Making Tax Digital for Income Tax became mandatory on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, but HMRC’s guidance on Making Tax Digital exemptions confirms that not everyone in that bracket has to comply.
Some exemptions apply automatically, while others must be actively applied for before the first quarterly update deadline on 7 August 2026.
Among the key figures:
- MTD for Income Tax applies from 6 April 2026 to qualifying income over £50,000 in the 2024 to 2025 tax year, falling to £30,000 from April 2027 and £20,000 from April 2028.
- The first quarterly update, covering 6 April to 5 July 2026, is due by 7 August 2026.
- HMRC aims to respond to exemption applications within 28 calendar days.
- A refused application can be appealed within 30 days of the date on the decision letter.
The two-tier exemption system
Not every sole trader or landlord above the income threshold has to use the new system, since a set of exemptions and deferrals sits alongside the Making Tax Digital rules.
Being exempt does not end reporting duties, though.
HMRC’s guidance on applying for an exemption confirms that anyone who qualifies must still “report income and gains in a Self Assessment tax return as normal.”
Exemptions fall into two groups. Some are automatic, because HMRC already holds the relevant information. Others must be actively claimed.
The Low Incomes Tax Reform Group (LITRG) sums up the practical test simply. If the reason for an exemption was already shown on the 2024 to 2025 tax return, the exemption should be automatic.
If it was not shown, HMRC has no way of knowing — so an application is needed.
Making Tax Digital exemptions that apply automatically
According to HMRC, automatic exemptions include:
- qualifying income below the relevant threshold, or none at all
- trustees, including charitable trustees and pension scheme trustees
- personal representatives handling a deceased person’s tax affairs
- anyone who lacks a UK National Insurance number when the relevant tax year begins
- Lloyd’s members, for their underwriting business only
- non-resident companies
- individuals whose 2024 to 2025 tax return showed they could not provide information to HMRC and had a power of attorney or court-appointed deputy in place
Partnerships, including LLPs, and limited companies also sit outside Making Tax Digital for now. Neither has a timetable set for joining.
One-year deferrals, and groups without a start date
A further set of exemptions applies automatically for the 2026 to 2027 tax year only, where the relevant circumstance was already shown on the 2024 to 2025 tax return. These cover:
- farmers, market gardeners and people who personally create literary or artistic works, if they claimed averaging relief
- foster carers and kinship or shared lives carers claiming qualifying care relief
- anyone who reported income from trusts or estates on the SA107 supplementary page
HMRC has said this group is generally expected to join Making Tax Digital from April 2027, once earnings for the 2025 to 2026 tax year pass £30,000.
A separate group has an open-ended deferral rather than a one-year one: ministers of religion, Lloyd’s members with self-employment or property income, and those claiming Blind Person’s Allowance or Married Couple’s Allowance.
HMRC’s guidance says this group is expected to be brought into the regime at a future date, without giving a timeline.
Digital exclusion: the exemption that needs an application
The most relevant exemption for many older, unwell or offline taxpayers is “digital exclusion.” It is not automatic, so it has to be applied for.
Under the law, a person is digitally excluded if it is not reasonably practicable for them to use electronic communications or keep electronic records, for any reason — including age, disability or location. HMRC accepts several grounds:
- age, a health condition or disability that prevents someone using a computer, tablet or smartphone
- being unable to get reliable internet access at home, business, or a suitable alternative location
- belonging to a religious order or society whose beliefs stand against digital communication, so long as the person does not otherwise use a computer, tablet or smartphone
Three caveats matter. Preferring paper, or disliking the cost or learning curve, is not enough on its own.
HMRC rules out exemption where the only reason given is unfamiliarity with software, a small number of records, or the extra time and cost involved.
Using an accountant does not automatically qualify someone either. If an agent already keeps digital records and files using compatible software, HMRC considers the requirements met — so taxpayers should check with their agent first.
And an existing MTD for VAT exemption does not carry over automatically.
Anyone in that position must contact HMRC to confirm their circumstances are unchanged. The exception is insolvency: if the VAT exemption was granted solely because of insolvency, the Income Tax exemption does not apply.
If you think one of these exemptions could apply to you, here’s what to do.
Steps to check and apply for an exemption
- Check whether you’re automatically exempt. If the reason was already shown on your 2024 to 2025 tax return — say, you’re a foster carer, a trustee, or you don’t have a National Insurance number — you shouldn’t need to contact HMRC at all.
- Speak to your agent first, if you have one. If your accountant already keeps digital records and files using compatible software, a digital exclusion exemption is unlikely to be necessary. If you’re unsure whether Making Tax Digital applies to you in the first place, Tax Rebate Services’ guide to Making Tax Digital for landlords explains how qualifying income is worked out.
- Gather your information. Have ready your National Insurance number, contact details, how you currently file your return, and a clear explanation of why Making Tax Digital isn’t reasonably practicable for you. HMRC may ask for supporting evidence, particularly for health-related claims.
- Apply by phone or in writing to HMRC’s Self Assessment general enquiries line, titling any letter “Making Tax Digital for Income Tax — digitally excluded application” if that’s your situation. An agent, or a friend or family member with your authorisation, can apply on your behalf instead.
- Keep preparing while you wait. HMRC aims to respond within 28 days, but advises applicants to keep preparing for Making Tax Digital in case an application is not accepted.
If accepted, you should get a letter setting out which exemption you have and its duration — for a 2026 to 2027 exemption, you would not need to join Making Tax Digital before the 2027 to 2028 tax year begins.
You must still file a Self Assessment return as normal, since exemption from Making Tax Digital is not exemption from tax.
While the exemption lasts, you remain on the current late filing and late payment penalty rules rather than the new points-based system.
If refused, the decision letter explains why and how to appeal within 30 days, using the title “Making Tax Digital for Income Tax — digitally excluded appeal” (or “— exemption appeal” for other types), sent to the address on the letter with any new information.
Circumstances can change either way. If you’ve already signed up but later become digitally excluded — through illness or disability, say — apply for an exemption straight away.
If you were granted an exemption and are no longer digitally excluded, tell HMRC; your confirmation letter explains how.
Free help is available if you’re unsure where you stand, or need support applying.
HMRC’s Extra Support Team helps people who struggle with the standard process because of health conditions, disability or other vulnerabilities, and the charities TaxAid and the Low Incomes Tax Reform Group both offer free guidance.
Key Takeaways
- Have an agent? Check with them first — if they already keep digital records and file for you, you may not need a digital exclusion exemption at all.
- Exemptions are generally automatic if the reason was already on your 2024 to 2025 tax return; otherwise, you need to apply to HMRC.
- Digital exclusion requires a genuine inability to use electronic devices or keep electronic records — not simply a preference for paper.
- Using an accountant, or holding an existing exemption from Making Tax Digital for VAT, does not automatically carry over — check with HMRC or your agent.
- HMRC aims to respond to applications within 28 days; a refusal can be appealed within 30 days.
- An exemption from Making Tax Digital is not an exemption from tax — you still need to file a Self Assessment return as normal.
Written by:
Tax Rebate Services Editorial Team
Reviewed by:
Tony Shanks
,
qualified Taxation Technician (ATT)
Last updated:
This article provides general information and is correct as at the date shown. It isn't personalised tax advice — for help with your own circumstances, speak to a qualified adviser or HMRC.
