MTD IT to be expanded in April 2028

Today’s Spring Statement included a number of surprises Making Tax Digital announcements, including confirmation that the income threshold will be lowered to £20,000 from April 2028.

Income threshold to drop from April 2028: It was announced at last year’s Autumn Budget that MTD would be rolled out to those with income of over £20,000 “by the end of this Parliament”. This announcement was seen as underlining the incoming government’s support for the regime.

At today’s Spring Statement, it was confirmed that this lowering of the income threshold will take place from April 2028. Given that the current Parliament could run until summer 2029.

The first taxpayers will be mandated into MTD in 2026-27, meaning the first self-assessment returns under the regime are not due until 31 January 2028. This only gives a narrow two-month window for HMRC to take stock before bringing a further 900,000 lower-income taxpayers into the regime in April 2028.

Exemptions and deferrals: The Spring Statement documents confirm that the following will be exempt from MTD:

• 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”.

The first two of these appear to be sensible exclusions. The last is rather more puzzling. It’s not clear exactly who the intended target of this exemption is, especially as HMRC will no longer be providing a digital service for self-assessment filing under MTD (see below for more on this). Affected individuals will also apparently have to “notify and satisfy” HMRC that they are exempt. Hopefully HMRC will shed more light on this soon.

Alongside the above exemptions, some temporary deferrals have also been announced.

• Ministers of religion, Lloyd’s underwriters, and recipients of married couples’ allowance and blind Person’s allowance will not be required to join MTD IT during this Parliament.

• Individuals required to submit an SA109 (residence/remittance basis pages) won’t be brought into MTD until April 2027.

These deferrals sound sensible, and may be directly related to the issues raised below around the move to a full software journey.