HM Revenue & Customs (HMRC) has launched a significant trial of its new digital tax system, with almost 5,000 people across the country volunteering to participate. This large-scale test is a crucial step in the rollout of the government's Making Tax Digital (MTD) initiative for Income Tax.
What is Making Tax Digital for Income Tax?
The new Making Tax Digital (MTD) system will become mandatory for filing annual income tax self-assessment returns. The government is implementing this change in stages. From April 2026, the digital regime will affect individuals with annual earnings of £50,000 or more. A wider rollout will then follow, and from April 2027, it will become compulsory for anyone earning £30,000 and upwards.
The Volunteer Testing Phase
HMRC initiated a lengthy testing process last year, inviting volunteers to sign up and help shape the final service. Nearly 5,000 individuals have now joined this pilot programme. Exchequer Secretary to the Treasury, Daniel Tomlinson, confirmed the progress, stating, "In advance of MTD’s rollout, nearly 5,000 volunteers have signed up to test the service."
He added that HMRC's teams are working diligently to ensure the new systems function as intended and that the correct guidance and training are available for both users and their advisors.
Benefits and Government Assurances
According to official HMRC guidance, volunteers in the test will gain several advantages, including the opportunity to influence the future design of the service and get a head start in familiarising themselves with the necessary software before it becomes mandatory for all.
Daniel Tomlinson sought to reassure businesses and individuals about the simplicity of the new process. He explained that the required quarterly updates are not full tax returns but are instead "simple, unadjusted summaries of income and expenditure." These snapshots of trading activity are designed to be populated automatically by software and submitted with ease.
The key benefits highlighted by the government include:
- Reduced risk of errors by moving record-keeping closer to real time.
- Easier annual tax return preparation as information is already captured.
- Prompts and estimates to help taxpayers get their tax right.
To minimise costs, the government has worked with software developers to ensure that free software will be available for those with straightforward tax affairs. Furthermore, HMRC has pledged to have fully-trained advisers ready to support users from the system's introduction in April 2026.
