Don’t fall into the communication gap on Making Tax Digital

Many potentially affected taxpayers have not yet engaged with a major change in tax reporting.

The latest HMRC performance statistics, published in January 2026, indicate that between January and November 2025:

• Over one in five items of correspondence did not receive a response within 15 working days, and around one in eight remained unanswered after 40 working days.
• The average time taken to answer telephone calls was just over 13 minutes, with more than one in ten calls being abandoned.

Communication challenges contributed to difficulties when the high-income child benefit charge (HICBC) was introduced in 2013. In September 2025, HMRC introduced an online service enabling affected individuals to pay the charge through pay as you earn (PAYE), rather than needing to complete an income tax self-assessment return.

A further reform to the tax system is set to take effect in April and could face communication issues similar to those experienced with the HICBC in previous years. This change introduces a requirement to report certain income under the Making Tax Digital (MTD) rules.

Initially, MTD will affect those who:  

• are personally registered for self-assessment, 

• receive income from self-employment or property (or both), and 

• had qualifying income (basically gross income from self-employment and property) of more than £50,000 in 2024/25. 

If you meet those three criteria, then you must: 

• sign up for MTD – HMRC will not automatically register you, although it will send chase-up letters, 

• acquire HMRC-recognised software or, if you stick with spreadsheets or your existing software, obtain ‘bridging software’ that works with HMRC systems, 

• send quarterly updates of your income and expenses to HMRC, and 

• send an end-of-year return by 31 January following the end of the tax year. 

It may reflect HMRC’s expectations that the Autumn 2025 Budget confirmed taxpayers will not receive penalty points for the late submission of quarterly updates during 2026/27.

If you are currently below the £50,000 threshold, it is worth noting that this limit is scheduled to reduce to £30,000 for 2027/28 and to £20,000 in subsequent years.

Tax treatment varies according to individual circumstances and is subject to change. 

The Financial Conduct Authority does not regulate tax advice.