On 22 April 2024, HMRC issued updated guidance on Making Tax Digital (MTD) for Income Tax. After a pause in the pilot in February 2023, HMRC has now confirmed the expansion of the pilot from April 2024.
- Eligible sole traders and landlords can now voluntarily sign up for MTD for Income Tax for 2024/25.
- Before volunteering, eligible sole traders and landlords must ensure that they are using Compatible software that meets the minimum requirements.
- HMRC's guidance contains Updated criteria, with slight changes that expand the pool of eligible volunteers.
- Broadly, to be eligible, sole traders and landlords must:
- Have a National Insurance number.
- Be registered for self-assessment and have submitted at least one Self Assessment tax return.
- Have up-to-date tax returns, records and personal information filed with HMRC.
- Be UK resident.
- Must have an accounting period that either;
- Runs from 6 April to 5 April or,
- From 1 April to 31 March, with software that supports this.
- Sole traders and landlords will be ineligible to volunteer where they have partnership income, trust income, High-Income Child Benefit Charge, jointly owned property, HMRC debt or payment arrangements, bankruptcy/individual voluntary arrangements or if they are claiming blind persons' allowance or marriage allowance.
- In addition, MPs, Ministers and Lloyds underwriters are excluded from voluntarily sign up.
- To check eligibility, use our MTD: Income Tax Pilot Tool.
- HMRC have now made it possible for eligible sole traders and their agents to sign up to MDT for income tax using their Government Gateway IDs and passwords.
- It is expected that most sole traders and landlords will be able to volunteer for the MTD pilot from April 2025.
MTD for Income Tax will be mandatory:
- From April 2026 for self-employed businesses and landlords with business turnover above £50,000.
- From April 2027 for self-employed businesses and landlords with business turnover above £30,000.
- HMRC will review smaller businesses (with a turnover of less than £30,000) to decide if they will be mandated to join MTD.
- No timetable has yet been introduced for partnerships will be mandated to join MTD.
Useful guides on this topic
Making Tax Digital for Income Tax: Data required by HMRC
Making Tax Digital: what information do you need to submit? Making Tax Digital for Income Tax: categories of information required. This list has been updated and major changes are noted.
Compare software for Making Tax Digital for Income Tax
What's the cheapest software I can use for Making Tax Digital for Income Tax? What is the best value software can I use? How do a file a Self Assessment tax return under Making Tax Digital?
Making Tax Digital: Index & timeline
When does Making Tax Digital (MTD) apply? What does Making Tax Digital really mean? How will it affect you? Does MTD mean quarterly reporting? Is my business exempted from Making Tax Digital?
MTD: Income Tax Pilot Tool
Making Tax Digital (MTD) for Income Tax. Are you eligible to take part in the MTD Pilot?
Penalties: Making Tax Digital
HMRC's Making Tax Digital (MTD) programme has resulted in a re-design of penalties for late filing and payment.
External Links
HMRC Guidance: Use Making Tax Digital for Income Tax
