Making Tax Digital for Breeders From Occasional Litters to Reportable Income

If you breed dogs, even occasionally there’s a good chance you may already fall within the scope of HMRC reporting requirements.

For some, that means registering for Self Assessment. For others, it means changes are coming that will affect how income is recorded and reported.

If you’re member of the My Licensed Breeder groups, you will know that tehre are a few questions around this subject and some good ideas from the community. So this post is to verify information and signpost users to the relevent information.

From April 2026, HM Revenue & Customs will begin rolling out Making Tax Digital (MTD) for Income Tax, starting with individuals earning over £50,000 from self-employment or property.

While this may sound like something that only affects larger businesses, the reality is that many small-scale breeders could be impacted — either now or in the near future.

What is Making Tax Digital?

Making Tax Digital (MTD) is a move away from annual tax returns towards ongoing digital record keeping and reporting.

Under MTD, you (or your accountant) will need to:

Keep digital records of income and expenses
Submit updates to HMRC every quarter
Complete a final year-end tax submission

HMRC has confirmed that you will need to use compatible third-party software to do this.

Who does this apply to?

MTD for Income Tax applies to breeders who:

Are registered for Self Assessment
Receive income from self-employment or property
Have gross income (turnover, not profit) above certain thresholds

The rollout is phased:

From April 2026 → income over £50,000
From April 2027 → income over £30,000
From April 2028 → income over £20,000

This means that even if you are not affected in 2026, you may be required to comply within the next few years.

Why this matters for breeders

This is where things become particularly relevant.

Many breeders do not necessarily view themselves as “running a business”. However, HMRC considers a range of factors when determining whether an activity is commercial, including:

Selling puppies
Advertising litters
Repeated or planned breeding activity

Under current guidance, breeding activity may fall within the definition of self-employment depending on the circumstances.

This means some breeders may already need to:

Be registered for Self Assessment
Keep records of income and expenses
Report earnings annually

Making Tax Digital does not introduce these requirements it changes how they are managed and reported.

What will actually change?

For those within scope, the biggest change is frequency and structure.

Instead of one annual return, you will need to:

Maintain digital records throughout the year
Submit four quarterly updates
Complete a final submission at year end

Each update is cumulative and based on your income and expenses.

What records will you need to keep?

At a minimum, digital records must include:

Income received
Expenses paid
Dates of transactions
Categories (such as veterinary costs, feed, transport, etc.)

While this is a financial requirement, it closely mirrors the type of structured record keeping already expected under licensing conditions and you can log these in your Digital PawPrint. At the moment you cannot use MTD but we’re working on it.

Your options for staying compliant

HMRC does not provide its own software, so breeders will need to choose a system that works for them.

Broadly, there are three approaches:

1. Spreadsheets with bridging software

A lower-cost option where records are kept manually and submitted using a linking tool.

2. Bookkeeping software

A more automated approach, often linking directly to your bank account and generating submissions.

3. Accountant-led

Where an accountant manages the process on your behalf, using software to submit updates.

Each approach has different costs, levels of involvement, and suitability depending on your circumstances.

A number of providers offer free or low-cost software, although this is often subject to certain conditions. For example, some tools are only available at no cost if you also use a linked business bank account.

Services such as Starling Bank provide features that can support digital record keeping, and may integrate with bookkeeping tools. However, availability, functionality and eligibility can vary, and breeders should check whether any solution meets the requirements for Making Tax Digital for Income Tax.

As outlined by HM Revenue & Customs, the software used must be compatible with Making Tax Digital and capable of maintaining digital records and submitting updates.

Keeping costs under control

For breeders with simpler setups, there may be ways to keep costs proportionate.

For example:

Using spreadsheets alongside bridging tools
Keeping records consistently to reduce accountant time
Maintaining a single bank account for breeding-related income and expenses

The most cost-effective approach will depend on your level of activity and how comfortable you are using digital tools.

A familiar concept in a new format

For licensed breeders, this shift may feel familiar as you’re already expected to maintain policies and SOP’s, record welfare checks and evidence each process you mentioned in your policy.

MTD applies the same principle to financial records consistency, traceability, and accountability over time. Sadly, you have to do this a few times a year.

Getting prepared now

Even if you are not immediately affected, there is value in preparing early.

This could include: Understanding your total income from breeding and reviewing whether you are required to register for Self Assessment. You should starting to keep simple digital records andsSpeaking to an accountant if unsure.

Making changes gradually is often easier than adapting under pressure.

Automatic exemptions explained

Recent updates from HM Revenue & Customs have clarified how exemptions from Making Tax Digital for Income Tax will work. In some specific cases, individuals may be automatically exempt from joining Making Tax Digital from April 2026, based on what was included in their 2024–2025 tax return.

This may apply where the return includes:

Claims for averaging relief
Qualifying care relief
Income reported through trust or estate pages (SA107)
Non-residence or international tax information (SA109)

In these cases, the exemption is applied automatically and there is no need to contact HMRC. However, these exemptions are typically temporary, meaning that they delay the requirement to join Making Tax Digital until April 2027 and they do not remove the requirement entirely

If qualifying income remains above £30,000, Making Tax Digital is expected to apply from the 2027–2028 tax year onwards.

For most breeders, these exemptions are unlikely to apply, but they highlight an important point that the rules are being introduced in stages, and understanding when they apply is key.

Final thoughts

Making Tax Digital is not about changing what you earn or what you can claim, it is about how and when that information is recorded and reported, just another costly layer of tax governance to push you away from off self-employment. For many breeders, the biggest shift will be moving from accountants and doing things yourself. If you have the time.