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What You Need to Know About HMRC’s MTD Trial

Published by Prerana
Published Date: April 25, 2024

To revolutionise tax reporting and transform it into the digital era, HM Revenue and Customs (HMRC) has introduced the trial phase of Making Tax Digital (MTD). The MTD pilot began on 22 April 2024 for Income Tax Self Assessment (ITSA).

The MTD initiative offers tax agents and accountants a unique opportunity to test and experience the future of tax reporting firsthand. However, it's important to understand who can participate and what to expect from this trial, given the eligibility criteria and limitations.

Who Can Participate in the MTD Trial?

The eligible taxpayers who can participate in the Making Tax Digital (MTD) trial are limited for the time being. However, as the software operations are streamlined, the MTD system might contain additional taxpayer groups in the future. For now, the trial is limited to sole traders, landlords, and self-employed clients with an income over £50,000.

HMRC MTD Trial excludes 14 categories of taxpayers

Anyone liable for the High Income Child Benefit Charge (HICBC), taxpayers with jointly owned buy-to-let properties, partners in a partnership, and many more are not included in the trial. To be specific, 14 categories of taxpayer clients will be excluded from the trial.

The detailed categories of taxpayers not able to participate in the MTD test pilot is anyone who:

  • Claims the High Income Child Benefit Charge (HICBC)
  • Earns income from a trust
  • Earns income from a jointly owned property
  • Has a payment plan with HMRC
  • Earns income from a furnished holiday let
  • Has profits that vary between years
  • Is in a partnership
  • Claims married couple’s allowance
  • Claims blind person’s allowance
  • Is an MP, minister of religion or Lloyds underwriter
  • Is subject to a compliance enquiry
  • Is or going to be bankrupt or insolvent
  • Earns income from being a foster carer or being in a shared lives scheme

If you are a taxpayer with a constant income or profit and do not claim any allowance, you are eligible for the MTD test pilot.

What Are the Limitations of the MTD Test Pilot?

Other than limited eligible taxpayer groups, MTD piloting has more limitations in tracking taxes digitally. Taxpayers should use an accounting period of either 1 April to 31 March or 6 April to 5 April. Any other accounting period is not available for testing.

Also, taxpayers who sign up for the test pilot will not be able to claim carry back of losses, change their accounting period, or switch accounting methods during the trial period. Furthermore, a complete Self Assessment Tax Return is required for individuals signing up for the trial for the tax year preceding their HMRC MTD for Income Tax sign-up.


With the launch of the Making Tax Digital (MTD) trial for Income Tax, HM Revenue and Customs (HMRC) aims to modernise tax reporting processes and bring them into the digital age. This trial presents an exciting opportunity for tax agents and accountants to experience the future of tax reporting. However, it's crucial to be aware of the eligibility criteria, limitations, and requirements before signing up. As mandatory reporting for MTD for Income Tax is approaching, this trial phase serves as a vital step towards modernising the tax system and ensuring compliance in an increasingly digital world.

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