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Treasury estimates MTD for Income Tax deferral will cost over £1.75 billion

21 Mar 2023

Figures released in the Spring Budget documents have revealed that the deferral of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will cost the Exchequer more than £1.75 billion.

The Financial Secretary to the Treasury previously announced that the £10,000 turnover threshold for MTD for ITSA will increase to £50,000 from April 2026 and £30,000 from April 2027. Meanwhile, the mandation date for partnerships was pushed back from April 2025 to a later date.

The Budget figures suggest that the cost of these changes will total £1.75 billion.

Reviewing the figures, the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) stated that MTD for ITSA's benefits may have 'begun to flow more quickly' if the government had consulted stakeholders earlier and worked more closely in partnership with them.

Commenting on the issue, Alison Hobbs, Chair of the joint CIOT and ATT Digitalisation and Agent Strategy Committee, said: 'The announcement to defer the implementation of MTD for ITSA, and subsequently introduce it in a staged manner, was clearly the correct one. The incredibly limited testing, combined with significant problems still to be resolved, meant that this delay had to happen. However, according to government figures, the cost is clearly substantial.'


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Chartered Tax Adviser

Registered in England, Company Registration number – 7906656. Registered Office – 58b High Street, Stony Stratford, Milton Keynes, MK11 1AQ. Registered with the Chartered Institute of Taxation as a firm of Chartered Tax Advisers. Registered to carry out audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.