Helping vulnerable people cope with Making Tax Digital
This article has been written by Valerie Boggs, the Chief Executive of TaxAid and Tax Help for Older People.
Making Tax Digital will be the biggest change to the personal tax system since Self Assessment was introduced in the 1990s. At the moment, MTD has focused on VAT submissions. Over the coming months and years, it will include Income Tax and Corporation Tax. Many of you are already advising businesses registered for VAT and will have seen the many benefits that MTD can bring. Less paperwork, efficient bookkeeping and timely information can transform a business if they have access to high-quality, paid advice.
The same benefits will apply to individuals who can rely on a qualified and skilled agent to support them. The vulnerable people we support cannot afford that paid advice and are often digitally excluded. TaxAid and Tax Help for Older People already support digitally excluded people with your help.
HMRC has decided against producing free MTD compliant software for low-income taxpayers, as they currently do for Self Assessment. MTD will rely on third-party software companies to produce free software. Choosing this software will be beyond the capabilities of those struggling with language and literacy challenges or mental health difficulties.
Good digital records are mandatory for MTD compliance but many vulnerable taxpayers struggle with record-keeping or rely solely on paper.
The tax professions have been preparing for Making Tax Digital for some time yet the wider population has yet to be aware of these huge changes to Self Assessment. We are working now to find ways to support digitally excluded people before the 2024/25 tax year.
We are already working in partnership with HMRC to understand the barriers to MTD compliance. Our direct research with community and advice charities has already provided insight into necessary considerations as MTD is developed for Self Assessment. Over the coming months, we will be asking vulnerable people across the country what they need from us to support their engagement with MTD. We will build pilot projects that directly reflect the voice of digitally excluded taxpayers ready to meet the digital tax challenges of 2024/25.
I will update you on this journey as we learn how to meet the digital needs of our beneficiaries and hope we can rely on your support as we address this compelling challenge.