HMRC is being urged to ‘learn lessons’ before including the lowest earners to Making Tax Digital (MTD) for Income Tax.
What is Making Tax Digital?
Making Tax Digital is a key part of the government’s tax administration strategy – a 10-year plan with the aim of building a ‘trusted and modern’ tax system.
Eventually, all businesses will need to keep digital records by using software that works with MTD and then submit updates every quarter.
This will help to bring the tax system closer to real-time.
If you are self-employed or a landlord, you will be affected from the:
- 6th April 2026 – if you have an annual business or property income of more than £50,000
- April 2027 – if you have an annual business or property income of more than £30,000
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Making Tax Digital and lower earners
Currently, there has been no mention of self-employed individuals or landlords who earn less than £20,000, which is estimated to be around four million people.
Concerns have been raised by the Association of Taxation Technicians (ATT) due to lower earners being less likely to afford certain practices that come with MTD.
For example, there are the additional costs of the correct software to take into consideration, as well as the extra admin of having to report quarterly, which is more disproportionate for this group of individuals.
The ATT advises that HMRC learns lessons and irons out any kinks before introducing lower-income earners to MTD, ensuring a well-functioning digital system and providing a range of free software.
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