Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the (a) feasibility and (b) effectiveness of implementing Making Tax Digital for Income Tax, in the context of discontinuing Making Tax Digital for Corporation Tax.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC is on track to implement Making Tax Digital (MTD) for Income Tax for those with income over £50,000 from April 2026, with a wide range of customers already testing the service in live running
HMRC has completed a comprehensive cost-benefit analysis which shows the programme continues to deliver value for money for the taxpayer. The latest analysis and figures are published in the June 2025 Accounting Officer Assessment, which is available at:
Making Tax Digital Programme Accounting Officer Assessment (updated) - GOV.UK
The evidential basis for the benefits of MTD for Income Tax, includes economic analysis, evaluations and research and stakeholder feedback. The published evaluation of MTD for VAT found that it had successfully delivered against its objectives; businesses keeping digital records and updating them more frequently generated additional tax revenue in line with expectations.
While some stakeholders have raised concerns about the costs of compliance, HMRC’s comprehensive evaluation of MTD for VAT suggests that these are offset over time by reduced errors, improved efficiency, and better financial management.
HMRC has undertaken detailed assessments of the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords.
These have been modelled using the Standard Cost Model and published in Tax Information and Impact Notes (TIINs). The latest published assessment is available at: Extension of Making Tax Digital for Income Tax Self Assessment to sole traders and landlords - GOV.UK
HMRC has undertaken public consultation, independent research and user testing to assess the readiness of small businesses for the rollout of MTD for Income Tax. This engagement has informed the design of MTD for Income Tax and led to a phased implementation, tailored support, and focus on providing a wide range of affordable software options.
HMRC has adopted a co-creation approach to bring stakeholders into the heart of the design process, ensuring that the service is shaped by user needs and that businesses are supported through the transition.
Approximately 4,000 participants are currently involved in testing. These cover a range of income types and customer journeys. Findings from testing are used to refine software functionality, improve guidance, and ensure the service meets the needs of small businesses.
HMRC expects most required to use MTD will be able to do so successfully but recognises that some may face challenges using MTD. Although committed to supporting as many taxpayers as possible to move onto digital services, HMRC will exempt those who genuinely cannot use MTD due to age, disability, or digital exclusion.
HMRC undertook exploratory work on MTD for Corporation Tax but concluded that the MTD model was not the right fit for the varying needs of the diverse Corporation Tax population, which ranges from multinationals to microbusinesses to charities. HMRC are developing an approach for the future administration of Corporation Tax which better suits this population.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if her Department will publish a breakdown of the (a) public consultation and (b) testing processes used to assess the readiness of small businesses for the rollout of Making Tax Digital for Income Tax.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC is on track to implement Making Tax Digital (MTD) for Income Tax for those with income over £50,000 from April 2026, with a wide range of customers already testing the service in live running
HMRC has completed a comprehensive cost-benefit analysis which shows the programme continues to deliver value for money for the taxpayer. The latest analysis and figures are published in the June 2025 Accounting Officer Assessment, which is available at:
Making Tax Digital Programme Accounting Officer Assessment (updated) - GOV.UK
The evidential basis for the benefits of MTD for Income Tax, includes economic analysis, evaluations and research and stakeholder feedback. The published evaluation of MTD for VAT found that it had successfully delivered against its objectives; businesses keeping digital records and updating them more frequently generated additional tax revenue in line with expectations.
While some stakeholders have raised concerns about the costs of compliance, HMRC’s comprehensive evaluation of MTD for VAT suggests that these are offset over time by reduced errors, improved efficiency, and better financial management.
HMRC has undertaken detailed assessments of the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords.
These have been modelled using the Standard Cost Model and published in Tax Information and Impact Notes (TIINs). The latest published assessment is available at: Extension of Making Tax Digital for Income Tax Self Assessment to sole traders and landlords - GOV.UK
HMRC has undertaken public consultation, independent research and user testing to assess the readiness of small businesses for the rollout of MTD for Income Tax. This engagement has informed the design of MTD for Income Tax and led to a phased implementation, tailored support, and focus on providing a wide range of affordable software options.
