Making Tax Digital (MTD) for Income Tax has been in effect for a few weeks, but there still seems to be some lingering uncertainty around who needs to comply.
Fortunately for taxpayers, HMRC has cleared up this confusion in its latest guidance around exemptions and who the one year waiver applies to.
The deadline for applying for an exemption will be here before we know it, so you need to be sure whether you are eligible.
Am I exempt from Making Tax Digital?
HMRC’s guidance clarifies the automatic exemption for individuals who are not physically or mentally able to submit digital records, those without a National Insurance number and certain non-resident taxpayers who file using supplementary pages.
The update also explains the one-year waiver from quarterly reporting that they are offering some taxpayers this tax year.
You might be eligible for this if your 2024-25 Self-Assessment tax return:
Those who fall into one of these categories do not need to follow the MTD requirements straight away and can submit their 2025-26 tax return as normal by 31 January 2027.
HMRC has also confirmed that those to whom this applies have an automatic exemption.
However, this waiver is only temporary.
From the 2027-28 tax year, most individuals earning over £30,000 will need to comply and you need to make sure you are following the rules.
How do I apply for an MTD for Income Tax exemption?
If you have assessed the guidance and believe you are eligible, you need to first check if this exemption is automatic or not.
Most exemptions will need to be applied for directly to HMRC by phone or in writing.
Your application should include your personal details, current method of filing tax returns, an explanation of why you cannot comply and supporting evidence.
You will need to submit your application and get confirmation that it has been approved by HMRC by 7 August 2026 to be exempt from the first phase of MTD for Income Tax.
Missing this deadline will automatically trigger your MTD for Income Tax requirements for this tax year.
HMRC aims to respond to applicants within 28 days, although it can take longer if further information is required.
While waiting for this decision, you should continue to remain compliant with the MTD for Income Tax requirements.
What if I am not exempt from MTD for Income Tax?
Most landlords and sole traders will not be exempt, so you need to be preparing your digital record-keeping and quarterly submissions.
You also need to mark your calendars and start getting everything in order for the first submission deadline on 7 August 2026.
Whether you need help managing your MTD requirements or applying for an exemption, our team are here for you.
We’ll guide you through the uncharted territory that is MTD for Income Tax and help keep you compliant.
For further guidance on MTD for Income Tax, contact our team.
