The countdown for the first phase of Making Tax Digital (MTD) for Income Tax is underway, as the new system of digital tax reporting commences from 6 April 2026.
However, some landlords, self-employed individuals or sole traders may still be questioning whether they are exempt.
While HMRC has confirmed that exemptions do exist, the reality is that most people will not qualify. If you do believe that yourself or someone you support may be exempt, you must act quickly.
MTD for Income Tax will apply to landlords, self-employed individuals and sole traders who have a qualifying income from self-employment or property.
From 6 April 2026, individuals with a qualifying income of £50,000 or more must comply with the MTD requirements.
This is based on your 2024/25 tax return and those who qualify will need to keep digital records and submit quarterly updates using MTD-compatible software.
More people will become affected over the next few years as the thresholds will fall to £30,000 in April 2027 and £20,000 in April 2028.
Landlords, self-employed individuals and sole traders must assess their qualifying income before expenses, such as pensions or dividends, to know if they are affected.
There are some situations where you will be automatically exempt from MTD for Income Tax and do not need to apply for it.
These include:
These exemptions will apply on a year-by-year basis and you must review your eligibility regularly.
If your circumstances do change, such as if you receive a National Insurance number, MTD may apply to you from that point onward.
The digital aspect of MTD will mean that some people cannot reasonably comply with the rules.
This is known as a digital exclusion exemption and this could be due to:
However, these exemptions are scrutinised by HMRC and must be clearly supported with evidence.
A preference for paper records or not being confident with technology does not qualify as an exemption.
It is also important to know that using an accountant does not make you exempt. If they submit information digitally on your behalf using MTD-compliant software, HMRC will expect you to meet the MTD requirements. It is not the responsibility of your accountant to ensure you comply.
If you believe you or someone you know is exempt from MTD, you must make an application directly to HMRC either by phone or in writing.
You will need to provide personal details, your current filing method and any grounds for digital exclusion. This must be supported with evidence to prove why MTD is not reasonably practical for you.
HMRC will aim to respond within 28 days, but you are expected to prepare for MTD while you are awaiting this decision.
If your application is refused, you must then comply with the MTD requirements, but you do have the right to appeal.
HMRC exemptions will only apply to a handful of people and it will be unavoidable for most landlords, self-employed individuals and sole traders.
You are running out of time and if you believe that you or someone you support may qualify for an exemption, you must seek advice now.
We can help assess whether you are exempt and guide you through the application process so that it is fully supported with evidence.
If you find that you are not exempt, our team can help explain the MTD process and your requirements and advise on digital record-keeping and MTD software that works for you.
More people will fall into the MTD threshold over the next few years and we can help monitor any changes in your income and exemption status.
Whether you are preparing for MTD or need to apply for an exemption now, our team can offer expert advice so that your business and finances stay compliant.
For more information or guidance, contact our team today.
