Over one million taxpayers given more time to adjust to Making Tax Digital penalties
The Association of Taxation Technicians (ATT) says “common sense has prevailed” after taxpayers joining Making Tax Digital (MTD) next year were given more time to get used to the new system before they face late filing penalties.
More than one million lower-income taxpayers are expected to be part of the second wave brought into MTD in April 2027, many of whom are unrepresented and do not currently use software to keep their tax records.
The Government announced at this week’s Budget that it will extend existing penalty easements afforded to the first wave, who joined in April this year, to the new cohort.
The ATT had called for the easements to be extended, arguing that taxpayers entering the regime should be given a reasonable opportunity to adapt to significant new reporting requirements without immediately having to worry about penalties.
Emma Rawson, ATT Director of Public Policy, said:
“We’re pleased to see that common sense has prevailed and the Government has acted on our call to extend late filing penalty easements to those joining MTD next year.
“Extending the existing soft landing gives these taxpayers much-needed time to get to grips with the new regime, or appoint an agent to support them, without also having to worry about penalties while they are learning how to comply.
“However, it’s important to remember that a penalty easement does not remove the underlying obligations of MTD, and taxpayers will still need to understand what they have to do and when they have to do it.
“For somebody who currently keeps relatively simple records and deals with their tax affairs once a year, moving to digital record keeping and making quarterly submissions represents a significant change.
“HMRC therefore needs to use the time between now and April to make sure those coming into MTD know that they are affected, understand what they need to do and have the practical support they need to comply.”
Under MTD, affected self-employed individuals and landlords will need to keep digital records and submit quarterly updates to HMRC using compatible software.
Notes for editors: