HMRC to evaluate Making Tax Digital impact
12:09 AM, 20th October 2026, 5 days ago
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The government says it will continue to evaluate Making Tax Digital for Income Tax as the scheme is extended to those with qualifying income over £30,000 from April next year.
Making Tax Digital for Income Tax became compulsory in April 2026 for landlords and sole traders with qualifying income of more than £50,000.
The threshold will fall to more than £30,000 from April 2027.
Additional costs of hundreds of pounds
In a written parliamentary question, Liberal Democrat MP Monica Harding asked: “What assessment has HMRC made of additional software and accountancy costs faced by sole traders and landlords who are required to use separate systems for Making Tax Digital for Income Tax and existing VAT reporting?”
In response, Labour MP James Murray pointed to the government’s MTD impact assessment, which estimates that those with qualifying income above £50,000 may incur an average one-off transitional cost of £285 and additional annual costs of £115.
Landlords and sole traders with qualifying income between £30,000 and £50,000 may face an average transitional cost of £350 and additional annual costs of £110.
Mr Murray added: “HMRC will evaluate the impacts of MTD for Income Tax as it is rolled out to those with income over £30,000 from April 2027 and for those with income over £20,000 in April 2028.”
Landlords lose six days to Making Tax Digital admin
The news comes as research from Tide suggests landlords could spend an average of six full days dealing with Making Tax Digital administration.
According to the data, nearly half of the qualifying sole traders and landlords (44%) expect Making Tax Digital admin to eat into their normal working hours, with more than one in three (36%) stating that this will be during time they would otherwise be serving paying clients and customers.
More than half (58%) expect it to take more than a working week, with more than one in 10 (13%) predicting that Making Tax Digital will require more than 10 full days of their time in year one alone.
When the working day runs out, personal time is also paying the price. The data reveals 38% expect to complete their Making Tax Digital admin in the evenings, 35% at weekends and 32% during planned time off or while on holiday.
18 comments on this article
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Member Since May 2018 - Comments: 2597
2:28 PM, 23rd October 2026, About 2 days ago
Reply to the comment left by G Master at 20/10/2026 – 18:47
It isn’t just landlords who will experience the negative effects of Making Tax Digital. Small landlords and the self-employed will all be caught by it. HMRC have reported an increase of £13 bn in lost tax revenues due to increased company liquidations:
https://www.gov.uk/government/collections/company-insolvency-statistics-releases
France and America both hold enormous piles of debt but the problem of servicing this debt is far worse for France because the American economy is growing whilst the french economy is not growing. France spends more in interest payments than it does on either education or defence.
When labour came to power they promised to grow the economy, but then they targeted employers and employment with additional employment taxes and caused a crisis. Typically the small and medium sized companies come from growth of the microbusinesses. Only a bunch of idiots would be targeting small landlords and the self-employed with Making Tax Digital when the country needs growth both in the economy and also in the private rental sector.
Member Since January 2016 - Comments: 253
3:39 PM, 23rd October 2026, About 1 day ago
Reply to the comment left by David Lawrenson at 12:49
Good man. It’ll drive them bonkers when they realise that they are just accumulating mountains of crap data all year, and then business as usual at the end! All power to the little guy … and there’s an awful lot of us. I just can’t wait to witness the carnage when it drops to £30k turnover from April next year. That really does hoover up virtually every small landlord and tradesman in the UK. Good luck I say – I know a lot of electricians, plumbers, roofers and other trades who will not be impressed!
Ever since S24, any goodwill that I’ve had for the Government of the country has evaporated. I for one, will be doing my bit to ensure this dreadful piece of legislation is a total car crash (within the rules of course)
Member Since May 2018 - Comments: 2597
3:56 PM, 23rd October 2026, About 1 day ago
Reply to the comment left by Grumpy Doug at 23/10/2026 – 15:39
I know a lot of electricians, plumbers, roofers and traders who will just go “**** you MTD” and start taking cash again.
Member Since July 2013 - Comments: 528 - Articles: 1
4:05 PM, 23rd October 2026, About 1 day ago
Reply to the comment left by Grumpy Doug at 23/10/2026 – 15:39
Spread the word, think our friend here has started something.
Member Since October 2023 - Comments: 267
2:55 PM, 24th October 2026, About 13 hours ago
Now they are debating “extracting” overdue taxes directly from our bank accounts without any need for our approval.
My problem with that is………..HMRC gave me a £60 penalty by mistake, so I queried it.
They replied that they would respond to my query IN SEVEN MONTHS
Which they did. And their answer was “if you are overdue a payment, we have the right to charge interest as a penalty”
Which totally ignored my reason for querying it in the first place.
I could have told them why that response was nonsense, because it ignored the reason why I had made the late payment (of next years tax). I had been given permission by them.
But it would have been another 7 months to get a reply, so I gave up, it was only 60 quid.
Now imagine they mistakenly “extract” 20 grand from your account. Its going to take them 7 months to reply to a query, and it will be nonsense.
Member Since September 2022 - Comments: 75
3:29 PM, 24th October 2026, About 12 hours ago
Reply to the comment left by David100 at 24/10/2026 – 14:55
The government body should work WITH us. It seems that The PRS (though not a givernment body), HMRC, The council, The utility companies, the Housing Department are all working against us. Shutting landlords down is going to cost them a lot of loss revenue.
Member Since September 2022 - Comments: 75
3:30 PM, 24th October 2026, About 12 hours ago
Why is the government so much against the landlords?
Member Since May 2018 - Comments: 2597
3:30 PM, 24th October 2026, About 12 hours ago
Reply to the comment left by David100 at 24/10/2026 – 14:55
If you have ever been self-employed then you may have experienced a similar problem. If they over-tax tax you it takes many, many months to get the money back. And their proposals for MTD are to tax you on the basis of previous years’ profits when of course you might not be making a profit in the current year. They don’t do this to limited companies.