MTD Exemptions: Who Can Avoid Making Tax Digital for Income Tax

Making Tax Digital for Income Tax is mandatory for most sole traders and landlords above the qualifying income threshold, but it is not universal. A number of exemptions exist, and it is important to apply for one rather than simply assuming you qualify.

Below the income threshold

The most straightforward exemption is simply being below the mandation threshold. If your gross qualifying income from self-employment and property is below the current threshold, MTD for Income Tax does not yet apply to you, and you continue filing a normal Self Assessment return. The threshold has been lowered in stages, so check your position each year rather than assuming last year's answer still holds.

Digital exclusion

HMRC recognises that some taxpayers cannot reasonably be expected to keep digital records or file online. Grounds for a digital exclusion exemption typically include:

• Age, disability or a health condition that makes using digital tools impractical.
• Living in a location without reliable internet access.
• Religious beliefs that are incompatible with using electronic communications or record keeping.
• Any other reason HMRC accepts makes it not reasonably practicable for you to comply digitally.

How to apply for an exemption

You need to contact HMRC directly to apply — an exemption is not automatic, even if you clearly meet one of the grounds above. HMRC will ask about your circumstances and may request supporting evidence. If granted, you continue filing under the existing Self Assessment rules rather than the quarterly MTD process.

Using an agent instead of going digital yourself

If you would struggle with digital record keeping but do not necessarily meet the formal exclusion criteria, appointing an accountant as your agent is often the practical solution. Your agent can maintain the digital records and submit the quarterly updates on your behalf, so you never need to use the software directly yourself.