Government plans to digitalise the tax system used by landlords and self-employed workers have been paused for two years due to the current “challenging economic environment”.
Previously due to be implemented in April 2024, the overhaul of the system was delayed on Monday to give “a longer period to prepare”.
The government hoped the new system would reduce tax gaps – the difference between owed and collected taxes.
For 2021, this gap was worth £32bn, equalling 5.1% of all due payments.
Under the new system, those earning over £50,000 will have to provide quarterly updates on their income to HMRC through new software, as well as keeping digital records.
Those earning over £30,000 will have to do this a year later, from April 2027.
A review of the system for smaller businesses and people earning less than £30,000 was also announced.
Commenting on the delay, Treasury financial secretary Victoria Atkins said: “It is right to take the time to work together to maximise the benefits of Making Tax Digital.”
Suggesting the “digitalisation and modernisation” of the tax system remained “critical,” HMRC chief Jim Harra added: “We want to make sure we get this right.”