This April, a major new HMRC rule called Making Tax Digital (MTD) will come into effect, marking the most significant overhaul of the UK self-assessment tax system in decades. Despite nearly ten years of resistance from taxpayers and politicians alike, the government is pressing forward with this sweeping change, which introduces mandatory quarterly updates for many UK households.
Lord Mackinlay expressed his concerns to the Telegraph, describing MTD as “now here and far worse” than originally feared. He recounted his decade-long campaign to delay and modify the policy, highlighting extensive discussions with conservative financial secretaries since 2018. His objection was rooted in the practical impact on ordinary citizens, especially pensioners with modest rental incomes, who face navigating complex digital tax processes.
“A fully digital requirement for VAT came into effect in April 2019, with similar plans for income tax announced for 2020. I continuously challenged HMRC officials, only to encounter inconsistent and sometimes bewildering justifications,” Lord Mackinlay said. Responses ranged from tackling the tax gap to simply the notion that the change is “modern.”
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The initial MTD threshold starting this April will apply to those with £50,000 or more in self-employment or property income. By 6 April 2027, the threshold lowers to £30,000 for income earned in the 2025-26 tax year, and from 6 April 2028, it will drop further to £20,000 for the 2026-27 tax year. This means more taxpayers will soon be required to submit quarterly digital updates for each separate income stream they have, increasing the administrative burden.
“Despite my best efforts over almost a decade, MTD is launching in a more extensive and complicated form than initially planned,” Lord Mackinlay lamented. “One can only assume HMRC has little regard for the honest taxpayer — those with multiple income sources will need to file separate MTD returns for each.”
As Making Tax Digital expands, it signals a challenging new era for many UK taxpayers, emphasizing HMRC’s drive toward digital tax administration despite widespread opposition.