Implementing making tax digital will cost traders £320, says HMRC

The transition to making tax digital (MTD) for income tax self assessment (ITSA) from 2026 will cost sole traders and landlords on average £320 to set up the necessary systems according to HMRC.

In a new policy paper the department estimates that implementing MTD for ITSA will result in a one-off cost of £350 and subsequent annual cost of £110 for traders reporting within the £30 000 to £50 000 threshold. Those in the above £50 000 threshold may incur an average transitional cost of £285 with average annual additional costs of £115.

The paper adds that businesses already operating MTD for VAT or using digital tools for business administration may incur ‘relatively little cost’. Other less digitally capable businesses may experience higher transitional costs as they move to MTD processes.

Costs invariably will differ from business to business and are influenced by factors including size...