Making Tax Digital for Farmers: One-Year Reprieve

You’ve wrapped up harvest and drilling, you’re sorting the paperwork, and then you hear HMRC wants quarterly digital reports. Sound familiar?

Thankfully, there’s good news. Following pressure from farming groups and professional bodies, HMRC has agreed to give farmers more time before new digital tax reporting rules kick in. It’s a practical and welcome pause, but it’s not the end of the story.

Do I need to start digital reporting now?

Not just yet. Under HMRC’s Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), sole traders and landlords were due to start keeping digital records and submitting quarterly tax updates from April 2026.

But after lobbying from the NFU and others, HMRC has offered a concession for many farming businesses including:

Farmers who reasonably expect to use profit averaging for tax purposes, can now defer entry into the scheme until April 2027.

That gives an extra year of breathing room for many farmers, particularly those with fluctuating income who rely on averaging to smooth their tax bills.

✅ Quick check: will you be affected?

You may qualify for deferral until 2027 if:
• You run a sole trader farming business
• You earn over £30,000 in gross income
• You use profit averaging for tax purposes

Further guidance is set to be published by HMRC in due course about when the deferment will apply automatically.

Why does this delay matter for my farm?

For many farmers, quarterly digital reporting is a big shift from the traditional once-a-year tax return, and most farm businesses already juggle seasonal cash flow, unpredictable weather, and ever-changing subsidy rules.

This extra time gives you the space to:
• Understand what’s required under the new rules
• Choose software that fits your business
• Integrate digital records into your farm accounts gradually
• Avoid unnecessary stress at the busiest times of the year

It also creates a useful window to review the structure of your business. If your accounts are still run manually or your partnership agreement is out of date, this is a good time to put things on a clearer footing.

What should I do while there’s still time?

This isn’t something to panic over, but it’s not something to ignore either.

“This delay is good news. It gives farming families time to set up systems that work for them, without the shock of an abrupt compliance deadline. However, preparing now while things are quiet means you avoid a late rush next spring.”

Dan Wood, Agriculture Partner at Hawsons

There’s no one-size-fits-all answer here. Every farm is different, and your digital tax plan needs to reflect how your business runs, not just what HMRC wants on paper.

Let’s make sure your farm is ready with no surprises

If you’re unsure whether the new rules apply to you, or you’d like practical advice on how to prepare, we’re here to help.

We’ve worked with farming families across Yorkshire, Lincolnshire and the East Midlands for generations. We know the value of keeping things simple, protecting control, and making sure the farm runs smoothly for the next generation.

Contact us

If you have any questions, please feel free to call us on (01302 367262) or drop us a line using the contact form below.

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