Most people who are outside Making Tax Digital for Income Tax are there because of how much they earn or what kind of return they file, and HMRC applies those exemptions without being asked. Taxpayers with qualifying income of £20,000 or less, trusts, personal representatives and people without a National Insurance number are in that group. Everyone else who wants out has to apply, and the main ground is being digitally excluded: it is not reasonable for them to use compatible software. An exemption only removes the quarterly updates and software requirement. The Self Assessment return stays.
This article covers Making Tax Digital for Income Tax. It does not cover the VAT rules, except where a VAT exemption affects Income Tax.
Who Making Tax Digital for Income Tax applies to
The rules apply to individuals who file a Self Assessment return, mainly sole traders and landlords. Whether you are in depends on your qualifying income, which is your self-employment and property income. It is being phased in by income level:
| Start date | Qualifying income test |
|---|---|
| 6 April 2026 | £50,000 (2024/25 income) |
| 6 April 2027 | Above £30,000 (2025/26 income) |
| 6 April 2028 | £20,000 (planned, 2026/27 income) |
Taxpayers who fall within the rules must use compatible software to keep digital records and send quarterly updates to HMRC. An exempt taxpayer does neither and carries on as before. HMRC's exemption guidance says that if you are exempt you must still report your income and gains in a Self Assessment tax return as normal.
Seasonal or part-time businesses do not get a special exemption. The test looks at total qualifying income for the whole tax year, so a business that trades only in the summer is measured on its full-year figure.
If you own property jointly, the threshold works differently from how many people expect. Our piece on jointly owned property and the Making Tax Digital threshold covers it.
Two kinds of exemption: automatic and by application
HMRC's guidance separates exemptions in two ways.
- Automatic exemptions are given by HMRC from the information it already holds. You do not contact HMRC or apply.
- Exemptions you need to apply for require you to give HMRC extra information explaining why you are exempt.
Each can also be permanent (unless your circumstances change) or temporary, lasting until April 2027 at the earliest.
Older articles tend to treat digital exclusion as the only route out. That is out of date. The guidance now sets out a much longer list of automatic and temporary exemptions, and it has been revised several times since January 2026.
Automatic exemptions that are permanent
These apply without any application and last unless your circumstances change.
- Qualifying income of £20,000 or less. You are automatically exempt.
- No National Insurance number. If you do not have one before the start of the tax year, you are automatically exempt and cannot sign up. HMRC's example: someone who receives a number on 30 April 2026 is exempt for the 2026 to 2027 tax year, even if their qualifying income for 2024 to 2025 was over £50,000.
- Non-resident companies submitting an SA700.
- Trusts submitting an SA900. HMRC says this includes charitable trusts and trusts of non-registered pension schemes.
- Personal representatives of someone who has died, provided any outstanding Self Assessment returns are completed.
- Lloyd's members who included the SA103L page in their 2024 to 2025 return in relation to their underwriting business.
- People who are not physically or mentally capable of providing information to HMRC, where their 2024 to 2025 return showed either a power of attorney in the UK that is currently in place, or a legally appointed deputy, controller or guardian.
The role-based exemptions have a limit
The trust and personal representative exemptions cover the return you file in that role. They do not cover you personally. HMRC says that if you have your own self-employment or property income, you may still need to use Making Tax Digital for Income Tax for it, so you should work out your own qualifying income separately.
A treasurer who is also a trustee of a charitable trust is a typical case. The trust's SA900 is exempt. The treasurer's own rental income is tested on its own.
Partnerships
Partnerships do not currently need to use Making Tax Digital for Income Tax. HMRC has said it will set out the timeline for partnerships later. A partner's own sole trade or property income is a separate matter and still counts towards their qualifying income.
Automatic exemptions that last until April 2027
You do not need to use Making Tax Digital for Income Tax for the 2026 to 2027 tax year if your 2024 to 2025 return included any of the following:
- a claim for averaging relief (as a farmer, market gardener or someone who personally creates literary or artistic works) using the SA103 supplementary page as an individual;
- a claim for qualifying care relief, for example as a foster carer or kinship carer;
- the SA107 supplementary page, to report income from trusts or estates; or
- the SA109 supplementary page.
If one of these applies, you do not contact HMRC. These exemptions are temporary. If your qualifying income for 2025 to 2026 is above £30,000, you will need to use Making Tax Digital for Income Tax from the 2027 to 2028 tax year.
