By Niamh Tracey | 12 July, 2023

Treasury reviewing £30k entry threshold for MTD

The Treasury minister has indicated that she is reviewing whether Making Tax Digital quarterly reporting is appropriate for people with earnings below £30,000

The comments came during a hearing before the Treasury Committee where MPs questioned Victoria Atkins, financial secretary to the Treasury, about the decision to delay the rollout of Making Tax Digital (MTD).

The initial plan was to require all sole traders and landlords to report earnings above £10,000 via MTD on a quarterly basis from April 2024 but the delay saw the threshold raised to £50,000 with an effective date of 2026.

‘We want to deliver this well, and that is why we are taking a staged approach and also why I am looking very carefully at those people that earn up to £30,000,’ Atkins said.

‘I have listened not just to the concerns of agents, accountants and other professionals but to colleagues as hopefully we are the first point of call I hope when a constituent has problems.

‘I know from colleagues that there are concern about how these changes may affect that very lowest income bracket which is why I have said again let’s have a look at this, let’s see if the system is as it should be and what direction we should be taking Making Tax Digital for that lowest income cohort.’

Committee chair Harriet Baldwin asked the minister why she took the decision to delay the programme until an initial rollout in 2026.

‘I needed to take the decision in very, very quick time. We want this programme to work well for customers. It is an enormous transition project,’ Atkins said.

‘Millions and millions of people will move from doing their self assessment taxes on paper and now we want to move them to a digital way of doing taxes. This is how we conduct the rest of our lives, our banking and it is what people expect.

‘When it happens and it will happen, it will be much easier for people, but I had to take a very cold hard look at where we are, and decided to take the decision to delay mandation until 2026.’

While not admitting that there had been problems with the pilot for MTD for income tax, Atkins said that it was important to ensure that an effective trial was run before the rollout.

‘We have to pilot this properly and need to listen to stakeholders, software companies, accountants, agents, to make sure we factor in their expertise as we design this.

‘I’ve ensured that we do this in a measured way and that we do it with different cohorts of people because I take the view that those who are earning £50,000 or above will already be registered for VAT and it will be less of a change for them than for those who have just started out their businesses.

‘We are trying to do it in a paced way. I hope we get to the place so that ahead of 2026 people will be signing up for this as they see it as a better way to do things.’

MPs also asked how HMRC was contributing to the Chancellor’s demand that the civil service improved its productivity levels.

Atkins said: ‘Everyone at HMRC would acknowledge that HMRC has such an important role to play in government productivity – we’re responsible for extraordinary parts of the state, from self assessment to business taxes. We must lead on productivity and MTD will be a very important part of this but this is not the only transformational project HMRC is going through.’


Source: Croner-i