Making Tax Digital (MTD) for the self-employed and landlords is still over a year away, but the October 2024 Budget expanded its scope to include individuals with income between £20,000 and £30,000, set to take effect before the end of this parliament.
MTD timeline
With the latest announcement, the MTD timeline for the self-employed and landlords now looks like this:
- 6 April 2026: Those with an income of more than £50,000 for the 2024/25 tax year.
- 6 April 2027: Those with an income of between £30,000 and £50,000 for the 2025/26 tax year.
- Before the end of this parliament: Those with an income of between £20,000 and £30,000 for the tax year prior to the year of mandation.
It is very important to appreciate that the various mandation levels are based on gross income, and not on net profit after expenses have been deducted.
More significant than what was actually announced was what was left unsaid: that the government appears to be fully committed to the implementation of MTD from April 2026 without any further postponement.
Outstanding issues
One of the main concerns is that the testing of MTD by HMRC is still relatively small scale. Until recently, there was a lack of compatible software and a long list of exclusions of those who cannot currently sign up to use MTD voluntarily, e.g.:
- those paying the high income child benefit charge;
- anyone claiming the marriage allowance; and
- those with income from a trust or jointly owned property.
There is still no confirmation on how MTD will work in practice for those with jointly owned property. At issue is that each owner will be expected to keep their own digital records and submit separate quarterly updates – something that will be impractical in many cases.
HMRC’s guidance on if and when you will need to use Making Tax Digital can be found here.
For more information, contact us on 0114 266 4432 or email info@smh.group.
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