Making Tax Digital costs spiral to more than £1bn

Making Tax Digital has cost taxpayers more than £1bn and is now more than £800m over budget.

A report by The Telegraph reveals that the scheme cost HMRC an additional £142m in 2025-26.

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, bringing a further group of landlords, property owners and self-employed people into the system.

£800 million above original budget

According to The Telegraph, 2025-26 is the scheme’s second most expensive year to date, taking the total cost of the troubled rollout to £1.03bn.

However, the programme has faced repeated delays, revisions and technical issues, pushing costs more than £800m above its original budget.

However, HMRC continues to insist that Making Tax Digital reduces the administrative burden for landlords and businesses.

An HMRC spokesman told The Telegraph: “Making Tax Digital modernises our systems and will raise billions of pounds for public services, as well as reducing the admin burden of paying tax for many businesses.”

No advantage to Making Tax Digital

As previously reported by Property118, despite the government claiming Making Tax Digital will help landlords, an accountant says this is not the case.

Simon Misiewicz previously told Property118: “There’s no real benefit beyond maybe streamlining some of the work you already do, does it help with tax returns and submissions? The truth is, I can’t see how.

“There’s no advantage for the individual in submitting quarterly returns, because HMRC doesn’t do anything with them until the end of the year. You don’t pay your taxes any earlier, and there is no real cash-flow benefit for the government”.

The government admitted in the Making Tax Digital impact assessment that landlords earning £50,000 could incur an average transitional cost of £285 and an average annual additional cost of £115.