Self-employed individuals and landlords with qualifying income above £30,000 can now apply for an exemption from Making Tax Digital (MTD) for Income Tax if they meet HMRC’s criteria for being ‘digitally excluded’.

The exemption window has opened for taxpayers who earned more than £30,000 in qualifying income during the 2025–26 tax year and will be required to join MTD from 6 April 2027.

Who can apply for an exemption?

Being digitally excluded means that HMRC considers it unreasonable for someone to use compatible software to:

• Keep digital records
• Send quarterly updates
• Submit their tax return

Exemptions are primarily intended for people who cannot reasonably use digital technology and are unable to arrange for someone else, such as an accountant or tax agent, to manage their MTD obligations.

Being exempt from MTD does not remove the requirement to submit an annual Self Assessment tax return.

Some taxpayers will also qualify for automatic or temporary exemptions. This includes individuals who are not physically or mentally capable of providing information to HMRC and have an appropriate Power of Attorney or legally appointed representative in place.

There are also specific exemptions for certain taxpayers, including some personal representatives managing estates, non-resident companies submitting an SA700, trusts filing an SA900 and Lloyd’s members filing the SA103L supplementary page.

What reasons will not qualify?

HMRC has made clear that simply finding MTD inconvenient or costly is not enough to qualify for an exemption.

Applications will not be accepted where the only reason is that the taxpayer:

• Has previously filed a paper tax return
• Is unfamiliar with accounting software
• Has only a small number of digital records to create each year
• Believes signing up to MTD will take additional time or cost money

HMRC advises taxpayers to apply for an exemption before they are required to start using MTD.

Already exempt from MTD for VAT?

Being exempt from MTD for VAT does not automatically mean you are exempt from MTD for Income Tax.

If you already have an MTD for VAT exemption, you will still need to contact HMRC by phone or in writing and provide your National Insurance number, VAT registration number and the reason for your exemption.

If your circumstances have not changed, HMRC can then confirm whether the exemption also applies to MTD for Income Tax.

When does MTD apply?

MTD for Income Tax is already mandatory for self-employed individuals and landlords with qualifying income above £50,000, with the current £50,000 threshold taking effect from 6 April 2026.

Those with qualifying income above £30,000 will join the system from 6 April 2027.

Taxpayers in the £20,000 income group will not be able to apply for an exemption until summer 2027 onwards, according to HMRC.

Partnerships will also eventually be brought into MTD, although HMRC has not yet confirmed a timetable for this.

What happens while an application is being considered?

If you have already signed up for MTD and your circumstances change, you must continue following the MTD requirements while HMRC considers your exemption application.

HMRC says taxpayers are legally required to continue using MTD while waiting for a decision. Exemption applications will normally take a few weeks to process.

Some temporary exemptions are also due to end in April 2027, including certain exemptions relating to averaging relief for farmers and market gardeners and individuals who personally create literary or artistic works.

Need help with MTD?

Making Tax Digital can be difficult to navigate, particularly if you are unsure whether you need to sign up or what software you should use.

At Quove Accounting, we can help with MTD setup, software and digital record keeping, as well as your wider Self Assessment and accounting requirements.

Get in touch with our team if you need support getting ready for MTD.

Categories: Insights