The UK tax authority, His Majesty’s Revenue and Customs (HMRC) has released a final evaluation report on the effects of Making Tax Digital for VAT on 27 February 2025.

A final evaluation report summarising the main evidence and conclusions of HM Revenue and Customs’ (HMRC) impact evaluation of Making Tax Digital for Value Added Tax (VAT).

This report concludes HMRC’s impact evaluation of Making Tax Digital for Value Added Tax (VAT), providing a synthesis of previously published evidence to give a final assessment of how the policy has performed against its objectives.

The main findings of HMRC’s evaluation of Making Tax Digital for VAT are:

• Making Tax Digital generated additional VAT revenue as forecast. The central estimates were around GBP 57 and GBP 19 per quarter per business for businesses above and below the VAT threshold, respectively. The estimated amount of additional tax revenue raised was in the range of GBP185 million to GBP 195 million in 2019 to 2020, similar to the amount Making Tax Digital for VAT was forecast to raise;
• Making Tax Digital was relatively straightforward to comply with for a majority of customers. Most experienced benefits as well as costs. Around two-thirds found signing-up to Making Tax Digital easy. Over half found compatible software easy to find. Around 60% found making their first Making Tax Digital submission easy, rising to over 70% for ongoing submissions thereafter. Making Tax Digital increased customers’ confidence their VAT was right, with those mandated in 2019 more likely to experience this (53% compared to 27% mandated in 2022). Over half incurred financial costs with Making Tax Digital whereas over two-thirds experienced at least one benefit;
• Making Tax Digital software has wider economic benefits beyond tax. Fully functional Making Tax Digital software had operational and financial benefits for two-fifths of businesses and acted as a spur to digitalisation for one-fifth. 45% said Making Tax Digital software had saved them time. Estimated time savings were 26 to 40 hours per business per year on average for all those using fully functional software. The total value of this time was estimated to be £603 million to GBP 915 million.