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.

This question was answered on 29th October 2025
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.