Making Tax Digital Exemption: Who Qualifies and How to Apply in 2026

Who needs Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax applies to qualifying individuals who are registered for Self Assessment and receive self-employment income, property income or both.

The rollout is based on qualifying income, which broadly means gross self-employment and property income before expenses.

HMRC uses the relevant earlier Self Assessment return to determine when the requirement starts.

If you want a wider explanation of the rules, read Real Key Accountancy’s Making Tax Digital for Income Tax 2026 guide. You can also use the MTD Start Date Checker in our free business tools as an initial guide.

Being below a threshold is not always the same as being exempt

This distinction is important.

For example, suppose your qualifying income for 2024/25 was £45,000. You did not have to start MTD from April 2026 because your income was not more than £50,000.

That does not necessarily give you a permanent exemption. If your qualifying income for 2025/26 exceeds £30,000, you may need to start from 6 April 2027.

HMRC currently states that people with qualifying income of £20,000 or less are automatically exempt from MTD for Income Tax unless their circumstances change.

What is a Making Tax Digital exemption?

An exemption removes the requirement to use MTD for Income Tax for the period covered by that exemption.

Depending on the circumstances, an exemption can be:

• automatic, meaning HMRC applies it using information it already holds;
• application-based, meaning you need to contact HMRC;
• permanent, unless your circumstances change; or
• temporary, meaning MTD could apply in a later tax year.

An exemption from MTD does not normally remove your underlying tax obligations.

If you remain required to complete Self Assessment, you must continue reporting your income and gains through the appropriate Self Assessment process.

Who is automatically exempt from Making Tax Digital?

Some people do not need to submit an exemption application.

Qualifying income of £20,000 or less

HMRC states that you are automatically exempt if your qualifying income is £20,000 or less.

Remember that qualifying income generally means gross self-employment and property income before expenses. It is not your final taxable profit.

No National Insurance number

You are automatically exempt if you do not have a National Insurance number before the start of the relevant tax year.

HMRC also states that someone without a National Insurance number cannot sign up for MTD for Income Tax.

Certain role-based exemptions

Automatic exemptions also apply in particular circumstances involving:

• non-resident companies submitting form SA700;
• trusts submitting form SA900, including certain charitable and pension-related trusts; and
• personal representatives completing outstanding returns for someone who has died.

If you personally have separate self-employment or property income, your own MTD position still needs to be considered.

Certain specialist Self Assessment circumstances

HMRC has additional automatic exemptions connected with information shown on particular Self Assessment supplementary pages or claims.

For 2026/27, these include certain taxpayers who reported matters such as:

• qualifying care relief;
• individual averaging relief for certain farmers, market gardeners, authors and artists;
• trust or estate income reported through SA107; or
• circumstances requiring an SA109 residence page.

Some exemptions apply only temporarily. Others last beyond April 2027, with HMRC intending to set out the future MTD timetable later.

Special rules also exist for some Lloyd’s members, Ministers of religion and taxpayers claiming or transferring certain allowances.

Because these exemptions depend on specific tax-return information, it is sensible to check HMRC’s current Making Tax Digital exemption guidance rather than assuming a previous year’s treatment continues indefinitely.

What does digitally excluded mean for Making Tax Digital?

Digital exclusion is one of the most important Making Tax Digital exemption routes for individual sole traders and landlords.

HMRC considers someone digitally excluded where it is not reasonable for them to use compatible software to:

• keep the required digital records;
• submit quarterly updates; or
• complete their MTD tax reporting.

HMRC considers applications individually rather than applying one simple test.

Age, health or disability

You may qualify where your age, health condition or disability prevents you from reasonably using a computer, smartphone or tablet for MTD.

There is no published rule saying that everyone above a particular age is automatically exempt.

Instead, HMRC considers how your circumstances affect your ability to meet the digital requirements.

Religious beliefs

An exemption may apply if you are a practising member of a religious society or order whose beliefs are incompatible with electronic communications or electronic record keeping.

HMRC’s guidance also refers to the person not using a computer, smartphone or tablet for either personal or business purposes in these circumstances.

No suitable internet access

Digital exclusion can also apply where you cannot get internet access at your home or business because of your location and cannot reasonably access the internet somewhere suitable instead.

Poor connectivity is therefore potentially relevant. However, the assessment considers whether suitable alternative access is realistically available.

Does being elderly automatically give you an MTD exemption?

No. There is no automatic Making Tax Digital exemption simply because you reach a particular age.

Age can support an application where it contributes to digital exclusion. HMRC will look at your actual ability to use the required technology.

For example, someone aged 75 who routinely manages their business online may have very different circumstances from someone of the same age who cannot reasonably use digital devices because of their health, capability or support needs.

The individual circumstances matter more than the number on a birth certificate.

What reasons will HMRC not normally accept?

HMRC specifically states that it will not accept digital exclusion where the only reason is that you:

• previously submitted paper tax returns;
• are unfamiliar with accounting software;
• create only a small number of digital records;
• expect MTD to take more time; or
• are concerned about the cost of signing up and using MTD.

