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.
You are already expected to:
- Maintain policies
- Record welfare checks
- Evidence your processes
MTD applies the same principle to financial records — consistency, traceability, and accountability over time.
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
- Reviewing whether you are required to register for Self Assessment
- Starting to keep simple digital records
- Speaking to an accountant if unsure
Making changes gradually is often easier than adapting under pressure.
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.
For many breeders, the biggest shift will be moving from occasional record keeping to a more consistent, structured approach.
Those who already operate with clear systems in place will be in a strong position to adapt.
Further resources
The information in this article is based on guidance and materials published by the following organisations:
HM Revenue & Customs – Making Tax Digital for Income Tax (overview and step-by-step guidance)
HM Revenue & Customs – Qualifying income guidance for Making Tax Digital
Low Incomes Tax Reform Group – Choosing Making Tax Digital software
Low Incomes Tax Reform Group – Record keeping and quarterly updates guidance
Additional general information on software and digital record keeping was also reviewed from:
Starling Bank – Making Tax Digital overview
Industry discussions and practitioner insights on accounting methods and record keeping approaches
