To ask His Majesty's Government, further to the Written Answer by the Economic Secretary to the Treasury on 28 May (2785), whether they will publish the (1) Prime Minister's, (2) Deputy Prime Minister’s, and (3) Chancellor of the Exchequer's, tax return for 2024–25 prior to changes in administration.

To ask His Majesty's Government, further to the Written Answer by the Economic Secretary to the Treasury on 28 May (2785), whether they will publish the (1) Prime Minister's, (2) Deputy Prime Minister’s, and (3) Chancellor of the Exchequer's, tax return for 2024–25 prior to changes in administration.

My honourable friend the Exchequer Secretary to the Treasury (Dan Tomlinson) has today made the following Written Ministerial Statement.

Today the government sets out further reforms to simplify and modernise the tax and customs system, building on the commitment first made in the HMRC Transformation Roadmap published in July 2025 and...

My honourable friend the Exchequer Secretary to the Treasury (Dan Tomlinson) has today made the following Written Ministerial Statement.

Today the government sets out further reforms to simplify and modernise the tax and customs system, building on the commitment first made in the HMRC Transformation Roadmap published in July 2025 and...

To ask His Majesty's Government how many letters about the requirement to file quarterly Making Tax Digital returns have been sent out in error to taxpayers whose qualifying income is below the initial £50,000 threshold; and if so, what has been the mailing and administration cost of this.

To ask His Majesty's Government how many letters about the requirement to file quarterly Making Tax Digital returns have been sent out in error to taxpayers whose qualifying income is below the initial £50,000 threshold; and if so, what has been the mailing and administration cost of this.

To ask His Majesty's Government whether they plan to incorporate self-assessment income tax data into the inter-departmental business register; if so, when they expect that data to be incorporated; and what assessment they have made of the impact of including that data on the representation of sole traders and businesses...

To ask His Majesty's Government whether they plan to incorporate self-assessment income tax data into the inter-departmental business register; if so, when they expect that data to be incorporated; and what assessment they have made of the impact of including that data on the representation of sole traders and businesses...

To ask His Majesty's Government what assessment they have made of the readiness of the self-employed to submit quarterly returns through Making Tax Digital.

To ask His Majesty's Government what assessment they have made of the readiness of the self-employed to submit quarterly returns through Making Tax Digital.

To ask His Majesty's Government whether they plan to issue fines and penalties for inaccurate quarterly Making Tax Digital returns.

To ask His Majesty's Government whether they plan to issue fines and penalties for inaccurate quarterly Making Tax Digital returns.

To ask His Majesty's Government how increasing filing obligations through Making Tax Digital from one to five filings per year will reduce the tax gap.

To ask His Majesty's Government how increasing filing obligations through Making Tax Digital from one to five filings per year will reduce the tax gap.

To ask His Majesty's Government, further to the Written Answers by Lord Livermore on 8 July (HL8787 and HL8788), how requiring users to submit quarterly updates of income and expenditure in addition to submitting a tax return will (1) reduce errors, and (2) save time.

To ask His Majesty's Government, further to the Written Answers by Lord Livermore on 8 July (HL8787 and HL8788), how requiring users to submit quarterly updates of income and expenditure in addition to submitting a tax return will (1) reduce errors, and (2) save time.

My Lords, from April 2026, Making Tax Digital for income tax will be phased in for unincorporated businesses, self-employed individuals and landlords, starting with those with income over £50,000. This will place small businesses on a more digital footing and should act as a catalyst for greater adoption of new digital technologies, unlocking the significant productivity benefits associated with digitalisation.

My Lords, from April 2026, Making Tax Digital for income tax will be phased in for unincorporated businesses, self-employed individuals and landlords, starting with those with income over £50,000. This will place small businesses on a more digital footing and should act as a catalyst for greater adoption of new digital technologies, unlocking the significant productivity benefits associated with digitalisation.

I thank my noble friend the Minister for the helpful Answer. Given that Making Tax Digital has significantly increased the cost of compliance for small businesses through mandatory software and subscriptions, what steps are the Government taking to mitigate those burdens? Might this rollout be the right moment to consider an accounting software switch service modelled on the banking version, and to require that such software includes prompts to highlight underused tax reliefs as a core feature, rather than an added cost?

