Laptop with coloured graphics coming out of the screen visualising data extraction

Spring Statement MTD news: expansion to lower incomes, greater importance of third-party software and further exemptions

26 March, 2025

Today's Spring Statement contained some surprise announcements on Making Tax Digital (MTD):

  • Taxpayers with sole trade or property income of more than £20,000 to be brought into MTD from April 2028.
  • Third-party software will be needed to file the digital tax return.
  • Further exemptions and deferrals for some taxpayers.

Expansion to lower-income taxpayers

Individuals with self-employment or property income of over £20,000 were expected to be brought into MTD “by the end of this parliament” according to last year’s Autumn Budget.

The Government confirmed today that MTD will be rolled out to landlords and sole traders with income from these sources of over £20,000 from April 2028.

MTD tax returns will have to be filed using software

It was also revealed today that taxpayers in MTD will need to file their tax returns using specialist software.

HMRC had previously been expected to offer an online filing service for MTD taxpayers in a similar way to how many people file their Self-Assessment returns via GOV.UK. Today's change of approach means taxpayers in MTD will need third party software to not only keep their digital records and file quarterly updates, but also to submit their digital tax return after the year-end.

The ATT learned of the possibility of this policy change in advance as part of our ongoing MTD engagement with HMRC. We expressed our concerns in a joint letter to the Exchequer Secretary to the Treasury. Whilst our reservations were acknowledged, we understand the decision has been made based on the findings of HMRC user trials, which indicated moving out of software to a GOV.UK submission service would be confusing.  

MTD goes live for the first affected taxpayers from 6 April 2026. Taxpayers within the scope of MTD, and their agents, will need to ensure they have appropriate software in place to allow them to complete each step of the MTD compliance process - from digital record keeping right through to submitting their end of year summary return. This might involve more than one software product, so it's crucial to consider software options early and make sure the full compliance journey is covered. HMRC maintain a list of MTD compatible software to assist with this.

Further exemptions and deferrals

Exemptions for the following individuals were announced today, adding to existing MTD exemptions:

  • Taxpayers who have a Power of Attorney
  • Non-UK resident foreign entertainers and sportspeople (provided they have no other income within MTD)
  • Taxpayers for whom HMRC ‘cannot provide a digital service’

These exemptions will need to be applied for, but it is not clear which taxpayers the final bullet point might refer to.

Alongside the above exemptions, some temporary deferrals were also announced:

  • Ministers of religion, Lloyd’s Underwriters, and recipients of Married Couples’ Allowance or Blind Persons’ Allowance will not be required to join MTD during this Parliament.
  • Individuals required to submit an SA109 (residence/remittance basis pages) will not be brought into MTD until April 2027.

These exemptions and deferrals are welcome, particularly as they were some of the points raised in our joint letter to the Exchequer Secretary to the Treasury linked above.

You can find further information about MTD in our MTD Frequently Asked Questions.