LITRG welcomes extension of Making Tax Digital penalty easement for next wave of taxpayers
The Low Incomes Tax Reform Group (LITRG) of the Chartered Institute of Taxation has welcomed the publication in today’s Budget documents that taxpayers joining Making Tax Digital (MTD) for Income Tax from April 2027 will benefit from a temporary easement from late submission penalties during their first year in the regime.
It means that for the first 12 months, these taxpayers will not receive penalty points for making late quarterly updates1.
Claire Thackaberry, Technical Officer at LITRG, said:
“This is a sensible move.
“The taxpayers joining MTD from next April are more likely to be managing their tax without professional help and more likely to be using accounting software for the first time.
“This could make the new reporting requirements harder to get to grips with.
“Giving them more time to adjust, without the worry of penalties for late quarterly updates, should help them learn how the system works.
“In the longer term, this should help taxpayers to meet their MTD obligations and support HMRC’s aim of modernising the tax system.
“HMRC must also provide clear, timely communications and guidance so taxpayers understand the extension is not a reason to delay preparing for MTD.”
Notes for editors
1Page 124 of the Budget document:
6.152 Making Tax Digital (MTD) for income tax – Taxpayers joining MTD for income tax in April 2027 will not receive penalty points for late submission of their first four quarterly updates for the tax year 2027-28. The government is also deferring the roll-out of Making Tax Digital for Income Tax to several taxpayer groups until further notice.
