Updated guidance on who can join the MTD for income tax pilot

HMRC has updated its guidance on who can join the Making Tax Digital (MTD) for income tax pilot.

Individuals can now sign up to MTD for income tax if:

  • They are a sole trader with income from one business, they rent out a UK property or both (individuals with income from furnished holiday lettings can now join the pilot)
  • Their self assessment tax returns and payments are up to date
  • They are UK resident for tax purposes

HMRC has clarified that individuals who need to report income from any other sources or who make other payments that are taxable or on which they claim tax relief, cannot join the pilot. The pilot is expected to be opened up to other sources of income and claims in due course.

This update highlights that, although it has been scaled back, work on the MTD for income tax pilot is ongoing and mandation from 2021 remains a possibility. But first, anyone signing up needs to acquire an MTD for income tax software product; the HMRC list of software products still includes just four products which are available now with two more in development.