HMRC presses on with roll-out of Making Tax Digital for Income Tax (MTD IT) - but changes plans for Corporation Tax.

MTD IT is now well on the horizon, with updated draft legislation published over the summer. Significantly, too, HMRC also published a Transformation Roadmap, underscoring the fact that digital self-serve is very much the direction of travel. According to this document, ‘HMRC will look very different by 2030. Almost all our straightforward customer queries will be handled digitally or automatically with at least 90% of customer interactions being digital’.

New rules for sole traders and landlords

MTD IT is the new way for income and expenses to be reported to HMRC. Under these mandatory new rules, sole traders and landlords must send updates, filed online using specific software, to HMRC every three months.

The change is being rolled out in phases from 6 April 2026, depending on the level of what is called ‘qualifying income’. Entry to MTD IT is mandatory for sole traders and landlords:

• from 6 April 2026 if qualifying income is over £50,000 for the 2024/25 tax year
• from 6 April 2027 if qualifying income is over £30,000 for the 2025/26 tax year
• from 6 April 2028 if qualifying income is over £20,000 for the 2026/27 tax year.

And other taxpayers

The government has also said that it will ‘continue to explore how we can best bring the benefits of digitalisation to a greater proportion of the four million sole traders and landlords who have income below the £20,000 threshold’. This would seem to keep open the door to some sort of change for those below the £20,000 threshold in due course.

MTD and Corporation Tax

The surprise announcement over the summer was the news that plans to introduce MTD for Corporation Tax have been abandoned. But this doesn’t mean that there’s going to be no change for the Corporation Tax population. Though there’s no Plan B for MTD for Corporation Tax as yet, other comments in HMRC’s Transformation Roadmap suggest things are unlikely to stand still.

The Roadmap says: ‘HMRC will modernise services for Corporation Tax, beginning with a renewal of internal systems for Corporation Tax to provide the foundation for future improvements . . . developing an approach to the future administration of Corporation Tax that is suited to the varying needs of the diverse Corporation Tax population.’

‘HMRC recognises that this population includes a very wide range of entities and situations, from small businesses to multinationals, from charities and property management companies to unincorporated associations. HMRC will work with stakeholders to identify changes that will provide the best outcomes . . . and is committed to consulting and providing early clarity and assurance on both the design and timing of changes.’

Helping with digital compliance

HMRC’s new world is all about digital compliance, and this is bound to entail challenges for the taxpayer. We are on hand to advise on the best way ahead for you and your business. Please don’t hesitate to contact us with any queries you may have.