I thank my noble friend the Minister for the helpful Answer. Given that Making Tax Digital has significantly increased the cost of compliance for small businesses through mandatory software and subscriptions, what steps are the Government taking to mitigate those burdens? Might this rollout be the right moment to consider an accounting software switch service modelled on the banking version, and to require that such software includes prompts to highlight underused tax reliefs as a core feature, rather than an added cost?

I am grateful to my noble friend for his question. HMRC has taken a range of steps to ensure that the adoption costs of Making Tax Digital are kept to a minimum, including working with industry to ensure that there is free and low-cost software available where necessary. The use of Making Tax Digital should bring significant benefits by increasing accuracy, reducing the time it takes to complete tax returns, and therefore increasing productivity. The rollout of Making Tax Digital encourages taxpayers

to adopt digital solutions. For example, of those businesses already using Making Tax Digital for VAT, one-third have used the software for other business processes. More broadly, the Government are actively promoting digital technology adoption for small businesses, which is key to unlocking productivity and growth, and helping firms reduce administrative burdens. In our small business plan, we accepted all 10 recommendations from the industry-led Digital Adoption Taskforce.

I am grateful to my noble friend for his question. HMRC has taken a range of steps to ensure that the adoption costs of Making Tax Digital are kept to a minimum, including working with industry to ensure that there is free and low-cost software available where necessary. The use of Making Tax Digital should bring significant benefits by increasing accuracy, reducing the time it takes to complete tax returns, and therefore increasing productivity. The rollout of Making Tax Digital encourages taxpayers

to adopt digital solutions. For example, of those businesses already using Making Tax Digital for VAT, one-third have used the software for other business processes. More broadly, the Government are actively promoting digital technology adoption for small businesses, which is key to unlocking productivity and growth, and helping firms reduce administrative burdens. In our small business plan, we accepted all 10 recommendations from the industry-led Digital Adoption Taskforce.

My Lords, Making Tax Digital is not targeted at upskilling self-employed people and landlords; it is about cutting costs at HMRC. The requirements have led to a surge in calls to HMRC for guidance, but over half a million calls went unhandled in January, and the same in February, the last months for which I have numbers. How is this being handled, given that people who fail to comply face steep fines and penalties, and that when they rely on the internet they are at risk of being scammed?

My Lords, Making Tax Digital is not targeted at upskilling self-employed people and landlords; it is about cutting costs at HMRC. The requirements have led to a surge in calls to HMRC for guidance, but over half a million calls went unhandled in January, and the same in February, the last months for which I have numbers. How is this being handled, given that people who fail to comply face steep fines and penalties, and that when they rely on the internet they are at risk of being scammed?

If I may, I disagree with the premise of the noble Baroness’s question. Making Tax Digital is about increasing productivity for businesses and helping HMRC close the tax gap, which I am sure the noble Baroness would agree should be a priority. There are clear benefits of Making Tax Digital, such as productivity gains to improve business operations, easier and faster tax returns by promoting digital record-keeping, and greater accuracy by reducing errors for tracking paper records. There is a substantial tax gap, and Making Tax Digital will reduce that by nearly £6 billion—some £4 billion for VAT and £1.95 billion for income tax. By doing that, and enabling HMRC to have the correct resources, it is able to direct resources where they are most needed, which addresses the point the noble Baroness was making.

If I may, I disagree with the premise of the noble Baroness’s question. Making Tax Digital is about increasing productivity for businesses and helping HMRC close the tax gap, which I am sure the noble Baroness would agree should be a priority. There are clear benefits of Making Tax Digital, such as productivity gains to improve business operations, easier and faster tax returns by promoting digital record-keeping, and greater accuracy by reducing errors for tracking paper records. There is a substantial tax gap, and Making Tax Digital will reduce that by nearly £6 billion—some £4 billion for VAT and £1.95 billion for income tax. By doing that, and enabling HMRC to have the correct resources, it is able to direct resources where they are most needed, which addresses the point the noble Baroness was making.

My Lords, will it be mandatory?

My Lords, will it be mandatory?

Yes.

Yes.

That was a good answer. I know that my noble friend the Minister is very diplomatic. But in view of the fact that there is huge controversy over the tax affairs of Mr Nigel Farage in relation to his house in Clacton and the huge amount of money that he gets from various sources, including GB News, is it not about time that the Government looked at asking Members of the other House to have their tax affairs made public?

