Voluntarily signing up to MTD for income tax

HMRC has updated its making tax digital for income tax guidance to expand the criteria setting out who can sign up on a voluntary basis. Under the revised criteria, taxpayers can sign up to MTD for income tax on a voluntary basis if all of the following apply:

• they are a UK resident;
• they are already registered for self-assessment;
• their accounting period aligns with the tax year;
• they have submitted at least one self-assessment tax return;
• they are keeping digital records;
• one or more of the following were included in their last tax return:
• an existing self-employment income;
• a UK property source;
• a foreign property source; and
• their tax records are up to date (eg they have no outstanding tax liabilities).

The guidance also notes that taxpayers cannot currently sign up on a voluntary basis if they:

• need to report income from any other source;
• have an income tax charge (e.g. high income child benefit charges or certain pension tax charges);
• have a payment arrangement in place;
• do not have an up to date address with HMRC;
• are a partner in a partnership;
• are currently, or are going to be, bankrupt or insolvent;
• are a minister of religion, Lloyds underwriter or foster carer; or
• have arrangements in place where their affairs are dealt with by a third party (eg a trusted helper, insolvency practitioner, nominee or solicitor).