Agricultural professionals and self-employed workers may face changes to how they submit tax returns to HMRC from April next year.
The income threshold for individuals who need to report income and expenses quarterly will be lowered to £50,000 from 6 April 2026.
It is then due to be lowered further to £30,000 from April 2027 and £20,000 from April 2028.
See also: Advice on tax and legal issues when a farm tenancy ends
Individuals will be expected to keep digital records throughout the year as part of the government’s Making Tax Digital (MTD) for Income Tax proposals.
HMRC is encouraging sole traders to register, explore the new online services, and begin preparing now.
Sole traders
Christine Nisbet, finance director at rural business specialist firm FBR Seed, said: “We speak to sole traders every week who still don’t realise this change is coming, or how close it is.
“From April next year, manual tax returns will no longer be accepted. Instead, submissions must be made quarterly through HMRC-recognised software like Xero or Sage.
“This is a big shift for people used to paper records or Excel spreadsheets.
Ms Nisbet added: “Many are simply unaware of the changes, or unsure how to go about getting set up, and we want to make sure as many businesses as possible understand what’s coming, so they can stay compliant and avoid unnecessary headaches down the road.”
Freelance income
George Holmes, managing director of business finance specialists Aurora Capital, noted that landlords with several rental properties could also be affected if their gross rental income, combined with any other freelance income, was more than £50,000 a year.
He said: “It’s also important to remember that HMRC’s threshold is based on your gross income, the total amount you bring in before expenses like tools, rent, or supplies, not your profit.
“If you invoice clients and manage your own books, you should assume Making Tax Digital will affect you, and start preparing now.”
NFU Scotland has outlined its support for the Making Tax Digital framework as part of a wider submission of recommendations to the Treasury ahead of the autumn budget.
However, NFU Scotland has stressed that the framework must be designed to take into account “the realities of agricultural production cycles and diversified farm structures”.