From 6 April 2026, farmers with gross income over £50,000 stop filing one annual tax return and start filing quarterly instead. The threshold falls again in 2027 and again in 2028, and it is measured on turnover, not profit. Here is exactly who is caught, when, and the one deferral written specifically for farms.
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) phases in on gross combined income from self-employment and property, not profit. Farmers with gross income over £50,000 join from 6 April 2026, over £30,000 from April 2027, and over £25,000 from April 2028. Gross means gross: livestock and crop sales, machinery hire, subsidies and rental income all count in full before a single expense is taken off. A farm can turn over a large number and still show a modest profit, and it is the turnover figure that decides whether MTD applies.
HMRC is rolling MTD ITSA out in three stages, each one lowering the gross income figure that pulls a farm into the regime. The stages apply UK-wide and use the same test throughout: combined gross income from self-employment and property in a tax year.
For most working farms, the date that actually matters is the first one. A holding with any meaningful acreage or herd size will usually clear £50,000 in gross sales long before it clears it in profit, which is exactly the point covered in the next section.
This is the single most common point of confusion for farmers checking whether they are affected, and it is worth stating plainly: the MTD threshold is tested against gross income, before any expenses or tax reliefs are deducted. It is not a profit test, and it is not a test on what ends up in your pocket at the end of the year.
Gross income means everything coming into the business: crop sales, livestock sales, machinery hire, agri-environment and other subsidy payments, and any rental income from cottages or diversified lets, all added together and counted in full. None of your input costs come off that figure for the purposes of the threshold, not diesel, not feed, not fertiliser, not vet bills, not machinery finance.
Take a mixed arable and beef holding turning over £220,000 a year between crop sales, store cattle and a stewardship payment. After diesel, seed, fertiliser, feed, vet costs and machinery repayments, the actual taxable profit for the year might land at £18,000, comfortably under all three thresholds if profit were the test. It is not the test. The £220,000 gross figure is what HMRC looks at, so this holding is inside MTD ITSA from 6 April 2026 even though its real profit sits well below £25,000. Margins can be thin and turnover can still be large, and on a farm those two things are almost always true at once.
One more wrinkle worth flagging: the threshold looks at self-employment and property income combined. If the farm business turns over £40,000 and a let cottage on the holding brings in a further £15,000 of rental income, those two figures are added together for the test, not assessed separately. Farms already registered on the Flat Rate Scheme for VAT should note that MTD ITSA is a wholly separate regime for income tax, so being on the Flat Rate Scheme has no bearing on whether these thresholds catch you.
Once a farm is inside MTD ITSA, the annual self-assessment return is replaced by a different rhythm. Instead of one return filed after the tax year ends, the farm submits four quarterly summaries of income and expenses through the year, each one building on the last, followed by a final declaration once the year closes that confirms the complete tax position.
The quarterly summaries are lighter than a full return, essentially a running total of what has come in and gone out, filed through compatible software rather than typed into HMRC's online portal. The final declaration is where any reliefs, adjustments and the full year's figures come together into the number that is actually owed. In practice this means record-keeping shifts from an annual scramble to something closer to a habit: a photo of a receipt or an invoice logged as it happens, rather than a shoebox sorted every January.
There is one exception written specifically with farms in mind. Farming income is notoriously volatile, a good harvest or a strong store price one year followed by a poor one the next, and profit averaging is the long-standing mechanism that lets farmers smooth their taxable profit across two or five years to soften that swing.
HMRC has confirmed that farmers who rely on profit averaging can defer joining MTD ITSA until April 2027, even if their gross income would otherwise place them in the April 2026 cohort. This is a genuine farm-specific carve-out, not a general grace period available to every trade, and it exists because averaging calculations and quarterly in-year reporting do not sit comfortably together. If your farm uses averaging and would otherwise be caught from 6 April 2026 on gross income alone, the deferral pushes your actual start date back a full year, to April 2027, in line with the second threshold stage.
This deferral is worth checking carefully with an accountant rather than assuming it applies automatically. It covers farmers who use averaging, not every business with agricultural income, and the detail of how HMRC identifies eligible cases is worth confirming for your own circumstances.
Once a farm is inside MTD ITSA, quarterly summaries and the final declaration have to be filed through software that HMRC recognises as compatible, not through the general self-assessment portal. HMRC keeps a live list of compatible software at its compatible-software finder, and it is worth checking any product against that list before relying on it for a filing deadline.
Not every piece of farm software that talks about MTD has actually been through HMRC's recognition process, so it is worth reading our what to look for in software checklist before choosing one for the switch. FarmHQ has been built HMRC-recognition-ready from day one, so quarterly summaries and the final declaration sit on the same record as the receipt capture and VAT-coded bookkeeping a farm is already doing, rather than in a separate system that needs its own reconciliation. For more on the dates and deadlines that affect a working farm, our other farm paperwork guides cover the statutory side of the calendar as well as the money side.
MTD for Income Tax Self Assessment phases in over three years. Farmers with gross income over £50,000 from self-employment or property are in from 6 April 2026. The threshold drops to over £30,000 from April 2027, then to over £25,000 from April 2028.
It applies to gross income, not profit. That means total sales and receipts, including livestock and crop sales, machinery hire, subsidies and rental income, before any expenses or reliefs are deducted. A farm with thin margins can still be caught if its turnover is high.
HMRC has confirmed that farmers who rely on profit averaging can defer joining MTD ITSA until April 2027, even if their gross income would otherwise place them in the April 2026 cohort. This deferral is specific to farmers and does not apply to other trades.
You need software recognised by HMRC as compatible with Making Tax Digital for Income Tax, capable of sending quarterly summaries and a final declaration. HMRC publishes a list of compatible software at gov.uk.