Major changes to how most NI farmers calculate their income tax bills are to be delayed again, the UK government has confirmed.

The next step in Making Tax Digital (MTD) requires self-employed workers to submit digital records of income and expenses every three months for income tax calculations.

It was due to be rolled out in April 2024, but another postponement has been announced which moves the start of MTD for income tax back by at least another two years to April 2026.

Self-employed businesses with annual turnover above £50,000 will be required to comply with MTD for income tax from this new date.

Those with turnover between £30,000 and £50,000 will begin the process in April 2027 and a review is to be carried out into how MTD should work for those with revenues below £30,000.

The UK government has said the exercise will “consider how MTD for income tax self-assessment can be shaped to meet the needs of these smaller businesses”.

Partnerships

Aside from self-employed individuals, the timeline for partnerships is even less clear. Partnerships were due to start complying with MTD for income tax in April 2025, but that deadline has also been dropped.

On Monday, Treasury Minister Victoria Atkins maintained the UK government “remains committed” to introducing MTD for partnerships “at a later date”.

Problems with the computer programmes needed to comply with MTD for income tax, as well as low levels of awareness among taxpayers, has led to the latest pause in the process.

The first major step in MTD happened in April 2019 when businesses with turnover above £85,000 had to start keeping digital VAT records.

In April 2022, this was extended to all VAT-registered businesses, regardless of their turnover.

Income tax

The plans to extend MTD to income tax aim to make it compulsory for businesses to use computer programmes to submit a digital summary of their income and expenses to HMRC every quarter.

An “estimated tax calculation” will then be produced by HMRC to help each business budget for their tax liability.

However, final tax calculations will still only be made annually and there will be the opportunity to add extra information to the digital tax records at the end of every year.