Sole traders and landlords are expected to face significant compliance costs as HMRC expands its Making Tax Digital (MTD) programme. Industry research estimates that total compliance expenses could reach around £2.18bn.
From April, individuals earning more than £50,000 from self-employment or property income will be required to submit five tax-related reports each year. The income threshold is scheduled to fall to £30,000 in 2027 and £20,000 in 2028, expanding the number of affected taxpayers.
Business platform research suggests the average self-employed individual may spend approximately £753 on software, training or professional support to meet the requirements. Compliance preparation could also require an additional 114 working hours annually for record keeping and reporting.
Experts have warned that the new system represents a major shift in tax administration. Some advisers believe the reporting framework may eventually evolve into a quarterly payment model similar to VAT arrangements.
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