Government plans to digitise the tax system used by self-employed people and landlords have been delayed for a third time.
Compulsory use of HMRC's Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will be delayed by two years to April 2026.
Announcing the delay, HMRC chief executive Jim Harra said: “A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to ensure that our self-employed and landlord customers can make the most of the opportunities this will bring."
The government has also announced a review into the needs of smaller businesses, particularly those under the £30,000 income threshold.
The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations.
The NFU said it welcomed the government's announcement and the additional time it would give to "resolve our concerns".
These include timescales for implementation, the need for a robust pilot phase to identify problem areas, and additional complexity resulting from Basis Period Reform for many farmers.
"We particularly welcome the review into the needs of smaller businesses and will continue to discuss our concerns and proposed solutions with HMRC in the coming months," the NFU said.
The government statement explains that self-employed individuals and landlords are currently facing a challenging economic environment.
The transition to MTD for ITSA represents a significant change to taxpayers and HMRC for how self-employment and property income is reported; because of this the government is giving a longer period to prepare for MTD.
The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.
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.
Those with an income of between £30,000 and £50,000 will need to do this from April 2027.
Most customers will be able to join voluntarily beforehand, meaning they can eliminate common errors and save time managing their tax affairs.