HMRC has adopted a co-creation approach to bring stakeholders into the heart of the design process, ensuring that the service is shaped by user needs and that businesses are supported through the transition.
Approximately 4,000 participants are currently involved in testing. These cover a range of income types and customer journeys. Findings from testing are used to refine software functionality, improve guidance, and ensure the service meets the needs of small businesses.
HMRC expects most required to use MTD will be able to do so successfully but recognises that some may face challenges using MTD. Although committed to supporting as many taxpayers as possible to move onto digital services, HMRC will exempt those who genuinely cannot use MTD due to age, disability, or digital exclusion.
HMRC undertook exploratory work on MTD for Corporation Tax but concluded that the MTD model was not the right fit for the varying needs of the diverse Corporation Tax population, which ranges from multinationals to microbusinesses to charities. HMRC are developing an approach for the future administration of Corporation Tax which better suits this population.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what cost-benefit analysis her Department has undertaken to assess the potential impact of the Making Tax Digital for Income Tax programme on taxpayers.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC is on track to implement Making Tax Digital (MTD) for Income Tax for those with income over £50,000 from April 2026, with a wide range of customers already testing the service in live running
HMRC has completed a comprehensive cost-benefit analysis which shows the programme continues to deliver value for money for the taxpayer. The latest analysis and figures are published in the June 2025 Accounting Officer Assessment, which is available at:
Making Tax Digital Programme Accounting Officer Assessment (updated) - GOV.UK
The evidential basis for the benefits of MTD for Income Tax, includes economic analysis, evaluations and research and stakeholder feedback. The published evaluation of MTD for VAT found that it had successfully delivered against its objectives; businesses keeping digital records and updating them more frequently generated additional tax revenue in line with expectations.
While some stakeholders have raised concerns about the costs of compliance, HMRC’s comprehensive evaluation of MTD for VAT suggests that these are offset over time by reduced errors, improved efficiency, and better financial management.
HMRC has undertaken detailed assessments of the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords.
These have been modelled using the Standard Cost Model and published in Tax Information and Impact Notes (TIINs). The latest published assessment is available at: Extension of Making Tax Digital for Income Tax Self Assessment to sole traders and landlords - GOV.UK
HMRC has undertaken public consultation, independent research and user testing to assess the readiness of small businesses for the rollout of MTD for Income Tax. This engagement has informed the design of MTD for Income Tax and led to a phased implementation, tailored support, and focus on providing a wide range of affordable software options.
HMRC has adopted a co-creation approach to bring stakeholders into the heart of the design process, ensuring that the service is shaped by user needs and that businesses are supported through the transition.
Approximately 4,000 participants are currently involved in testing. These cover a range of income types and customer journeys. Findings from testing are used to refine software functionality, improve guidance, and ensure the service meets the needs of small businesses.
HMRC expects most required to use MTD will be able to do so successfully but recognises that some may face challenges using MTD. Although committed to supporting as many taxpayers as possible to move onto digital services, HMRC will exempt those who genuinely cannot use MTD due to age, disability, or digital exclusion.
HMRC undertook exploratory work on MTD for Corporation Tax but concluded that the MTD model was not the right fit for the varying needs of the diverse Corporation Tax population, which ranges from multinationals to microbusinesses to charities. HMRC are developing an approach for the future administration of Corporation Tax which better suits this population.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, on what evidential basis the (a) Making Tax Digital for Income Tax and (b) other remaining parts of the Making Tax Digital programme will deliver adequate levels of benefits to justify the administration for (i) small businesses and (ii) landlords.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC is on track to implement Making Tax Digital (MTD) for Income Tax for those with income over £50,000 from April 2026, with a wide range of customers already testing the service in live running
HMRC has completed a comprehensive cost-benefit analysis which shows the programme continues to deliver value for money for the taxpayer. The latest analysis and figures are published in the June 2025 Accounting Officer Assessment, which is available at:
Making Tax Digital Programme Accounting Officer Assessment (updated) - GOV.UK
The evidential basis for the benefits of MTD for Income Tax, includes economic analysis, evaluations and research and stakeholder feedback. The published evaluation of MTD for VAT found that it had successfully delivered against its objectives; businesses keeping digital records and updating them more frequently generated additional tax revenue in line with expectations.
