The first Making Tax Digital (MTD) deadline fell on 7 August, meaning sole traders with a farming related business with a qualifying income of over £50,000 should now have submitted their first quarterly update for the 2026/27 tax year.

However, with HMRC reporting that only 436,000 of a potential 800,000+ cohort of taxpayers met their first deadline, there is still a lot of non-compliance taking place.

This new way for HMRC to collect tax information replaces one annual tax return at the end of the year, for farmers with a qualifying income of over £50,000.

If they haven’t already, farmers need to ditch paper reporting or manual spreadsheets for income and adopt a digital system that supports quarterly reporting.

However, how easy has this been for the agricultural sector and what challenges does MTD continue to pose as the next quarterly deadlines approach?

Does this apply to all farmers?

While most farmers will eventually need to comply with MTD, the timing depends on structure and turnover.

Since April 2026, MTD has applied to self-employed farmers with income above £50,000.

The threshold falls to £30,000 from April 2027, and 2028 will see this lower even further, impacting farmers crossing the £20,000 income band.

So, in short, if you operate as a sole trader and your gross income will soon cross the £30,000 band, you will be impacted by MTD over the coming years.

What does this mean in practice?

The MTD for Income Tax Self-Assessment means farmer and farming contractors with income above £50,000 now need to keep digital records and submit quarterly updates, with the next deadline falling on 7 November for the quarter covering 6 July to 5 October.

The move to quarterly updates is a significant change for farmers, whose income can be affected by weather, commodity prices and seasonal cycles.

For any other income streams, like farm shops, B&Bs or renewable energy, these must also be reported digitally under MTD.

How this might be challenging for farmers

The nature of farming makes it unlike many other industries, so MTD creates specific challenges.

The unpredictability of crop cycles, weather conditions and market prices means that the quarterly reports submitted by farmers rarely show the full picture.

With many farmers and farming contractors often diversifying their income streams, recording and categorising these correctly in MTD software can sometimes be time consuming.

A practical consideration is how isolated some farms are, with limited internet access. This creates hurdles for using cloud-based accountancy software and submitting regular online submissions.

Also, many farmer and farming contractors still rely on paper spreadsheets to complete their tax returns, so transitioning to complex digital software can require time, training and potential cost.

Follow-up

If you found the first quarterly deadline stressful or are still finding it hard to stay on top of digital record keeping, outsourcing this work could benefit your business.

An accountant can take the stress out of MTD, helping you incorporate compliant digital record-keeping software and assist with preparing and submitting your remaining returns for the year on your behalf.

Please get in touch with our team today.