Making Tax Digital (MTD) is one of the biggest changes to the UK tax system in recent years. Introduced by HMRC to modernise the way businesses and individuals keep records and submit tax returns, MTD aims to make tax reporting more accurate and efficient through digital record-keeping and software submissions.
From April 2026, MTD for Income Tax Self-Assessment (MTD for ITSA) will begin to apply to many self-employed individuals and landlords. However, not everyone will be required to follow the new rules, and some people may qualify for an exemption.
Who Does Making Tax Digital Apply To?
Making Tax Digital for Income Tax will apply to individuals who earn income from self-employment or property and exceed HMRC’s qualifying income threshold.
From April 2026, MTD will apply to:
- Self-employed individuals
- Sole traders
- Landlords with UK property income
- Landlords with overseas property income
If your gross qualifying income (turnover before expenses) from these sources exceeds £50,000, you’ll be required to comply with MTD rules from April 2026.
From April 2027, the threshold will reduce to £30,000, bringing more individuals into scope.
Those affected will need to:
- Keep digital accounting records
- Use MTD-compatible software
- Submit quarterly updates to HMRC
- File an End of Period Statement (EOPS)
- Submit a Final Declaration each year
Who Is Exempt From Making Tax Digital Automatically?
Some individuals are automatically exempt from MTD and will not need to apply for an exemption.
Automatic exemptions may apply to:
- Trustees (including charitable trustees)
- Personal representatives of estates
- Non-resident companies
- Individuals without a National Insurance Number
- Foster carers (in some circumstances)
- Religious ministers where digital use conflicts with beliefs
HMRC recognises that certain groups either fall outside the scope of MTD legislation or face structural barriers that make compliance inappropriate.
If you fall into one of these categories, you generally won’t need to take action, but it’s always sensible to confirm your position with an accountant. Contact us for advice on your business.
Can You Apply For An Exemption From MTD?
Yes, if you’re required to comply with MTD but believe you’re unable to do so, you can apply for what’s known as a digital exclusion exemption.
This is designed to protect individuals who genuinely cannot use digital tools or online systems due to personal circumstances or practical limitations.
HMRC will assess applications on a case-by-case basis.
What Can Qualify For An Exemption?
You may qualify for an exemption if digital record-keeping or software use is not reasonably practical for you.
Common qualifying factors include:
- Age (where digital adoption would be unreasonable)
- Disability (physical or cognitive conditions affecting technology use)
- Medical conditions (long-term health issues preventing compliance)
- Severe difficulties using technology
- Remote location with no reliable internet access
- Religious beliefs are preventing the use of digital systems
HMRC’s key test is whether it’s reasonable and practical for you to use digital tools, not simply whether you’d prefer not to.
Supporting evidence (medical letters, location data, etc.) may strengthen your application.
What Can’t Qualify For An Exemption?
Some situations won’t usually qualify you for an exemption.
These include:
- Finding MTD inconvenient
- Preferring paper records to digital systems
- Not wanting to pay for accounting software
- Having basic tech difficulties, but access to support
- Delegating bookkeeping to an accountant or bookkeeper
HMRC expects most individuals to comply where support, software, or professional help is available.
In other words, reluctance alone isn’t grounds for exemption.
How Do You Apply For An MTD Exemption?
If you believe you qualify, you’ll need to apply directly to HMRC.
Here’s a step-by-step overview of the process:
1. Check You Qualify
Review HMRC’s exemption criteria carefully. If you’re unsure, an accountant can help assess your eligibility before applying.
2. Gather Supporting Information
You may need evidence such as:
- Medical documentation
- Proof of disability
- Details of your location and internet access
- Personal statements explaining your circumstances
The stronger your evidence, the smoother the process tends to be.
3. Apply by Phone or in Writing
You can apply for exemption by:
- Calling HMRC’s Self-Assessment helpline
- Writing to HMRC to request digital exclusion
Your accountant can also assist with this on your behalf.
4. Wait for HMRC’s Decision
HMRC will review your application and notify you of the outcome. Processing times can vary depending on complexity.
5. Inform HMRC of Any Changes
If your circumstances change (for example, improved health or internet access), you must inform HMRC, as your exemption status may change.
What If Your Application Is Rejected?
If HMRC rejects your application, you have the right to appeal.
You must write to HMRC within 30 days of the decision, outlining why you believe the rejection is incorrect and providing additional evidence if available. Contact us if you would like support with this for your business.
While awaiting the appeal outcome, you’re expected to remain MTD compliant if the rules apply to you.
What’s The Difference Between Temporary And Permanent Exemptions?
Exemptions aren’t always indefinite; they can be granted on either a temporary or permanent basis.
Temporary Exemptions
A temporary exemption may apply where your inability to comply is short-term.
For example:
- Recovering from surgery
- Temporary illness
- Short-term lack of internet access
- Bereavement or major life events
HMRC may review your status after a set period.
Permanent Exemptions
Permanent exemptions are granted where circumstances are unlikely to change.
For example:
- Long-term disability
- Severe or permanent medical conditions
- Ongoing religious restrictions
- Permanent remote living situations
Even permanent exemptions may be reviewed occasionally, but they generally remove the need for future compliance.
Get Accounting Support for Making Tax Digital With SwiftBooks
Making Tax Digital represents a significant shift in how individuals manage their tax affairs, and for many, the transition can feel overwhelming.
Working with an accountant ensures:
- You know whether MTD applies to you
- Your records are fully compliant
- Submissions are handled accurately and on time
- You avoid penalties
- You use the most suitable software for your needs
At SwiftBooks Accounting, we support self-employed individuals and landlords through every stage of the MTD journey, from software setup and digital record-keeping to quarterly submissions and annual filings.
If you’re unsure whether MTD applies to you or whether you may qualify for an exemption, we’re here to help.
Get in touch today to speak with our team and make your transition to Making Tax Digital simple and stress-free.