Making Tax Digital (MTD) for Income Tax is in full swing, but there is still confusion in the air over who is exempt from these requirements.
Recent updates from HMRC have cleared this up, explaining who qualifies for these exemptions and what the year one waiver really means.
The clock is ticking, so if you believe you are eligible for exemption, you don’t want to leave it too late to apply.
Am I exempt from Making Tax Digital?
HMRC’s guidance clarifies that 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 are automatically exempt.
It also explains which taxpayers are eligible for a one-year waiver from quarterly reporting for the first tax year of MTD for Income Tax.
You might qualify for this if, in your 2024-25 Self-Assessment tax return, you:
- Claimed averaging relief using the SA103 or SA104 supplementary page
- Claimed qualifying care relief
- Used the SA107 supplementary page to report trust or estate income
- Used the SA109 supplementary page to report residence and foreign income and gains and were not a UK resident
Those who fall into these categories do not need to follow the MTD requirements straight away.
You can submit your 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, be careful as this waiver only lasts one year.
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 can I apply for an exemption?
You might believe that you fall into one of these exemption categories, but not all exemptions are automatically applied.
If it is not, you will need to apply to HMRC directly by phone or in writing.
This application should include your personal details, current method of filing tax returns, an explanation of why you cannot comply and supporting evidence.
Those who fall into the first phase this tax year need to submit their application and be approved by 7 August 2026.
Missing this deadline means you automatically fall into 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.
You should not sit around and wait for the verdict and you need to 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 are not exempt and 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.
If you do believe you are exempt, we can help guide you through the application process.
Making Tax Digital for Income Tax is uncharted territory for all taxpayers. Let us help you understand the rules and stay compliant.
For further guidance on MTD for Income Tax, contact our team.
