On 18 March 2015, in a ‘where were you’ moment for agents, George Osborne stood in front of the House of Commons and declared “the death of the annual tax return”. Having to complete a tax return, he said, was “complex, costly and time-consuming”, and so, “starting next year”, most individuals would have the information HMRC needs “automatically uploaded into new digital tax accounts”. Ending with a rhetorical flourish, he declared that “tax really doesn’t have to be taxing”.

It’s fair to say that Making Tax Digital (MTD) has been on a journey since. There have been successes – HMRC would point to MTD VAT (see below) – and much work has been done behind the scenes. However, some would argue that the real challenges are still to come, starting in a little over a year when the first cohort of sole traders and landlords are brought within MTD for income tax.

In March 2025, HMRC published its final evaluation of MTD for VAT, concluding that MTD VAT had “successfully delivered against its objectives” of:

• helping to close the tax gap by reducing errors and a failure to take reasonable care;
• making it easy for businesses to meet their VAT obligations; and
• contributing to wider productivity gains for businesses through digitalisation. 

Some of the key findings are summarised below. In some instances, figures are provided separately for businesses brought within MTD VAT from 2019 (turnover in excess of the VAT threshold) and those mandated from 2022 (remaining VAT registered businesses). Many of the benefits of MTD VAT appear to relate to the requirement to keep digital records, rather than the changes to the submission process. It should be remembered that MTD income tax presents more of a challenge than MTD VAT, for taxpayers, agents and HMRC, as it imposes additional tax filing requirements on those within its scope.