While some stakeholders have raised concerns about the costs of compliance, HMRC’s comprehensive evaluation of MTD for VAT suggests that these are offset over time by reduced errors, improved efficiency, and better financial management.
HMRC has undertaken detailed assessments of the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords.
These have been modelled using the Standard Cost Model and published in Tax Information and Impact Notes (TIINs). The latest published assessment is available at: Extension of Making Tax Digital for Income Tax Self Assessment to sole traders and landlords - GOV.UK
HMRC has undertaken public consultation, independent research and user testing to assess the readiness of small businesses for the rollout of MTD for Income Tax. This engagement has informed the design of MTD for Income Tax and led to a phased implementation, tailored support, and focus on providing a wide range of affordable software options.
HMRC has adopted a co-creation approach to bring stakeholders into the heart of the design process, ensuring that the service is shaped by user needs and that businesses are supported through the transition.
Approximately 4,000 participants are currently involved in testing. These cover a range of income types and customer journeys. Findings from testing are used to refine software functionality, improve guidance, and ensure the service meets the needs of small businesses.
HMRC expects most required to use MTD will be able to do so successfully but recognises that some may face challenges using MTD. Although committed to supporting as many taxpayers as possible to move onto digital services, HMRC will exempt those who genuinely cannot use MTD due to age, disability, or digital exclusion.
HMRC undertook exploratory work on MTD for Corporation Tax but concluded that the MTD model was not the right fit for the varying needs of the diverse Corporation Tax population, which ranges from multinationals to microbusinesses to charities. HMRC are developing an approach for the future administration of Corporation Tax which better suits this population.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of the Making Tax Digital programme on (a) compliance costs and (b) administrative requirements for (i) self-employed people, (ii) small businesses and (iii) pensioners.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC is on track to implement Making Tax Digital (MTD) for Income Tax for those with income over £50,000 from April 2026, with a wide range of customers already testing the service in live running
HMRC has completed a comprehensive cost-benefit analysis which shows the programme continues to deliver value for money for the taxpayer. The latest analysis and figures are published in the June 2025 Accounting Officer Assessment, which is available at:
Making Tax Digital Programme Accounting Officer Assessment (updated) - GOV.UK
The evidential basis for the benefits of MTD for Income Tax, includes economic analysis, evaluations and research and stakeholder feedback. The published evaluation of MTD for VAT found that it had successfully delivered against its objectives; businesses keeping digital records and updating them more frequently generated additional tax revenue in line with expectations.
While some stakeholders have raised concerns about the costs of compliance, HMRC’s comprehensive evaluation of MTD for VAT suggests that these are offset over time by reduced errors, improved efficiency, and better financial management.
HMRC has undertaken detailed assessments of the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords.
These have been modelled using the Standard Cost Model and published in Tax Information and Impact Notes (TIINs). The latest published assessment is available at: Extension of Making Tax Digital for Income Tax Self Assessment to sole traders and landlords - GOV.UK
HMRC has undertaken public consultation, independent research and user testing to assess the readiness of small businesses for the rollout of MTD for Income Tax. This engagement has informed the design of MTD for Income Tax and led to a phased implementation, tailored support, and focus on providing a wide range of affordable software options.
HMRC has adopted a co-creation approach to bring stakeholders into the heart of the design process, ensuring that the service is shaped by user needs and that businesses are supported through the transition.
Approximately 4,000 participants are currently involved in testing. These cover a range of income types and customer journeys. Findings from testing are used to refine software functionality, improve guidance, and ensure the service meets the needs of small businesses.
