Why the future of tax is digital, easier and up-to-date

Craig Ogilvie

Director of Making Tax Digital, HMRC

We’re building a modern, digital tax system that will help businesses get their taxes right, save them time and bring in money for essential public services.

Digital innovation touches every aspect of our daily lives and, at HMRC, we’re working hard to make it simpler for everyone to manage their tax affairs digitally, too.

Easier way of reporting income

We have successfully delivered changes to how customers manage Value Added Tax (VAT), and now, nearly 2 million businesses use compatible software to submit VAT returns digitally. Many businesses report that the new process is easier; importantly, satisfaction with our digital services is consistently above 80%.

The year 2026 will see the first phase of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) rolled out — when self-employed individuals and landlords will start using compatible software for digital record-keeping and updating HMRC. The majority (97%) of Self Assessment (SA) customers already file their tax returns online, and MTD will bring new benefits of a real-time, digital approach. We’re building the service now, so people who sign up early will experience these benefits before anyone else.

Reducing mistakes gives business owners
greater certainty in their finances.

Quicker record-keeping with less error risk

MTD is delivering groundwork for technology changes that will bring individuals’ and businesses’ interactions with the tax system in line with the other digital services they use daily.

Improved, digital record-keeping — done in close to real-time — will help self-employed people and landlords worry less about making a mistake and save them time when they come to submit their end-of-year tax return, as all their records will be up to date.

Currently, there’s no requirement to create up-to-date records during the tax year; this increases the risk of unintentional customer errors in annual tax returns as relevant transactions could date back up to 21 months.

Studies have shown that 67% of businesses feel using compatible software to submit VAT returns digitally has reduced the potential for mistakes in their record-keeping.

Greater productivity and support

Evidence also indicates that using compatible software is encouraging businesses to digitalise more generally due to productivity benefits. Reducing mistakes gives business owners greater certainty in their finances while minimising the amount of unpaid tax owed — ensuring everyone pays their fair share.

It also frees up HMRC resources, so we can help people with more complex circumstances needing one-to-one support. MTD is not the whole story of how we’re transforming the UK tax system, but it’s a very important chapter.