Making Tax Digital for Trusts: Trustees, Beneficiaries, and TRS

Making Tax Digital for Trusts does not apply. Any trust that files an SA900 Trust and Estate Tax Return is automatically exempt from Making Tax Digital for Income Tax Self Assessment, with no application required and no notification to HMRC needed.¹ Trustees keep filing the SA900 the way they always have. That is the short answer, but it is not the whole picture: trusts have a separate digital obligation through the Trust Registration Service, and beneficiaries who receive trust income can be dragged into MTD through their own tax returns.

Why the Trust Itself Is Exempt

MTD for Income Tax was designed for sole traders and landlords. HMRC’s exemption guidance names trusts submitting an SA900, including charitable trusts and trusts of non-registered pension schemes, as automatically exempt. Non-resident companies filing an SA700 sit in the same category.¹ The sign-up page for MTD reinforces the point by describing the system as applying to individuals who are self-employed or receive property income, with no mention of trusts or personal representatives.²

The primary legislation enabling MTD sits in sections 60, 61, and Schedule 14 of the Finance (No. 2) Act 2017, but the regulations made under that Act have not extended quarterly reporting to trusts. HMRC has announced no date for bringing trusts in. The government is still phasing in coverage for sole traders and landlords at progressively lower income thresholds through 2028, so trustees have nothing on the horizon to plan around. Watch for HMRC announcements, but do not sign up.

What Trustees Still File

Trusts continue to report income and tax through the SA900 Trust and Estate Tax Return. Submission is either through commercial software designed for trust and estate Self Assessment or on paper.³ The deadlines are the standard Self Assessment ones: 31 October for paper, 31 January after the end of the tax year for online. No MTD-compatible software. No quarterly updates. No Final Declaration. The process is unchanged.

The Trust Registration Service Is a Different Obligation

When trustees search for “making tax digital” alongside trusts, the digital obligation they usually collide with is the Trust Registration Service. It sits under anti-money laundering rules rather than the MTD programme, but it is where trustees get caught out, and the penalty is steeper than most expect.

You must register a trust with HMRC if it becomes liable for any UK tax, including Income Tax, Capital Gains Tax, Inheritance Tax, or Stamp Duty Land Tax. Beyond tax liability, all UK express trusts must register even where there is no tax to pay, unless they fall into a specific exclusion category such as Schedule 3A trusts. Non-UK trusts must register if they acquire UK land or property, or if they have at least one UK-resident trustee and enter a business relationship in the UK.⁴

Registration deadlines depend on when the trust was created and whether it is taxable:

Taxable trusts created on or after 6 April 2021: register within 90 days of becoming liable for tax.
Taxable trusts created before 6 April 2021: if liable for Income Tax or Capital Gains Tax for the first time, register by 5 October in the tax year after the trust starts receiving income; if previously liable, by 31 January in the following tax year.
Non-taxable trusts created after 6 October 2020: register within 90 days of creation.
Non-taxable trusts created on or before 6 October 2020: the original registration deadline was 1 September 2022.

Failure to register or to keep the register up to date can result in a penalty of up to £5,000.⁴ HMRC has been enforcing this more actively since the registration requirements expanded in 2022.

When Beneficiaries Get Pulled Into MTD

The trust is exempt. The people receiving its income may not be. Where trust income is treated as arising directly to a beneficiary and reported on that beneficiary’s personal Self Assessment return, the income counts toward their qualifying income for MTD purposes. A beneficiary with self-employment or property income can be pushed across the threshold partly on the strength of what they receive from the trust.

Beneficiaries report trust income on the SA107 supplementary pages of the SA100 personal tax return.⁵ For the first year of MTD, running from April 2026 to April 2027, HMRC has created a temporary automatic exemption for individuals who reported income from trusts or estates on the SA107 in their 2024/25 return. After that initial year, those individuals need to check whether their combined qualifying income from self-employment and property brings them in.

The distinction is easy to miss. A beneficiary earning £35,000 from self-employment and receiving £20,000 from a trust could find the combined figure puts them over the £50,000 threshold. The trust exemption does not protect them.

How MTD Will Work for Those Beneficiaries

Trustees who advise beneficiaries or coordinate with their accountants will want a working picture of the system beneficiaries are entering.

Who Is In and When

MTD for Income Tax rolls out in three phases based on total qualifying income from self-employment and property:

From April 2026: individuals with qualifying income above £50,000 must use MTD-compatible software to keep digital records and submit quarterly updates.²
From April 2027: the threshold drops to £30,000.⁶
From April 2028: the threshold drops again to £20,000.⁷

Quarterly Updates and the Final Declaration

Individuals inside MTD send HMRC a summary of income and expenses every three months through compatible software. Quarterly updates are not tax returns and do not trigger a tax bill. For the 2026/27 tax year, the quarterly deadlines fall on 7 August, 7 November, 7 February, and 7 May.⁶

At the end of the tax year, the taxpayer submits a Final Declaration through the MTD software instead of a traditional Self Assessment return. Year-end adjustments such as capital allowances go in at this stage, along with non-business income like employment or dividends, and any reliefs claimed. The Final Declaration deadline is 31 January following the end of the tax year, the same date that already applies to Self Assessment.⁶

Software

Records have to be kept digitally in compatible software, with each transaction recorded by date, amount, and category. HMRC publishes a list of software that can create the records, send quarterly updates, and submit the Final Declaration.⁸ Spreadsheet users can rely on bridging software to connect their records to HMRC’s systems.

Digital Exclusion

Beneficiaries who are within MTD’s scope but genuinely cannot use digital tools can apply for a digital exclusion exemption. It covers age, health, or disability that prevents use of a computer, tablet, or smartphone; membership of a religious community whose beliefs prohibit digital communications; and lack of internet access at home or business because of location.¹ Unfamiliarity with software, few transactions, and the cost or time of adopting MTD do not qualify. Until HMRC grants an exemption, the standard digital rules apply.

1
GOV.UK. Find Out if You Can Get an Exemption from Making Tax Digital for Income Tax
2
HM Revenue & Customs. Sign Up for Making Tax Digital for Income Tax
3
GOV.UK. Self Assessment – Trust and Estate Tax Return (SA900)
4
GOV.UK. Register a Trust as a Trustee
5
GOV.UK. Self Assessment – Trusts Etc (SA107)
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GOV.UK. Quarterly Updates with Making Tax Digital
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GOV.UK. Reduction of the Mandation Threshold from 30,000 to 20,000 from April 2028
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GOV.UK. Choose the Right Software for Making Tax Digital for Income Tax