HMRC expects most required to use MTD will be able to do so successfully but recognises that some may face challenges using MTD. Although committed to supporting as many taxpayers as possible to move onto digital services, HMRC will exempt those who genuinely cannot use MTD due to age, disability, or digital exclusion.
HMRC undertook exploratory work on MTD for Corporation Tax but concluded that the MTD model was not the right fit for the varying needs of the diverse Corporation Tax population, which ranges from multinationals to microbusinesses to charities. HMRC are developing an approach for the future administration of Corporation Tax which better suits this population.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the time taken for Companies House to reconcile their information with HMRC on the ability of new businesses to (a) employ staff, (b) register for PAYE and (c) issue VAT invoices.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Government recognises the importance of efficient and timely coordination between Companies House and HMRC in supporting the operational readiness of newly incorporated businesses. There is currently a timely data-feed between Companies House and HMRC.
HMRC continue to review how improved data-sharing and increased automation can support new businesses and reduce administrative burdens.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if her Department will make an assessment of the potential impact of the time taken by HMRC to issue (a) Corporation Tax Authentication Codes and (b) VAT registration numbers on small businesses; and what steps she is taking to reduce that time.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC aim to process 80% of VAT registration applications within 40 working days of receipt.
They processed 80.25% of VAT registrations within 40 days of receipt in 2022/23, 88.08% in 2023/24 and 94.73% in 2024/25.
Improving day-to-day performance is a key priority for HMRC. The HMRC Transformation Roadmap, published in July, sets out how they will deliver improved services which will mean a better experience for taxpayers, agents, and businesses.
There is no authentication code for Corporation Tax registration. For customers who register with Companies House, registration for Corporation Tax is automated. Information sharing means that HMRC systems create a customer record within 48 hours, without the need for any additional customer input. The customer’s unique taxpayer record is then sent to them by post. When a customer enrols to the Government Gateway for Corporation Tax, an activation code is issued automatically by post.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what performance indicators are used by the HMRC for the registration of (a) VAT registration numbers and (b) corporation tax authentication codes; and how often such targets were met in each of the last three years.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC aim to process 80% of VAT registration applications within 40 working days of receipt.
They processed 80.25% of VAT registrations within 40 days of receipt in 2022/23, 88.08% in 2023/24 and 94.73% in 2024/25.
Improving day-to-day performance is a key priority for HMRC. The HMRC Transformation Roadmap, published in July, sets out how they will deliver improved services which will mean a better experience for taxpayers, agents, and businesses.
There is no authentication code for Corporation Tax registration. For customers who register with Companies House, registration for Corporation Tax is automated. Information sharing means that HMRC systems create a customer record within 48 hours, without the need for any additional customer input. The customer’s unique taxpayer record is then sent to them by post. When a customer enrols to the Government Gateway for Corporation Tax, an activation code is issued automatically by post.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what comparative assessment she has made of the effectiveness of IT systems used by (a) Companies House and (b) HMRC.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
No comparative assessment has been completed of the IT systems. HMRC and Companies House have a joint commitment on sharing data and analytics to tackle corporate fraud relating to accounting and registration services.
Asked by: Martin Wrigley (Liberal Democrat - Newton Abbot)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of (a) digitising and (b) streamlining the HMRC process for issuing (i) VAT registration numbers and (ii) corporation tax authentication codes.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
As part of the Government’s commitment to improve customer experience through reform and modernisation of tax and customs administration, HMRC recently published the Transformation Roadmap. As part of this plan, HMRC will continue to explore opportunities to digitise their services where it is right to do so. This includes the development of a secure and GDPR compliant digital method to communicate VAT registration details with customers. Until this is developed, VAT registration numbers are sent by physical post which minimises the risk of fraud by preventing the interception of VAT numbers by fraudsters.
Similarly, the activation code for a customer to add corporation tax (CT) services to their business tax account must be delivered by a secure process. HMRC are investing in their legacy corporation tax system in order to provide the foundation for future improvements and will work with customers to ensure that they meet the needs of the diverse CT population.