Sole traders turn to AI for tax advice as rules change

Starling Bank has published research suggesting that sole traders are using artificial intelligence tools for tax and accounting advice as HMRC’s Making Tax Digital changes drive wider adoption.

A survey of 1,000 UK sole traders found that 26% had used an AI platform for guidance on Making Tax Digital, while 20% said they regularly used AI for tax and accounting support. Among respondents, 88% said they trusted AI advice, and 55% expected to rely on it more over the coming year.

Speed appears to be the main reason. Some 39% said they chose AI because they wanted information quickly, compared with 32% who cited the cost of professional advice.

Many sole traders seem to be using AI for routine tasks rather than as a replacement for accountants or tax advisers. The research found that 26% had used AI for a second opinion on advice they had already received.

The survey was released alongside Starling’s launch of a free accounting software package for sole traders. It includes an HMRC-recognised Making Tax Digital for Income Tax tool that lets users manage tax reporting through the bank’s system, categorise transactions and track their finances in real time.

The launch comes as smaller businesses face pressure to adapt to new digital tax reporting requirements. Making Tax Digital for Income Tax requires self-employed people and landlords with qualifying income above £50,000 to use compatible software for digital record-keeping and quarterly reporting to HMRC.

Starling also highlighted wider financial administration pressures on smaller firms. Separate research cited found that small and medium-sized enterprises spend an average of £63,000 a year managing their finances.

Speed over cost

The findings suggest convenience is shaping how sole traders seek support. Rather than relying only on professional advisers, many are using AI to answer basic questions quickly, especially as new tax rules add unfamiliar compliance steps.

That may reflect the practical constraints on sole traders, who often manage administration themselves while running day-to-day operations. In that context, tools that provide immediate responses can be appealing, even if users still prefer professional advice for more complex matters.

“These findings are a call to action for all those who work with sole traders, showing that we need to find faster and more convenient ways to deliver the support they need. At Starling, we’re committed to playing our part with digital tools that help sole traders blast through their admin, leaving them more time to grow their businesses and to manage complex issues with their professional advisers,” said Daniel Hogan, Director of Business Tools at Starling.

User response

One customer cited in the research said AI had been useful for initial checks on the tax changes, but not for more serious advice.

“AI platforms are not usually where I’d get tax information from, but they were useful for searching about the Making Tax Digital changes. It may be helpful in future for low-level research, but for more serious advice, I’ll stick with the experts. It’s great that Starling has created a free HMRC-recognised Making Tax Digital tool for sole traders like me. It’s taken a weight off my mind,” Dr Emily Durling, Clinical Psychologist and Starling customer, said.

Starling’s accounting product has two pricing tiers. Its Essentials plan is free and aimed at sole traders, landlords and small businesses. Its Plus plan is designed for VAT-registered businesses and costs £7 a month until April 2027, then £14 a month.

The bank has previously introduced other AI-based customer tools, including services focused on spending insights and scam detection. Its latest research suggests that, for many sole traders, AI’s immediate appeal lies less in cutting advisory costs than in getting quick answers to routine questions as tax administration becomes more digital.