staffing

• construction

• professional services

5. Automation may save many freelancers from quitting

Tools that link bank accounts directly to HMRC (“set‑and‑forget” systems) are being promoted as the easiest way to comply.

These tools:

• reduce admin

• automate record‑keeping

• minimise errors

• help avoid penalties

If adoption is high, fewer freelancers will quit.

6. The real danger is that freelancers may reduce work to stay below thresholds to avoid:

• quarterly reporting

• software costs

• admin burden

Some freelancers may:

• keep turnover below £50k

• or below £30k from 2027

This would reduce economic activity, not because of market forces, but because of tax design.

Don’t quit. Talk to your accountant or bookkeeper. Once the process is in place you’ll benefit from knowing more about your finances more often. You’ll have a better picture of how your business is operating and that will help you make better business decisions.