Making Tax Digital for Rural Businesses

If you have self-employment or rental profits you need to understand how HMRC’s Making Tax Digital (MTD) affects you.

Starting April 2026, MTD for income tax will become mandatory for self-employed individuals and landlords with qualifying income over £50,000 annually (defined as gross self-employment income plus gross rental income before expenses) as reported on the 2024/25 tax return.

If your qualifying income is over £30,000, you will need to comply with MTD from April 2027, and those with qualifying income over £20,000 will need to comply from April 2028.

What is MTD for income tax?

MTD is a new requirement to file quarterly updates to HMRC detailing your sole trade and rental income and expenses.  These income and expenses will need to be recorded digitally and filed with HMRC using MTD- compatible software.  Once these quarterly reports have been filed, a fifth final return will be submitted, replacing the current Self-Assessment Tax Return for the affected individuals.

Which rural businesses will be affected from April 2026?

The good news for some businesses is that those trading in a partnership or company are not   required to report under MTD for income tax currently – though partnerships will be brought into scope at some point, but there isn’t a proposed timescale currently.

However, if you are an individual who has a rental portfolio or sole trade outside of your partnership or company, you will be required to report personally if your qualifying income exceeds the threshold of £50,000 for the 2024/25 tax year.

Next steps

• Check if you are affected – submit your 2024/25 return as early as possible
• Check the HMRC list of all compatible MTD software
• Get a plan in place for reporting from April 2026 if you are affected
• Speak to our Ag Team – we can help with the reporting and the transition to MTD!

Against this backdrop of MTD, we know that many rural businesses are still reeling from the Autumn Budget Inheritance Tax (IHT) announcements.  MTD and these IHT changes are a big shift and the team at Ensors can help with planning and navigating these changes for the families at the heart of these businesses.

The information contained within this publication is given by way of general guidance. Specialist advice should always be sought in relation to your particular circumstances. No liability is accepted by Ensors for any actions taken without seeking appropriate professional advice.