Executive Summary
Making Tax Digital (MTD) is a key initiative by HM Revenue and Customs (HMRC) aimed at modernising the tax system, reducing errors, and improving the taxpayer experience. Since April 2022, all VAT-registered businesses are required to use MTD-compatible software for digital record-keeping and tax return submissions.
Below is a report analysis estimating the broader economic benefits of MTD beyond its core tax compliance objectives. Using survey data from businesses utilizing fully functional MTD for VAT software, we assess the average time savings achieved and assign a financial value to this saved time.
Findings indicate that businesses have reduced the time spent on financial management and record-keeping compared to pre-MTD practices. The estimated annual time savings range between 26 and 40 hours per business. When applied across all VAT-registered businesses using compatible software, this equates to a total time savings of 32 to 49 million hours in the 2022–2023 tax year, with a financial value between £603 million and £915 million.
This analysis provides strong evidence that MTD delivers tangible benefits to businesses, reinforcing previous estimates of its administrative impact and demonstrating its wider economic value beyond tax compliance.
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