According to a survey commissioned by HMRC, taxpayers are unprepared and unenthusiastic and therefore, not ready for Making Tax Digital (MTD).
The global market research group, Ipsos, recently released data suggesting that awareness of MTD in general, and MTD for income tax self-assessment (ITSA) specifically was low.
MTD ITSA will require those with annual business or property income above £10,000 to keep their records and file their returns with specialist software from April 2024.
HMRC claims MTD ITSA will make it easier for people to file their taxes without making mistakes that cost the Treasury billions in lost tax revenue.
Despite this, only 38% of respondents agreed that using MTD-compatible software would be easy, compared to 35% who disagreed.
Under half (43%) said that MTD would make submitting quarterly returns easy, while almost four in ten (39%) said it would be more difficult.
Similarly, just 34% said a quarterly summary would ease the end of year burden, compared to 42% who said it would become more difficult with MTD.
Ipsos randomly selected 2,200 individuals eligible for MTD for ITSA and weighted the final data to be representative of the MTD for ITSA population.
What the experts say
Andrew Jackson, representing both the Association of Taxation Technicians and Chartered Institute of Taxation, said:
“The survey results suggest the lack of understanding among affected people of what the changes mean in practice. It shows an alarming lack of readiness and enthusiasm for MTD, fuelled largely by a lack of awareness that MTD for ITSA begins in less than two years’ time.”
He continued:
“The survey adds to our concerns about the lack of available and affordable Making Tax Digital software and the low numbers of business people and landlords signing up to take part in the Making Tax Digital for Income Tax pilot.
This taxpayer scepticism and overall lack of readiness is combined with a lack of certainty and continuing questions from agents on practical matters.”
He added that HMRC should publish more detailed guidance about MTD to improve awareness about the scheme.
Are you ready for Making Tax Digital?
If you would like further information about Making Tax Digital and how your business may be affected, please get in touch with PKB.
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