The UK government is introducing changes to how some people report income tax under the new Making Tax Digital (MTD) scheme, and one taxpayer claims it will cost him an eye-watering £2,500. Garry Piccolo, a 69-year-old glass installer from Essex, has spoken out about the financial burden the new rules impose on him.
What Is Making Tax Digital?
Making Tax Digital (MTD) is a government initiative that requires eligible individuals to keep digital records and report their income to HMRC every three months. While the scheme aims to simplify tax reporting, critics argue it adds unnecessary costs and complexity for many self-employed people and former sole traders.
Garry Piccolo's Situation
Mr Piccolo switched from being a sole trader with a total income of more than £50,000 to an employee last year. Under the new rules, people who were previously self-employed but no longer breach the income threshold must still comply with MTD for a further three years. Despite earning just £3,680 in rental income alongside his salary—an amount that falls outside MTD reporting requirements—Mr Piccolo will still have to submit five tax filings each year for the next three years to comply.
He believes the extra tax filings could cost him £2,500 a year in accountancy fees. Speaking to the Telegraph, he said: "It's ridiculous. The Government says it's making things easier for the self-employed, but everything you do brings another cost. I'm 69 and I don't want the hassle. It seems nonsensical that HMRC can't look at my situation and say 'that's unreasonable'."
Martin Lewis Weighs In
BBC and ITV star Martin Lewis has also expressed concern about the new rules. He said: "MSE is a consumer site, and as a rule we avoid business – even small business – issues. Yet this is such a fundamental shake-up to the way Self-Assessment tax is done, I thought it important that, at least for Making Tax Digital's introduction, we mark it and use our reach to ensure people know what's coming. So I asked the team to put this beginner's guide together."
Lewis added: "I must admit, some of this is driven by nervousness from what I've heard. I know some accountants near retirement, and heard of others, who have left the industry early as they don't want to deal with the new scheme. Some tax pros I've spoken to roll their eyes, and worry about the implementation and 'are we ready?'. The concept of digitising taxes isn't the issue. The worries I hear are over cost, complexity, timing and people's readiness. How accurate that is I don't know, this isn't my area, yet time will tell. Either way though, if you need to do it, especially if you don't have professional accounting help, the sooner you're aware of what's happening and can plan for it, the better."
