MTD for ITSA Delay Brings Breathing Space for Farmers

If you’re a sole trader using profit averaging in your tax computations, you’ll now have a bit more breathing space before Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) becomes mandatory. For partnerships this is still delayed with no fixed starting date in sight.

Originally, MTD for ITSA was due to start in April 2026 for self-employed individuals and landlords meeting certain income thresholds. That means keeping digital records and making quarterly submissions of income and expenditure through compatible software. But for those who use profit averaging, including many farm businesses, this part of the rollout has now been delayed until April 2027.

What the Deferral Means in Practice

For agricultural clients who qualify for averaging, the extra year gives you more time to prepare your records and systems for digital quarterly reporting. It also allows the wider digital tax framework to mature before you’re required to adopt it. This is particularly helpful where annual income figures fluctuate, or averaging claims are part of long-term tax planning.

At the moment, HMRC hasn’t confirmed exactly how eligibility for this deferment will be determined. They may look at whether an averaging claim appears on your 2024/25 Self Assessment return, or possibly even earlier years. That distinction matters because averaging is not something every farmer will claim every year for tax planning reasons. We’ll update you once HMRC clarifies this point.

Why This Matters for Farming Businesses

Making Tax Digital is a significant shift in how income tax is reported. It’s designed to bring more timely information into the tax system, reduce errors and align tax reporting with modern digital practices. For many in the farming sector, that’s a positive development in the long term. Being able to ease into this change, especially where complex profit patterns exist, should help make the transition smoother.

But the deferral also underscores the importance of planning ahead. Even with this delay, MTD for ITSA is still on the horizon. Agricultural businesses should use this period to get comfortable with digital record keeping and make sure their accounting software and processes will be ready. Staying ahead now could reduce stress further down the line.

Need Help Preparing?

If you’re unsure about how this deferral affects you, or want support getting your system ready for MTD for ITSA, please get in touch with your usual Forrester Boyd contact. We’re here to help you make the most of this extra time and ensure your tax affairs are managed efficiently as the digital reporting landscape evolves.