That was a good answer. I know that my noble friend the Minister is very diplomatic. But in view of the fact that there is huge controversy over the tax affairs of Mr Nigel Farage in relation to his house in Clacton and the huge amount of money that he gets from various sources, including GB News, is it not about time that the Government looked at asking Members of the other House to have their tax affairs made public?

It is not for me to comment on the tax affairs of any one individual.

It is not for me to comment on the tax affairs of any one individual.

Does the Minister recall his time on the Economic Affairs Committee and the report which was produced—I am not sure whether he was still on the committee at that time—on Making Tax Digital? It welcomed the move but thought it was important to take account of the burdens placed on small businesses and the costs that were involved. Surely at a time when the economy is, shall we say, not exactly performing as he might hope,

might it not be better to look at this again, with a view to the levels of fines and the speed with which it is being implemented? There was considerable evidence then that HMRC was simply contracting out its job of collecting taxes to people who were trying to run businesses in difficult times. Surely that is not acceptable.

Does the Minister recall his time on the Economic Affairs Committee and the report which was produced—I am not sure whether he was still on the committee at that time—on Making Tax Digital? It welcomed the move but thought it was important to take account of the burdens placed on small businesses and the costs that were involved. Surely at a time when the economy is, shall we say, not exactly performing as he might hope,

might it not be better to look at this again, with a view to the levels of fines and the speed with which it is being implemented? There was considerable evidence then that HMRC was simply contracting out its job of collecting taxes to people who were trying to run businesses in difficult times. Surely that is not acceptable.

I am grateful to the noble Lord for his question. I of course remember my time on the Economic Affairs Committee, and I was privileged to serve when he was the chair of that committee. We produced many high-quality reports. I do not think I was on the committee at the time of the report that the noble Lord refers to, but I fully appreciate that there are costs to business of doing this—I think the recurring cost is estimated to be, on average, £110 annually. It is important to say that HMRC has worked with industry to ensure that a range of software is available, including free and low-cost software, and of course those costs do not take into account the benefits. There are important productivity and time-saving benefits.

As regards Making Tax Digital for VAT, HMRC has carried out a detailed evaluation of the impact of that, which shows that two-thirds of businesses report time-saving benefits. Of businesses that were using digital accounting software for the first time, 80% reported significant benefits, a quarter reported improved productivity and one-third had used Making Tax Digital software for other business processes. At a time when productivity is such a challenge—an issue that we frequently discuss in this House—and when small businesses make up such a large part of the economy, if we can see two-thirds of small businesses making significant productivity gains, that is a benefit worth having.

I am grateful to the noble Lord for his question. I of course remember my time on the Economic Affairs Committee, and I was privileged to serve when he was the chair of that committee. We produced many high-quality reports. I do not think I was on the committee at the time of the report that the noble Lord refers to, but I fully appreciate that there are costs to business of doing this—I think the recurring cost is estimated to be, on average, £110 annually. It is important to say that HMRC has worked with industry to ensure that a range of software is available, including free and low-cost software, and of course those costs do not take into account the benefits. There are important productivity and time-saving benefits.

As regards Making Tax Digital for VAT, HMRC has carried out a detailed evaluation of the impact of that, which shows that two-thirds of businesses report time-saving benefits. Of businesses that were using digital accounting software for the first time, 80% reported significant benefits, a quarter reported improved productivity and one-third had used Making Tax Digital software for other business processes. At a time when productivity is such a challenge—an issue that we frequently discuss in this House—and when small businesses make up such a large part of the economy, if we can see two-thirds of small businesses making significant productivity gains, that is a benefit worth having.

My Lords, I want to go back to the question from the noble Baroness, Lady Kramer, about helplines. I have to say that, for me—I declare my interest as a small farmer with a small business that wants to do things online—the helpline is not working at the moment, and we heard the numbers that show that it is not working. The most important thing is that that is understood and actions are taking place to make the helpline work, because the digital system will work really well as long as the helpline works too.

My Lords, I want to go back to the question from the noble Baroness, Lady Kramer, about helplines. I have to say that, for me—I declare my interest as a small farmer with a small business that wants to do things online—the helpline is not working at the moment, and we heard the numbers that show that it is not working. The most important thing is that that is understood and actions are taking place to make the helpline work, because the digital system will work really well as long as the helpline works too.