In just over six months the first group of taxpayers will be required to join HMRC’s Making Tax Digital for income tax (MTD IT) programme.
Some individuals may be able to avoid this by claiming an exemption.
Self-employed taxpayers and landlords with qualifying income of £50,000 or more on the 2024-25 tax return will be required to comply with MTD IT from April 2026. This means they will have to maintain digital records; send quarterly updates to HMRC; and submit an annual tax return via MTD-compatible software.
Some types of income are exempt from MTD. These include partnership income and qualifying care income. This does not mean that partners and carers are automatically exempt, as any other qualifying income, for example if you are also a landlord, could bring you into the scope of MTD IT.
It may be possible in some circumstances to apply for an exemption from MTD IT on the grounds of ‘digital exclusion’. This applies to practising members of a religion whose beliefs are incompatible with using electronic communications or keeping electronic records; or those for whom it is not ‘reasonably practicable’ to comply with MTD IT due to age, disability, location or any other reason.
An application will need to be made to HMRC for digital exclusion from MTD IT, even where the taxpayer already has a digital exclusion exemption from MTD VAT. Further details on who might qualify for digital exclusion and how and when to apply are expected in due course. HMRC has said that it expects the number of digitally excluded taxpayers to be low. If you think you might be eligible, contact us to discuss your situation and, if appropriate, we can help you with your application when the information is available.
We have been preparing to help clients navigate MTD IT for some time. If you are self-employed or a landlord and your total gross income from trading and/or property is £50,000 or more on your 2024-25 tax return, we can help you get your business MTD-ready. cture are important. If you’re considering selling part of your business, planning ahead can make all the difference.
At AJN Accountants, we can review your situation and help you decide the best approach to make sure you don’t pay more tax than you need to.
