Who can't yet sign up for MTD IT?
Making Tax Digital for Income Tax (MTD IT) becomes mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000. However, HMRC’s current guidance makes clear that not everyone can sign up yet. If you are preparing early, are you actually eligible?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
According to HMRC’s sign-up guidance, certain taxpayers are currently excluded from joining MTD IT. These include individuals who:
- are members of a partnership
- are subject to bankruptcy or an individual voluntary arrangement
- have certain complex tax affairs that the system does not yet support
- do not meet the digital and identity verification requirements.
In addition, some taxpayers with particular reporting needs may find that the service cannot yet accommodate their circumstances. HMRC has indicated that functionality is being expanded in stages. If you attempt to sign up and are not eligible, your application will be rejected and you will remain within self-assessment. This does not remove the obligation to join when mandation applies and your circumstances fall within scope. As 6 April 2026 approaches, you should review both your income level and your eligibility under HMRC’s current criteria before attempting to enrol. Checking the guidance in advance can prevent delays and confusion during the transition to digital reporting.
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