| The Low Incomes Tax Reform Group (LITRG) has expressed concern in response to today’s Budget announcement that the income threshold for having to join Making Tax Digital for Income Tax1 is to be lowered from £30,000 to £20,000. We do not yet know the timeline for this change. This is to be announced at a future fiscal event, but today’s documents confirm that it will be by the end of this Parliament (2029).
Sharron West, LITRG Technical Officer, said:
“When MTD for Income Tax was first announced, the turnover threshold was set at £10,000. We were always clear that this was far too low.2 The threshold was later adjusted upwards to £30,000.3
“Splitting the difference at a turnover of £20,000 will still bring many businesses and landlords who are not liable for income tax4 within the scope of MTD, meaning they will have to get to grips with digital recordkeeping and using third-party software.
“The previous government promised that free third-party software would be available, but this remains scarce, and with limitations on use.
“In view of today’s announcement, we once again urge HMRC to develop their own suitable basic free product to allow those at the lower end of the income scale to meet their MTD obligations, in the same way they do now for self assessment.5”
Sharron West added:
“HMRC must not run before they can walk with MTD. They need to make sure that MTD works smoothly and that support is easily available before it is rolled out to those on the lowest incomes.” |
