In this week’s Enews, we look at the ICAEW’s advice that taxpayers sign up to the next stage of Making Tax Digital. There is also a forecast on the costs of the conflict in the Middle East and a plea for the government to take action on business rates to update you on.

• ICAEW encourages taxpayers to sign up to Making Tax Digital
• Iran war could cost Treasury up to £8 billion a year
• Government must fix ‘broken business rates’

Taxpayers who are required to use Making Tax Digital (MTD) for Income Tax from April 2026 should sign up now if they haven’t done so already, says the Institute of Chartered Accountants in England and Wales (ICAEW).

Taxpayers who had combined gross income from sole trades and property businesses of more than £50,000 for 2024/25 must use MTD for Income Tax from April 2026.

More taxpayers will be required to use MTD from April 2027 and April 2028. Taxpayers who are not required to use MTD income tax can volunteer to do so.

HMRC estimates that approximately 864,000 taxpayers are required to use MTD for Income Tax from April 2026. The ICAEW says that approximately only 280,000 taxpayers have signed up so far, with 30,000 taxpayers having done so voluntarily.  

The Institute said:

‘ICAEW is encouraging taxpayers who have yet to sign up to MTD income tax to do so in good time in order to submit their first quarterly update by 7 August 2026. By signing up in advance of the first filing deadline, taxpayers and agents will give themselves more time to deal with any issues that may arise.’

Internet link: ICAEW website

Prolonged conflict in the Middle East could cost the Treasury up to £8 billion a year through higher debt interest payments and lost tax revenue, warns the Institute for Public Policy Research (IPPR).

The think tank says inflation could peak as high as 5.8% and is urging the government to act.

The IPPR recommends a temporary energy price cap at £2,000 to target the most severe scenarios and a 10p fuel duty cut, alongside lower speed limits to help reduce energy demand.

It says the package would cost up to £5 billion a year depending on the severity of the shock. At worst, the intervention is broadly fiscally neutral, with policy costs offset by lower borrowing costs and protected tax revenues, says the IPPR.

However, if intervention succeeds in preventing permanent ‘scarring’ damage to the economy, or in averting sharper interest rate rises, the government could stand to save between £6-10 billion a year compared to doing nothing, it adds.

Sam Alvis, Associate Director at the IPPR, said:

‘A well-designed intervention, that pairs capping prices with clear incentives to reduce energy demand, would not only protect living standards but prevent the need for damaging interest rate rises, and insure against the risk of more severe damage.

‘This is cost-effective, and if permanent damage is avoided, this actually saves the government money. Keeping interest rates lower and investment higher prevents any damage to deploying and using clean energy, the long-term solution to crises like this.’

Internet link: IPPR website

The government must take the chance to fix the UK’s broken business rates system, says the British Chambers of Commerce (BCC).

The business group says anxiety about business rates rose to 41% in its Quarterly Economic Survey for the first quarter of 2026.

This is the highest level since the BCC started asking the question in 2017.

Companies cite cost pressure from business rates as a key reason for increasing prices and delaying expansion of their premises.

While the government made some concessions on business rates for pubs and live music venues earlier this year, BCC research shows business concerns are much wider.

Kate Shoesmith, Director of Policy and Insights at the BCC, said:

‘Reforming business rates was a key manifesto pledge of the government, but it has only tinkered around the edges.

‘The government must deliver the more ambitious root and branch reform of the whole system that it promised.

‘As first steps, it should mitigate the steep jumps in bills across all sectors caused by the 2026 revaluation and introduce a single flat rate multiplier.

‘This shift should then jumpstart a more rigorous consultation with business on how to fully reform what is a complex and rigid system.

‘They are ready to contribute innovative thinking on change without costing the Exchequer. There are other tax mechanisms that can meet the goal of widening the tax base to allow for a lower multiplier.’

Internet link: BCC website