Following on from a Blog on MTD, posted on 26th March, ‘MTD is now upon us’ I have now obtained HMRC’s final version of the 2026 regulations covering MTD reporting and exemptions. So today I will be looking at the more important changes.
With effect from 6th April 2026, Making Tax Digital (MTD) for income tax is now a reality for that large cohort of taxpayers who had a gross income of £50,000 plus, in the tax year ended 5th April 2025.
Somewhat delayed, the last pieces of legislation have finally now been slotted into place, only a matter of hours before the new regime started. This follows Royal Assent to Finance Act 2026 being granted, which made some changes to the MTD late filing and late payment regimes. We also now have updated regulations in the form of the Income Tax (Digital Obligations) Regulations 2026.
What do the regulations cover?
The amended regulations revoke and replace the previous MTD regulations. Many of the changes made are tidying up or cosmetic, with most of the others introducing changes previously announced, including lowering the income threshold for entering MTD to £20,000 from April 2028, and requiring software to be used to file the MTD tax return. However, when we dig a little deeper, there are some more interesting changes, particularly around the various exemptions and deferrals.
Various exemptions
The new regulations cover a range of exemptions and to keep on top of these can be somewhat tricky as some exempt the taxpayer entirely, whilst others just specify income sources. Some are permanent, others temporary. Some apply automatically, whereas others require application to HMRC.
A full run-through of all of these different permutations isn’t possible to include in a single Blog, so instead I’ve picked out some points that I think are particularly of interest.
No NINO-No problem (perhaps!)
Regulation 35 confirms that taxpayers without a national insurance number (NINO) are automatically exempt from MTD. However, a look below the surface reveals that the timing of when this no-NINO test needs to be applied has changed. Now the regulations state that a taxpayer is only exempt for a tax year if he/she didn’t have a NINO on the last day of the prior tax year – in other words you are exempt for 2026/27 if you didn’t have a NINO on 5 April 2026.
In the previous version of the regulations, the reference date was the 31st January before the start of the tax year, meaning you would have been exempt for 2026/27 if you didn’t have a NINO on 31st January 2026. This shortening of timescales means taxpayers receiving a NINO late in the tax year may have to join MTD almost immediately having received one.
Power of Attorney exemptions
Regulation 32 provides for an exemption from MTD for taxpayers who have granted an enduring or lasting Power of Attorney. This exemption was previously announced at the Spring Statement and appeared to be quite wide-ranging.
However, the final amendment narrows it down and states that the exemption doesn’t apply if ‘the donor… is still capable of providing financial information to HMRC’. It therefore appears that having a Power of Attorney isn’t an automatic get-out of jail card – if you are still capable of doing MTD you will be in the frame regardless.
Other changes
It’s simply not possible in one Blog, to set out all the myriad of small changes in the regulations, with many of them very technical in nature. However, some changes are of interest, including the following:
- There’s a new requirement for amendments to be made electronically – presumably through software.
- If a taxpayer opts for calendar quarters straight away, their MTD start date will be 1st April in the previous tax year. Without this, a taxpayer with a 31st March year-end coming into MTD for the first time in April 2026 risks having their profits for the first week of April omitted from their online account, which in itself, is a breach of the regulations.
- The regulations do not appear to cover those taxpayers who abruptly cease to have any income, such as on retirement and who’ll presumably need to complete four MTD submissions before they can leave the club.
- SA109 deferral, this in essence concerns individuals who have retired to their ‘villa in the sun’ and who receive income from renting out a property in the UK. Unfortunately for this group the final version of the regulations somewhat contradicts the guidance given on HMRC’s website leaving affected taxpayers somewhat in limbo. The Association of Tax Technicians has flagged these issues to HMRC for urgent revision.
Accountant’s view
Although the regulations clear up some areas quite nicely, there remain a number of areas of confusion, some of which I’ve commented on today. Given that MTD for IT is now a reality, let’s hope HMRC can resolve these matters sooner rather than later.
Finally, I have tried hard to simplify the issues that are most likely to cause confusion to taxpayers during the roll-out of the new tax regime and I appreciate that some individuals need more detailed advice. So, if you think that you might be one of those taxpayers affected by the changes and need greater clarity, please write to me using the link below and I’ll do my best to help.