Automatic exemptions that last beyond April 2027
An automatic exemption that lasts beyond April 2027 applies if your 2024 to 2025 return included:
- the SA102M page, because you are a minister of religion of any faith, religion or denomination;
- the SA103L page, because you are a Lloyd's member with self-employment or property income; or
- a declaration that you received or transferred Married Couple's Allowance (for those born before 6 April 1935) or Blind Person's Allowance.
These groups will have to use Making Tax Digital for Income Tax eventually. HMRC says it will set out the timeline at a later date.
Exemptions you must apply for
A separate list applies where the relevant claim or page did not appear in the 2024 to 2025 return but you reasonably expect it in your 2025 to 2026 or 2026 to 2027 return. You must apply, because HMRC cannot see it yet. The cases are:
- averaging relief on the SA103 page as an individual, qualifying care relief, SA107 or SA109;
- the Married Couple's Allowance or Blind Person's Allowance declarations;
- the SA102M page for ministers of religion; and
- partners who claimed averaging relief on the SA104 supplementary page in 2024 to 2025, or who reasonably expect to claim it in 2025 to 2026 or 2026 to 2027. This one is easy to miss, because the individual SA103 claim is automatic but the partner's SA104 claim is not.
The SA109 covers a range of residence and overseas income situations. HMRC lists non-UK residents, people who are tax resident in another country, and people claiming overseas workday relief or expecting split year treatment. It also lists those using the temporary repatriation facility, those eligible for the foreign income and gains regime, certain former remittance basis users, and non-UK resident foreign entertainers or sportspeople.
HMRC adds a warning: do not apply if you have no good reason to think you will include any of these claims or pages in those returns.
A person in more than one category should send a single application explaining why each exemption applies.
The digitally excluded exemption
This is the exemption most accountants are asked about. HMRC says being digitally excluded means it is not reasonable for you to use compatible software to keep digital records, send quarterly updates or submit your tax return.
The guidance gives three examples:
- your age, a health condition or a disability stops you from using a computer, tablet or smartphone to keep digital records or send them to HMRC;
- you are a practising member of a religious society or order whose beliefs are incompatible with digital communications or keeping digital records, and you do not use a computer, tablet or smartphone for business or personal use; or
- you cannot get internet access at your home or business because of where you are, and cannot get access at a suitable alternative location.
HMRC says there may be other reasons and that it considers every application case by case.
Reasons HMRC will not accept on their own
HMRC will not accept an application if your only reason is that:
- you previously filed a paper return;
- you are unfamiliar with accountancy software;
- you have a small number of digital records to create each tax year; or
- signing up and using the service will take extra time or cost.
Cost or inconvenience may still sit alongside a genuine ground such as age or health. They cannot be the whole case.
If you have an accountant
The exemption is based on your personal circumstances, even when an agent, friend or family member applies for you. HMRC adds that if your agent uses compatible software to keep your digital records and submit them, the agent can meet the requirements on your behalf. HMRC tells applicants to speak to their agent first, because they may not need a digitally excluded exemption at all.
For a practice, that means a client who can hand over a shoebox of paper may not be digitally excluded. The firm can do the digital work. A client who cannot physically or reasonably engage in any way is a different case, and the application should say what the agent will and will not do.
If you are already exempt from digital VAT returns
A VAT exemption can carry over, but only in one case.
- If HMRC confirmed you are exempt from sending VAT returns using compatible software because you are digitally excluded, contact HMRC by phone or in writing. Give your National Insurance number, your VAT registration number, the reason you are digitally excluded and whether your circumstances have changed. If nothing has changed, HMRC will confirm you are also exempt for Income Tax. If something has changed, you need to apply.
- If your VAT exemption is because of an insolvency procedure, it does not carry over. If you are signed up to Making Tax Digital for Income Tax, you are not exempt and should keep using the service.
How to apply
You cannot apply online. You must call or write to HMRC, using the Self Assessment general enquiries contact details. Agents use the Agent Dedicated Line for Self Assessment or PAYE for individuals. HMRC's application guidance sets out the process.
If you write, put one of these titles on the letter:
- 'Making Tax Digital for Income Tax — digitally excluded application', for a digital exclusion claim; or
- 'Making Tax Digital for Income Tax — exemption application', for any other exemption.
What to include
Every application needs your National Insurance number, name and address, and an explanation of why you should be exempt with any supporting information. HMRC may ask for more.
A digital exclusion application must also say:
- how you currently submit a tax return, including whether someone helps;
- why you think you are digitally excluded, with supporting information;
- whether you have an agent, such as an accountant, and what that agent will do; and
- any additional needs, so HMRC can provide the right support.
