HMRC opens up applications for exemption from Making Tax Digital (MTD) for Income Tax for taxpayers who earned qualifying income above £30,000 for tax year 2025-26 who are being pulled into mandatory MTD from 6 April 2027.

It is now possible for £30,000 taxpayers to apply for an exemption, although bear in mind there are a number of limitations on who can actually be exempt, focused primarily on digitally excluded taxpayers.

HMRC states: ‘Being digitally excluded from Making Tax Digital for Income Tax means it’s not reasonable for you to use compatible software to:

• keep digital records 
• send quarterly updates or submit your tax return’. 

Under MTD, the self employed and landlords have to file quarterly updates on qualifying income using commercial software, or bridging software, and then submit a year-end consolidation, as well as an annual self assessment tax return.

Partnerships will also need to use MTD in the future but a timetable for these parties has not been confirmed with HMRC confirming on 17 August, ‘we’ll set out the timeline for this at a later date’.

HMRC is not providing any free software for MTD so it is a case of buying software, generally available on a monthly fee, or using bridging software.

For those who are not able to use a computer or hire an accountant or tax agent to handle the quarterly reporting, exemptions have to be applied for directly to HMRC. Being exempt from MTD does not remove the requirement to file an annual self assessment tax return every year.

Taxpayers are automatically exempt if they are ‘not physically or mentally capable of providing information to HMRC’ and have either given power of attorney (PoA) to someone in the UK to act on their behalf and it is currently in place, or to a legally appointed deputy, controller or guardian in place.

Even if you are already exempt from MTD for VAT you will still have to contact HMRC by phone or in writing for double confirmation effectively, by providing NI number, VAT registration number and the reason for exemption again. In terms of the process, after contact has been made, HMRC stated: ‘If your circumstances have not changed, we’ll confirm that you’re also exempt from Making Tax Digital for Income Tax.’

There is also automatic exemption on a temporary basis for taxpayers who do not have a National Insurance number before the start of the tax year, in other words they are waiting for one to be provided.

For example, anyone who received a NI number on 30 April 2026 and their qualifying income was over £50,000 for the 2024-25 tax year, will be MTD exempt for the 2026-27 tax year.

In addition, anyone filing the SA103L supplementary page as a Lloyd’s member in relation to their underwriting business is exempt.

There are also exemptions to the MTD system for personal representatives (PRs) handling the estates of someone who has died, non-resident companies submitting an SA700 and trusts filing an SA900, including charitable trusts of non registered pension schemes. All these exempted groups must to file standard self assessment tax returns.

What excuses will never work?

It is not possible to simply say ‘it will take extra time or cost for you to sign up to and use MTD’. This is not a valid excuse and will be rejected outright by HMRC.

HMRC will not accept an application for an exemption if the only reason for applying is one of the following:

• previously filed a paper return;
• unfamiliar with accountancy software;
• have a small number of digital records to create each tax year; and
• it will take extra time or cost for you to sign up to and use MTD.

HMRC warned: ‘You should apply before you, or the person you are applying on behalf of, needs to use Making Tax Digital for Income Tax.

‘If you are applying for an exemption because you think you are digitally excluded, you should apply for an exemption based on when you need to use Making Tax Digital for Income Tax.’

MTD is already required for self employed and landlords in the £50,000 income wave as of 7 August 2026, with the £30,000 threshold entering the system from 6 April 2027.

It is important to note that those in the £20,000 group cannot apply for an exemption until ‘summer 2027 onwards’, HMRC confirmed.

Any taxpayers who have already signed up but their circumstances have changed, and hence may be able to get an exemption must continue using MTD until their application is processed and a decision is made.

HMRC stressed taxpayers are legally required to continue using MTD ‘whilst you wait to hear from us’. It normally takes a few weeks for HMRC to respond to exemption requests.

It is also notable that HMRC guidance states that some of the temporary exemptions such as for claims for averaging relief for farmers, market gardeners and people who ‘personally creates literary or artistic works’ will only last until April 2027.

Useful links

HMRC guidance, Find out if you can get an exemption from MTD

HMRC guidance, Apply for an Exemption from MTD [updated 17 Aug 2026]