The first phase for Making Tax Digital (MTD) for Income Tax is nearly upon us, as the new system of digital tax reporting commences from 6 April 2026.
However, some landlords, self-employed individuals or sole traders may still wondering whether the rules apply to them and if they could be exempt.
Not knowing if you are exempt by now could put you at risk of rushed submissions and not having enough time to prepare.
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.
Who must comply with MTD for Income Tax?
MTD for Income Tax applies to landlords, self-employed individuals and sole traders with a qualifying income from self-employment or property.
From 6 April 2026, individuals with a qualifying income of £50,000 or more based on their 2024/25 tax return will be affected. Those who qualify will need to keep digital records and submit quarterly updates using MTD-compatible software.
The thresholds will fall to £30,000 in April 2027 and £20,000 in April 2028 and more people will be affected by MTD over the next few years.
Landlords, self-employed individuals and sole traders should assess their qualifying income before expenses to know if they are affected. This means looking at your turnover before pensions and dividends.
What are the automatic exemptions for MTD?
Some individuals are automatically exempt from MTD for Income Tax and do not need to apply for it.
These include:
- Trustees and personal representatives
- Individuals without a National Insurance number
- Non-resident companies
- Lloyd’s underwriters
- Ministers of religion
- Certain allowance recipients, such as a blind person’s allowance
- Foster carers with only foster income
These exemptions apply on a year-by-year basis and you must review your eligibility regularly.
If your circumstances do change, MTD may apply to you from that point onward.
When can you apply for an exemption?
There is also a digital exclusion for MTD, which applies to individuals who cannot reasonably comply with the requirements.
This could be due to:
- Age, disability or medical condition that makes it impractical to use digital technology
- No reliable internet access at home, at your business premises or in any other accessible location
- Religious beliefs that prohibit the use of electronic devices or digital record keeping
However, these exemptions must be clearly supported with evidence, as HMRC will test this strictly.
A preference for paper records, not being confident with technology, wanting to avoid additional software costs or having few transactions will not qualify.
It is also important to know that using an accountant does not make you exempt. If your agent submits 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.
How to apply for an MTD exemption?
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 a clear explanation with evidence of 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. You do have the right to appeal, but you are not exempt until HMRC confirms this.
Why do you need to act now for MTD?
HMRC exemptions will only apply to a small minority of people and for most landlords, self-employed individuals and sole traders, it is unavoidable.
You are running out of time and rushed decisions or inaction now could lead to costly mistakes, including fines.
If you believe you or someone you support may qualify for an exemption, you must seek advice now.
We can help assess whether an exemption is genuinely correct 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.
We can monitor changes in your income thresholds and exemption status as more people will be affected by MTD in the next few years.
Whether you are preparing for MTD or need to apply for an exemption now, our team can help you so that your business and finances stay compliant.
For more information or guidance, contact our team today.