Dan Wood
Partner
If you use averaging to smooth out your farm profits, you may have been wondering whether Making Tax Digital will apply to you from April 2026.
If that’s the case, you are not alone. When the one-year reprieve was first announced before Christmas, it left many farmers unsure about where they stood.
HMRC has now updated its guidance to provide more clarity, particularly for those claiming averaging relief and in many cases there is a bit more time than first expected.
We covered the original announcement here:
https://www.hawsons.co.uk/making-tax-digital-for-farmers-one-year-reprieve/
This latest update builds on that and helps firm up what you need to do next.
What this Means for you at a Glance
- If you claimed averaging on your 2024/25 tax return, you are likely to have a one-year delay before MTD applies
- You do not need to contact HMRC or apply for this delay
- You will continue to file your tax return as normal for now
- This is a delay, not a permanent exemption
What HMRC has Clarified
HMRC has confirmed that some taxpayers will not need to use Making Tax Digital for Income Tax for the 2026/27 tax year if their 2024/25 tax return included:
- A claim for averaging relief as a farmer or market gardener, using SA103 or SA104
- A claim for qualifying care relief
- Income from trusts or estates reported on SA107
- Residence or foreign income reported on SA109
For most farming businesses, averaging relief is the key point.
If this was included in your 2024/25 return, HMRC has confirmed you do not need to sign up to MTD for 2026/27 and you do not need to contact them.
You simply carry on and submit your 2025/26 tax return in the usual way.
A Practical Example
If your farm profits have been averaged over the last two years and that claim was included in your 2024/25 tax return, you are likely to fall into this one-year delay.
That means no quarterly digital reporting from April 2026 and no need to change your current process just yet.
What Happens After the Delay
This is not a long-term exemption.
HMRC has made it clear that taxpayers in this group will need to join MTD in the future. For many, that is likely to be from April 2027, depending on income levels.
So, while this gives you breathing space, it is still worth using that time to get prepared.
What if you did not Claim Averaging in 2024/25 Tax Year
If your 2024/25 return did not include one of the qualifying claims, but you expect it to apply in a later year, the position is different.
In that case, you may need to apply to HMRC for an exemption.
- Applications can be made by phone or in writing
- Your accountant can handle the exemption application for you.
- HMRC aims to respond within 28 days, although it may take longer if more detail is needed
Timing does matter here, so it is worth checking your position early.
Key Dates to be Aware of
- Those due to join MTD from April 2026 can apply for exemptions now
- Those due to join from April 2027 should expect to apply from summer 2026
For those already within MTD, the first quarterly deadline falls in August 2026. While there are no penalties for missing quarterly updates in that first year, the requirement to keep digital records still applies.
A Quick Note on Penalties
Even if you qualify for the one-year delay, the usual Self-Assessment rules still apply.
That means:
- Late filing penalties still apply
- Late payment penalties still apply
So, while MTD may be pushed back, the underlying compliance does not change.
Our View
Dan Wood, Agriculture Partner at Hawsons, comments:
“This is a helpful update and gives farmers using averaging relief a clearer answer and in many cases, a bit more time. The key is knowing whether it applies to you. It is worth checking your 2024/25 tax return now. If averaging was included, you may not need to do anything immediately. If not, you may need to act. Either way, a quick review now can help avoid pressure further down the line.”
How we can help
We are already working with our farming clients to:
- Confirm whether the delay applies
- Handle exemption applications where needed
- Review record keeping ahead of MTD
- Plan a straightforward move into digital reporting
If you would like to talk it through, we are always happy to help. You can contact your usual Hawsons adviser or contact Dan Wood our agriculture specialist on 01302 367262.
Alternatively, you can fill in the contact form below and a member of our team will get back to you.
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