Other circumstances can still be considered. HMRC assesses applications individually.

Therefore, an application should explain why using the required digital system is not reasonably practicable for you, rather than simply why you dislike the system.

Can an accountant deal with Making Tax Digital instead?

Potentially, yes.

An authorised agent can use compatible software, maintain relevant digital records and make MTD submissions on a client’s behalf.

HMRC explains that if your agent can meet the MTD requirements for you, you may not need a digital exclusion exemption.

However, hiring an accountant does not change the exemption test itself. If an exemption application is made, HMRC still considers your personal circumstances.

If your main concern is learning new software or managing quarterly administration, professional support may therefore be more suitable than an exemption application.

Real Key Accountancy provides Making Tax Digital, bookkeeping and digital-record support for sole traders, landlords and small businesses.

What if you already have a Making Tax Digital for VAT exemption?

Do not assume that an MTD for VAT exemption automatically transfers to MTD for Income Tax.

If HMRC previously agreed that you were digitally excluded for MTD for VAT, you should contact HMRC about your Income Tax position.

HMRC says that where your circumstances have not changed, it can confirm the equivalent Income Tax exemption. If your circumstances have changed, you may need to make a new application.

An exemption from MTD for VAT because of an insolvency procedure does not automatically provide an Income Tax exemption.

How to apply for a Making Tax Digital exemption

If your exemption is not automatic, HMRC currently requires you to apply by phone or in writing.

You should normally apply before the date you are required to start MTD.

As at August 2026:

• people due to start on 6 April 2026 can apply now;
• people due to start on 6 April 2027 can apply now; and
• people potentially starting on 6 April 2028 should apply from summer 2027 onwards.

Information to prepare

When applying for yourself, HMRC says you will need your:

1. National Insurance number;
2. name;
3. address; and
4. explanation of why the exemption applies, including relevant supporting information.

For a digital exclusion application, HMRC may also need information about how you currently submit your tax return, whether anyone helps you, what your accountant or agent does and any additional support needs.

You can find the current contact route through HMRC’s Making Tax Digital exemption application guidance.

What happens after you apply?

HMRC currently aims to respond within 28 calendar days, although a decision can take longer if further information is required.

You will receive a letter telling you whether the application has been accepted and, if so, how long the exemption lasts.

If you are already using MTD and your circumstances change, HMRC says you should continue using MTD while you wait for the exemption decision.

Can you appeal if HMRC refuses the exemption?

Yes.

If HMRC rejects your application, its decision letter should explain why and how to appeal.

You normally have 30 days from the date on the decision letter to appeal. The appeal must be made in writing, and you can provide additional information for HMRC to consider.

Practical Making Tax Digital exemption examples

Example: older sole trader who dislikes software

A 70-year-old tradesperson has always kept a spreadsheet and does not like accounting software. However, they regularly use online banking, email and a smartphone.

Age and dislike of software alone would not automatically establish digital exclusion.

They may instead find that setting up suitable software or getting bookkeeping support is the more practical solution.

Example: landlord without realistic internet access

A landlord lives and runs their property business from a remote location where suitable internet access is unavailable. There is also no reasonable alternative location they can use regularly.

Those circumstances may support a digital exclusion application because lack of suitable internet access is specifically recognised by HMRC.

The final decision would still be HMRC’s.

Example: income below the first threshold

A freelancer had qualifying income of £42,000 for 2024/25.

They did not need to start MTD on 6 April 2026 because they were below the £50,000 threshold.

However, this does not automatically mean MTD will never apply. If their 2025/26 qualifying income exceeds £30,000, they may enter MTD from 6 April 2027.

Common Making Tax Digital exemption mistakes

Avoid these common assumptions:

• “I use paper records, so I am exempt.” Previous paper filing is not enough by itself.
• “I am over 65, so I am automatically exempt.” There is no fixed age exemption.
• “I only have ten transactions a month.” A small number of records does not create digital exclusion.
• “Software costs money, so I can opt out.” Cost alone is not an accepted reason.
• “My income is below £50,000, so I am permanently exempt.” Lower staged thresholds apply from April 2027 and April 2028.
• “My VAT exemption automatically covers Income Tax.” You should contact HMRC to confirm the position.
• “I applied, so I can stop complying immediately.” If you already use MTD, HMRC says to continue while awaiting its decision.

Checking the correct rule early gives you more time either to make a well-supported application or prepare for digital reporting.

If MTD applies and you need help getting your records ready, Real Key Accountancy’s bookkeeping packages for sole traders and small businesses include support with digital records and Making Tax Digital preparation.

Making Tax Digital exemption: what should you do next?

First, establish whether you actually need MTD and when your start date applies.

Then check whether an automatic exemption already covers your circumstances. If not, consider whether you have a genuine digital exclusion or another specific exemption reason recognised by HMRC.

Where an application is needed, provide clear information about your circumstances rather than relying on a general objection to digital accounting.

If the real difficulty is software, bookkeeping or quarterly administration rather than digital exclusion, getting help with your records may be simpler than seeking an exemption.