With the launch of Making Tax Digital for Income Tax just days away, HMRC has announced a new cessation option for sole traders and landlords who fall below the annual qualifying income threshold.
Many taxpayers affected by the first phase of MTD from 6 April 2026, whose qualifying income has fallen below the £50,000 threshold since 1 February 2025, had raised concerns to HMRC about being brought into the regime too early.
They were unsure and had questioned HMRC about why they still had to comply at this stage after they had been notified by the tax authority to prepare for the new quarterly reporting obligations.
In response, HMRC’s Director of Making Tax Digital, Craig Ogilvie, has spoken out to confirm that there are ways for some taxpayers to opt out of MTD, but only if certain criteria are met.
He said: “Based on feedback from stakeholders, we have made improvements to the journey for customers who have ceased all qualifying income before their mandation date of April 2026.”
How do you request a cessation of MTD?
HMRC is asking affected taxpayers to contact them, either by phone or via the web chat service, to confirm that their Making Tax Digital (MTD) reporting obligations should be ceased.
When getting in touch, taxpayers should clearly state that they are notifying HMRC about the cessation of all qualifying income sources.
Once HMRC is informed, they will issue a confirmation letter to whoever made the request, whether that is the taxpayer or an authorised agent. HMRC has said that there may be a short delay before this letter is sent.
Taxpayers still have time to notify HMRC ahead of the first filing deadline on Friday, 7 August, confirming that their qualifying income now falls below the current threshold.
What will affect whether a cessation is granted?
HMRC has made it clear that only certain criteria will determine whether a sole trader or landlord can exit from the MTD regime.
A cessation will only apply to a customer where all sources of qualifying income have ceased, according to HMRC.
This means that if a taxpayer has ceased a source of “self-employment or property income since the end of 24/25 but is still continuing to receive income from a stream of qualifying income, they will still need to start using Making Tax Digital for Income Tax from 6 April 2026.”
Ogilvie added: “In all cases, when a customer submits their 25/26 self-assessment tax return, they should also confirm the cessation here too.”
If you believe that you may be eligible for a cessation of your Making Tax Digital for Income Tax obligations, you should speak with HMRC at the earliest opportunity. If you need any help communicating with HMRC, please speak to our team.
