Just nine people trialing digital tax for self-employed

This is despite Making Tax Digital for income tax being rolled out to 2.4m people in 2024, many of whom are unaware of what's happening

Just nine people are taking part in the pilot scheme for rolling out Making Tax Digital to more than 4m self-employed from 2024.

According to an investigation by the Financial Times and accountants Saffery Champness, the number of volunteers taking part in the pilot has fallen from 900 in 2018-19 to just nine, says HMRC.

Making Tax Digital for Income Tax (MTD ITSA) will mean 4.3m self-employed and landlords will have to file digital returns from April 2024. Anybody with a combined income of more than £10,000 from self-employment and being a landlord will be brought into the scheme.

>See also: Making Tax Digital April 2022 – what’s changing

Currently the self-employed have to file just one end-of-year tax return but MTD ITSA will involve having to submit updates quarterly every three months. Plus there will be an end-of-year statement plus a “finalisation return” (now called a tax return) each year. This means six reports to HMRC in total replacing the current single annual self-assessment tax return.

On top of which, the self-employed and landlords will have to license accounting software from approved providers, although the Government is currently offering discounts of up to £5,000 for small businesses to rent software.

Emma Rawson, technical officer at the Association of Taxation Technicians, a professional body, said many self-employed she had spoken to were unaware of Making Tax Digital and were “quite horrified to learn they’d have to buy software in a couple of years [to do their taxes]”.

>See also: Five steps for small businesses Making Tax Digital

Stuart Miller, product compliance and industry engagement manager at accountancy software provider Xero, told the Financial Times that having just nine people trialling MTD ITSA was too small a number.

“Until there are a significant number of taxpayers included in the pilot, it’s difficult to determine how fully robust the system will be,” he told the newspaper.

Zena Hanks, a partner at Saffery Champness, warned there may be problems when the system goes live if the number of people who have tested it was too small to be representative.

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...