The government has delayed the introduction of Making Tax Digital (MTD) for Income Tax for farmers operating as sole traders for an extra year before they need to start using , after lobbying by the NFU.
From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software.
But following sustained NFU campaigning, farmers who may reasonably expect to use profit averaging will now be entitled to a deferment until April 2027.
The NFU argued that the system had not been tested sufficiently for those who wish to use their entitlement for profit averaging. It engaged extensively with HMRC on Making Tax Digital for Income Tax raising concerns over timescales for implementation and the need for a robust pilot phase to identify problem areas.
It also highlighted the additional complexity resulting from Basis Period Reform for many farmers and the level of complexity with MTD reporting for diversified farms.
NFU president Tom Bradshaw said: “This announcement is a big win for our members. Deferring Making Tax Digital until 2027 for sole traders using profit averaging will save many farmers significant time and money, giving businesses vital breathing space.
“However, it’s important to recognise that this initiative has the potential to streamline tax administration in the long-term as a well-tested and workable system that could ultimately reduce paperwork and improve accuracy for farm businesses.
“We’ll continue pressing HMRC to ensure the systems are properly tested and workable before farmers are mandated.”