Delays announced to ‘make tax digital’ arrangements

HMRC has made changes to how tax returns will need to be submitted from April next year, however farmers may be entitled to defer until April 2027 following a recent adjustment.

The NFU has successfully lobbied government to introduce a concession, which will allow farmers operating as sole traders to delay the ‘Making Tax Digital for Income Tax’ requirements by a further 12 months, if they average their profits over several years.

This is due to the NFU arguing that HMRC’s system had not yet been tested for farmers using an entitlement to average their farm profits over either two or five years.

See also: Advice on keeping accurate farm accounts to pay the right tax

Further guidance on who will be eligible for this deferment is due to be issued by HMRC in the new year.

NFU president Tom Bradshaw said this easement will save many farmers significant time and money, giving businesses vital breathing space.

He added: “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 system is properly tested and workable before farmers are mandated.”

Other self-employed workers may still face changes to how they submit tax returns to HMRC from April next year, with the income threshold for those who need to report income and expenses quarterly being lowered to £50,000.