HMRC's guidance does not list the evidence it wants. Examples that make sense for each ground include a doctor's letter confirming a condition, a letter from a broadband provider or local authority confirming there is no service at the address, or a written description of religious beliefs and how they prevent digital record-keeping. Whatever you send, tie it to the person's own situation.
Applying for someone else
An agent must be authorised as a tax agent for each client and must apply for each client individually, based on that client's personal circumstances. A friend or family member needs the person's authorisation first. That can be a letter to HMRC with the person's signature, or a phone call where the person is present to give verbal authorisation. HMRC says you should make sure you fully understand their circumstances before you apply for them.
When to apply
Apply before you need to use Making Tax Digital for Income Tax. HMRC's timing depends on your start date:
| You must use it from | When to apply |
|---|---|
| 6 April 2026 | Now |
| 6 April 2027 | Now |
| 6 April 2028 | From summer 2027 onwards |
If you are already signed up and your circumstances change, apply for an exemption and keep using Making Tax Digital for Income Tax while you wait. If you signed up voluntarily and have become digitally excluded, you can opt out through your HMRC online services account.
What happens after you apply
HMRC aims to respond within 28 calendar days of receiving the application. It will take longer if it needs more information, and it may verify what you have told it. You then get a letter saying whether the application was accepted and what to do next.
While you wait, HMRC says to prepare to sign up and keep your Self Assessment records and supporting documents as normal. A sensible minimum is to keep written records up to date, so they can be converted to digital form if the answer is no.
If HMRC accepts
The letter states the type of exemption and how long it lasts. If you are exempt until April 2027, you do not need to sign up until the 2027 to 2028 tax year at the earliest. A digitally excluded exemption may be permanent depending on your circumstances. If your circumstances change so that you are no longer digitally excluded, you must tell HMRC. The letter explains how.
If HMRC refuses
The decision letter explains why and how to appeal. You have 30 days from the date on the letter to appeal. The appeal must be in writing, with one of these titles:
- 'Making Tax Digital for Income Tax — digitally excluded appeal'; or
- 'Making Tax Digital for Income Tax — exemption appeal'.
Send it to the address in the decision letter and include any new information you want HMRC to consider. If you need more time, call or write to Self Assessment general enquiries, or the Agent Dedicated Line if you are an agent. If the appeal is also refused, you will need to sign up and use the service, so read HMRC's steps for Making Tax Digital for Income Tax and keep your Self Assessment records meanwhile.
Penalties while exempt
HMRC states that while you are exempt during the 2026 to 2027 tax year, you remain on the current late payment and late filing penalties for Self Assessment. The Self Assessment return and its deadlines continue to apply in full. Our guide to Self Assessment deadlines and penalties sets those out.
A checklist for accountants
- Test every client's qualifying income against the threshold for their start date, including income from a sole trade and from property held personally.
- Check the 2024 to 2025 return for the SA102M, SA103, SA103L, SA107, SA109 pages, care relief, and the Married Couple's and Blind Person's Allowance declarations. If they are there, the exemption is automatic.
- Look forward as well as back. If a client did not claim any of these but reasonably expects to in 2025 to 2026 or 2026 to 2027, the exemption must be applied for.
- Separate the roles. For trustees and personal representatives, record the exempt entity returns apart from the person's own income.
- Do not apply without a ground. HMRC warns against applying where there is no good reason to expect the relevant claim or page, and will not accept the four weak reasons on their own as digital exclusion.
- Keep a file for each client. Record the ground, the evidence sent, the date of the application, HMRC's letter and the 30-day appeal date if refused.
- Diarise a review. Temporary exemptions end in April 2027 at the earliest. Review again when a client's income, claims or health change.
Landlords should also read our guides on the quarterly updates and deadlines for those who do fall within the rules, and our property accounts and tax page for what Deplexify prepares for them.
Frequently Asked Questions
Does filing a paper return make me exempt?
No. HMRC will not accept an application where the only reason is that you previously filed a paper return.
Is a charity exempt from Making Tax Digital for Income Tax?
HMRC lists trusts submitting an SA900 as automatically exempt, and includes charitable trusts. Making Tax Digital for Income Tax is aimed at individuals with self-employment or property income, so a charity's own position depends on its legal form and what it files. Check with HMRC if you are unsure.
Can my accountant apply for me?
Yes, if authorised as your tax agent. The application is made for each client individually and rests on that client's personal circumstances.
How long does HMRC take to decide?
HMRC aims to respond within 28 calendar days of receiving the application, and longer if it needs more information.
What if I am refused?
You have 30 days from the date on the decision letter to appeal in writing, with any new information. Keep your Self Assessment records throughout and prepare to sign up in case the appeal fails.