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MTD for individuals

Making Tax Digital (MTD) for individuals is centred around the Personal Tax Account (PTA) which already has many of the services needed by PAYE taxpayers. HMRC continues to improve and develop the PTA and in due course it will offer the full range of HMRC services to personal taxpayers, including some of those who are currently required to complete self assessment tax returns.

Individual taxpayers fall into two groups – some who are required to complete self assessment tax returns and a very much larger group whose tax affairs are dealt with wholly within the PAYE system (PAYE taxpayers). Individuals can and do move between the two groups as their circumstances change. Individuals who have income from self-employment or from property are regarded by HMRC as being businesses and should refer to the business section of this MTD hub.

Until the introduction of the Personal Tax Account there were almost no digital tax services available to PAYE taxpayers and the service was largely paper based. The key elements of the income tax system for PAYE taxpayers are tax codes issued by HMRC, reporting of income data by employers, pension providers and the Department of Work and Pensions and an annual reconciliation to check that the correct tax has been paid. The tax codes determine the PAYE deducted by employers and pension providers. HMRC checks each taxpayer’s PAYE record after the end of each tax year and contacts the taxpayer if there is an over or under payment of tax (a P800 calculation or PA302 simple assessment).