As many farmers are planning to mitigate the impact of upcoming Inheritance Tax reforms, another significant shift is quietly approaching — the rollout of Making Tax Digital (MTD) for Income Tax Self-Assessment.
This will impact the way self-employed individuals and landlords, including many farm businesses, report their earnings to HMRC, marking the end of the paper receipts and manual record keeping era.
Those with an income of more than £50,000 will be impacted from April, 2026, before the threshold is lowered to £30,000 in April 2027, and then again to £20,000 in 2028.
The new legislation means it will be mandatory for business owners to keep digital records and use compatible software to submit quarterly reports to HMRC, as well as a final End of Year Declaration.
Key changes for self-employed farmers and landlords
- Digital records: Farmers will be required to keep digital records, using MTD compatible software that integrates with farm management systems.
- Software usage: The use of software that works with MTD will be mandatory. This software will allow you to create and store digital records of each of your business transactions. Training to ensure accurate record keeping may be required.
- Quarterly updates: Businesses will need to submit updates every quarter, bringing the tax system closer to real-time. Farm businesses should review their cash flow processes to align with quarterly reporting. An End of Year Declaration will still be required, which will be similar to your normal self-assessment tax return.
By understanding these changes and preparing in advance, you can ensure a smooth transition to the new system.
Although the goal is to make it easier for individuals and businesses to get their tax right, this poses a challenge for businesses with increased administration, new systems and the risk of actually submitting incorrect information to HMRC in real time.
If you are unsure whether you’re ready for MTD or would like advice and support, please get in touch.
Call 01768 222030 or email [email protected]
