From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. Those with an income of between £30,000 and £50,000 will need to do this from April 2027.
"We’ll continue pressing HMRC to ensure the system is properly tested and workable before farmers are mandated.”
Aled Jones, NFU Cymru President
What’s changed?
Making Tax Digital for Income Tax was due to become mandatory for all sole traders on 6 April 2026. However, following NFU lobbying, anyone who may reasonably expect to use profit averaging will now be entitled to a deferment until 6 April 2027.
This deferment will apply even if you have other sole trades or property businesses as well as your farm which would, ordinarily, mean it would be mandatory for you to start using Making Tax Digital for Income Tax from 6 April 2026.
Farmers have an entitlement to average farm profits over either two or five years. HMRC will be issuing guidance on when they are able to automatically apply the deferment, and when it will be necessary to apply, in the new year.
NFU Cymru President Aled Jones said the news was a “big win” for farmers, and “will save many farmers significant time and money, giving businesses vital breathing space”.
“However, it’s important to recognise that this initiative has the potential to streamline tax administration in the long-term as a well-tested and workable system that could ultimately reduce paperwork and improve accuracy for farm businesses. We’ll continue pressing HMRC to ensure the system is properly tested and workable before farmers are mandated.”
NFU and NFU Cymru work
The NFU has engaged extensively with HMRC on Making Tax Digital for Income Tax over the past few years.
We have raised concerns over:
- timescales for implementation
- the need for a robust pilot phase to identify problem areas
- additional complexity resulting from Basis Period Reform for many farmers
- the level of complexity with MTD reporting for diversified farms.
In terms of the need for a robust pilot, HMRC was unable to include anyone who may wish to average their farm profits in the public beta testing for 2025/26. The NFU stated that it could not therefore encourage any farmer to volunteer given it would prevent them from making such a claim. We have since made the point that this limitation in the testing has left the system effectively untested for farmers. HMRC has recognised this with this easement.
We will continue to work with HMRC to raise our concerns over the difficulties the new system will cause for farmers, with multiple quarterly updates being required from diversified farm businesses. We also want to ensure the system will be tested before it becomes mandatory for farmers to use it. We will provide more detail on this once we have had further discussions with HMRC.