HMRC's Making Tax Digital Timeline

HMRC plans to become one of the most digitally-advanced tax administrations in the world. This means that big changes are needed to our current tax system, affecting both how data is collected and how it is stored by HMRC.

HMRC has taken a major step forward in achieving this with the launch of the Making Tax Digital initiative.

July 2020 saw the treasury provide a written statement declaring HMRC's 10 year plan signalling their intent to make tax:

• More effective
• More efficient
• Easier for taxpayers

A further written statement published in September 2021 introduced the legislation and confirmed the dates identified below.

In July 2022, HMRC opened a consultation on the tertiary legislation for MTD for Income Tax.

In December 2022 it was announced in a Written Ministerial Statement that the roll out of MTD for Income Tax would be delayed by a further two years.

In November 2023, HMRC published the outcome of their small business review which includes a number of simplification measures such as the removal of the End of Period Statement, the change to cumulative submissions and a commitment for enabling taxpayers to be represented by more than one agent.

In October 2024 the new Labour government, by way of an Autumn budget publication, confirmed that MTD for Income Tax will proceed as planned in April 2026. Furthermore, the mandation threshold of £30,000 will be lowered to £20,000 by the end of the current Parliament.

Timeline

HMRC’s MTD journey so far:

What now?

The key requirement for all businesses falling within the MTD regime, whether that is for VAT, Income Tax or Corporation Tax, will be to keep records digitally and up to date on a quarterly basis.

For businesses whose records are currently manual, or completed annually, this will represent the biggest change to their bookkeeping processes and it may be advisable for them to begin that digital transformation journey as soon as possible.

Future-proofing with TaxCalc

We are actively working on solutions, as recognised by HMRC, to make the transition into MTD for Income Tax as seamless as possible.

MTD Quarterly Filer is our new MTD for Income Tax bridging solution and upon release will allow our customers to submit quarterly submissions to HMRC. Those familiar with VAT Filer, our MTD for VAT bridging solution, will recognise the simplicity with which those submissions can be made.

For your annual tax filing obligations we will update Tax Return Production to allow you to meet your MTD for Income Tax requirements.

We are also continuing to explore collaborations with other software suppliers to ensure a seamless end to end process across multiple systems.