The Making Tax Digital for income tax self-assessment (MTD for ITSA) delay will cost the Treasury £1.75 billion, according to figures from the Spring Budget.

The estimates are based on HMRC's calculations of how digital reporting can minimise human error and increase compliance levels.

On 19 December 2022, the Treasury announced that MTD for ITSA will roll out from 2026 onwards - over ten years after the initial announcement.

Furthermore, a new phased approach means that only self-employed people and landlords with an annual turnover of £50,000 will need to comply from April 2026.

This threshold will drop to £30,000 in April 2027, with HMRC still to announce the mandation date for partnerships and businesses with smaller turnovers.

The Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) said that while the Government made the right choice in deferring MTD for ITSA, it could have avoided the delay by starting the consultation process earlier.

Alison Hobbs, chair of the joint CIOT and ATT digitalisation and agent strategy committee, added:

"Had discussions started in the right place, we might currently be reaping the benefits of digitalisation. It's not too late to learn this lesson for the future."

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