Making Tax Digital (MTD) for Income Tax. Are you eligible to take part in the MTD Pilot?
UPDATE: The pilot is currently closed to new participants. HMRC have not yet indicated when it will reopen.
At a glance
- Taxpayers and their agents can sign up and participate in a voluntary Making Tax Digital (MTD) for Income Tax pilot scheme.
- Signing up to the Pilot will mean that you will allow your software to transmit your accounting data to HMRC every three months.
- You could sign up until February 2023. This was entirely voluntary.
- Only certain taxpayers are currently eligible to participate.
Are you eligible to take part?
From July 2022, HMRC brought customers with the following income types into the pilot:
- Self-employment (including multiple self-employments)
- UK property
- Gift Aid
- Pay As You Earn income, including employment income and occupational pensions (excluding those with a coded out liability)
- UK interest
- UK dividends
Recent changes
Following the postponement of the introduction of MTD for income tax on 19 December 2022 to 2026, in February 2023 HMRC paused the pilot for new applicants whilst they refresh their testing strategy. They have not given any indication as to if and when the pilot will reopen.
Datas show that in the three years since the pilot scheme began 1015 people have participated, of these, only 218 or approximately 21% are landlords with property income. The numbers have fallen dramatically since the first year, 2018-2019, from 877 to 26 in 2020-2021 and as of January 2022, only nine were participating.
This tool will be adjusted in due course.
MTD pilot: eligibility checker
Are you UK resident? |
No → |
You cannot join the MTD pilot as you do not fulfil the current criteria. |
Yes ↓ | ||
Do you have a National Insurance number? | No → |
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Yes ↓ | ||
Are you Registered for Self-Assessment? |
No → |
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Yes ↓ | ||
Have you submitted at least one Self-Assessment tax return? |
No → |
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Yes ↓ | ||
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No → |
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Yes ↓ | ||
Does your business/both your businesses have a 5 April year-end? | No → |
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Yes ↓ | ||
Was one or more of the following included within the last tax return?:
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No → |
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Yes ↓ | ||
Do you have to report any of the following other types of taxable receipts:
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Yes → |
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No ↓ | ||
Do you have any income tax charges, e.g. HICBC, pension charges? |
Yes → |
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No ↓ | ||
Do you have a payment arrangement in place? |
Yes → |
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No ↓ | ||
Are you in a partnership? | Yes → |
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No ↓ | ||
Are you currently, or going to be, insolvent or bankrupt? | Yes → |
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No ↓ | ||
Are you a Minister of religion, Lloyds underwriter or foster carer? | Yes → |
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No ↓ | ||
Are you using, or going to start using functional compatible software that will allow you to report quarterly to HMRC? |
No → |
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Yes↓ | ||
Is the taxable turnover from your business/businesses above £10,000? |
No → |
Your business may not be big enough to be mandated into MTD. MTD will apply to your first accounting period that starts on or after 6 April 2024, if the taxable turnover from your self-employed business or income from property is above £10,000. If you know that your income is less than £10,000, and is unlikely to exceed that level then MTD is voluntary for you. You can sign up to the Pilot if you wish to. |
Yes↓ | ||
You have met the basic qualifying conditions to be able to join the MTD for Income Tax pilot. See the next tab. |
MTD: At a glance
What does MTD for Income Tax mean?
Under Making Tax Digital for business (MTD), self-employed and property landlords are required to use software in order to report quarterly to HMRC and to also provide an annual update.
MTD will apply to the first accounting period that starts on or after 6 April 2026 (delayed from April 2024) if taxable turnover from your self-employed business or income from property is above £50,000 (previously £10,000).
- Taxpayers with income between £30,000 and £50,000 will join from April 2027.
- The government will consult as to whether smaller businesses (below £30,000) will have to join.
- No date has yet been given for partnerships to join.
- Taxpayers have a potential minimum of five interactions with HMRC per year.
- Taxpayers are required to use functional compatible software: your accounting data will be used to access your business income.
- You will not need to provide further information unless, of course, you need to try and correct errors.
- There will be a final tax return (called a year-end declaration) at the year-end, which will include any claims and elections.
For full details MTD Toolkit for Accountants
HMRC's MTD Pilot
This is a test pilot and it may well be that aspects of the service will change.
You must use commercial software: HMRC will not provide any free software.
You can also choose to:
- Send an update to HMRC more often.
- Pay your tax bill as you go, if it makes it easier for you to manage your budget
- Ask your accountant to send updates for you.
The Pilot is not recommended for
- Taxpayers with a poor understanding of IT.
- Taxpayers with a poor understanding of bookkeeping.
- Those who do not have a reliable broadband connection.
- Those who will not be available at least on a quarterly basis to send in data.
- VAT registered traders.
- Traders and landlords with a low income.
Ask your adviser if you decide to take part in this pilot and wish to delegate to them.
Criteria
Use our tool, see tab MTD pilot: eligibility checker
You must be:
- Resident in the UK.
- Registered for Self Assessment.
- Up to date with returns and payments.
- Already within Self Assessment and submitting tax returns.
You cannot sign up if you:
- Need to report income from other sources.
- Have claimed one or more of the following grants:
Sign up to the Pilot
As of 9 December 2021, taxpayers could only sign up for the Pilot through their software provider. Sign up is currently on hold.
Taxpayers wishing to join the Pilot should:
- contact their software provider if they already have software or
- select suitable software and liaise with their chosen provider.
Links
External links
HMRC: Sign up as an individual for Making Tax Digital for Income Tax
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