Making Tax Digital expands - May 9th 2025

HMRC has been writing to taxpayers likely to be affected by the latest amendment to the Making Tax Digital (MTD) roll out.

Self-employed individuals and landlords with qualifying income – total income from self-employment and property letting – over £50,000 will have to keep their financial records and file quarterly returns to HMRC using MTD from 6 April 2026.

Qualifying income

Qualifying income for 2026/27 will be the amount shown in your 2024/25 tax return, which you have to submit by 31 January 2026. Whether or not HMRC writes to you now or after receiving your tax return, you should keep a check on your income to give you plenty of time to choose the right MTD-compatible software and integrate it with your existing accounting records.

Establishing qualifying income for 2024/25 will be more complicated if your business accounting date is not 31 March or 5 April, so now may also be a good time to align your accounts with the tax year.

• If your income is above £30,000 and up to £50,000 you will have to join MTD from 6 April 2027.
• For people with income above £20,000 and up to £30,000 the joining date will be 6 April 2028.

This will leave only a few individuals outside digitisation, at least for now. With some recent additions, the list includes:

• people who receive the married couple’s allowance (where at least one partner was born before 6 April 1935), or the blind person’s allowance;
• Lloyds underwriters;
• ministers of religion;
• non-UK resident foreign entertainers and sportspeople who have no other MTD qualifying income;
• people exercising a power of attorney.

Anyone who finds it impractical, for any reason, to use electronic communications or keep electronic records –will have to apply to HMRC for exemption.

There will also be a one-year deferral, until April 2027, for individuals who have to complete the supplementary tax form SA109, which covers residency status and remittance basis income under the ‘temporary repatriation facility’.

Other changes

The first three months of 2025 saw several announcements on MTD.

• Individuals with annual turnover from either self-employment or property below the £90,000 VAT registration threshold will be able to categorise items simply as income or expense without having to give a breakdown of the totals. There is one exception: a separate digital record will be needed for property finance costs.
• Users of MTD for income tax may have other income that has to be included in their self-assessment, such as dividends and interest. They will no longer be able to submit their tax return in HMRC’s separate online filing system but will have to report such income in their MTD End of Period Statement (EOPS), alongside any accounting adjustments to their quarterly reports. Like the tax return, the deadline for the EOPS will be 31 January.
• Joint property owners will only have to report quarterly a single figure for their share of the rental income. Total expenses can be left to the EOPS.

If your business accounts run to 31 March, you will be able to start your MTD obligations on 1 April (instead of 6 April) in the first year of operating MTD. This will avoid year-end adjustments.

Further information on this topic can be found here.