ICAEW Taxation Strategy head Frank Haskew has commented on the UK Government’s Making Tax Digital (MTD) draft legislation.
The draft legislation require taxpayers to submit end-of-year returns through MTD-compatible software, effective April 2026.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The MTD legislation will be extended to sole traders and landlords with income of more than £20,000 from April 2028.
Haskew said: “We remain concerned about extending MTD income tax to those with turnover over £20,000 from April 2028. Lowering the threshold will add about one million taxpayers, mostly sole traders but notably including landlords who may have only one rental property.
“This will follow shortly after the first mandatory annual tax returns are due for those with turnover over £50,000, allowing little time to assess the impact of MTD income tax before it is extended.”
The published draft legislation aims to tackle tax non-compliance, holding agencies liable for unpaid payroll taxes and granting HMRC new powers to target tax advisers facilitating non-compliance.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHaskew stated: “MTD income tax represents the most significant change in decades for sole traders and landlords, requiring digital record-keeping and filing quarterly updates and year-end tax returns via commercial software that meets HMRC’s requirements.
“HMRC will not provide software, so taxpayers must carefully choose from available products, many of which vary significantly and may not meet their needs. More preparation is needed from both HMRC and software developers.”
Certain groups will be exempt or deferred from MTD if they face disproportionate barriers or it is impracticable, with minor technical changes also included.
The measures aim to raise £500m ($677.68m) by 2029–30, level the playing field for compliant businesses and protect workers.
Haskew added: “While we support digitalisation of accounting records, we don’t agree with mandatory quarterly updates which add cost without benefit. Instead, we would like to see the retention of annual reporting with optional quarterly updates instead. As requirements begin in less than a year, agents and taxpayers must prepare.”
Recently, the ICAEW supported the Financial Reporting Council’s call to improve audit practices for small and medium-sized enterprises in the UK.
