MTD for IT Exemptions

Where an individual’s qualifying income from self-employment or rental income exceeds £50,000, MTD for IT will apply from April 2026. HMRC are assessing the turnover based on the 2024/25 tax return in order to mandate the relevant tax payers.

If you are recently self employed or in receipt of income from property (including foreign property), the mandating will only begin after the completion of your first Self Assessment Tax Return.

So far, much of the information shared has focussed on who will qualify for Making Tax Digital for Income Tax (MTD for IT), so now, it’s time to look at who is exempt, whether permanently or temporarily.

It is worth noting that some exemptions apply automatically, whereas others don’t.

AUTOMATIC EXEMPTIONS

Permanent

There are several groups of individuals that we already know will be permanently exempt from MTD for IT:

• person filing on behalf of non-resident company
• trustees – including those of a charitable trust or non-registered pension scheme
• personal representative or executor of someone who has died

NB. This is in their capacity as personal representative or executor. If they have qualifying income in their own right, their status is independent of this)

• a Lloyd’s member submitting a tax return in relation to your underwriting business

• not physically or mentally capable and have either:

  • enduring power of attorney or lasting power of attorney has been granted to someone to act on their behalf

• • a deputy appointed by a UK court to act on their behalf

Exemptions Lasting Until Circumstances Change

These exemptions apply permanently and mean that Making Tax Digital for Income Tax will not apply unless circumstances change.  If one of these exemptions applies, there is no need to contact or apply to HMRC.

Where:

• qualifying income is £20,000 or less

• an individual does not have a National Insurance number

Exemptions that Last until April 2027

The following was included in the 2024/25 tax return:

• averaging relief claim (e.g. a farmer or creative artist)
• qualifying care relief claim (e.g. a foster carer or kinship carer)
• income from trusts or estates (reported on the SA107 supplementary page)
• the SA109 supplementary page (Foreign pages) (and are expected to include them again in the 2026/27 tax year)

If one of these exemptions applies, there is no need to contact or apply to HMRC.

Making Tax Digital for Income Tax will apply from the 2027 to 2028 tax year onwards if the qualifying income is above £30,000 in the 2025/26 tax year.

NB. If none of these claims or pages were included in the 2024/5 tax return, but they are reasonably expected in the 2026/27 tax return, you should apply for an exemption for Making Tax Digital for Income Tax.

SA109 Supplementary Page – Foreign Pages

The SA109 supplementary page should be included in 2026/27 tax return where an individual is either a:

• non-resident in the UK in that tax year (including those entitled to claim personal allowances because of the terms of a Double Taxation Agreement)
• resident in the UK in that tax year and:
  • also a tax resident in another country
  • eligible for overseas workday relief (and expected to make a claim or election)
  • expecting split year treatment to apply
  • eligible to use the temporary repatriation facility (and expected to make an election)
  • eligible for the foreign income and gains regime (and expected to make a claim)
  • a former remittance basis user who expects to make a claim for business investment relief

Automatic Exemptions that Last Beyond April 2027 

An individual will be automatically exempt if their 2024/25 tax return was submitted as either:

• an employed Minister of religion of any faith, religion or denomination using the SA102M supplementary page
• someone who received or transferred Married Couple’s Allowance (for those born before 6 April 1935)
• someone who received or transferred Blind Person’s Allowance
• a Lloyd’s member with self-employment or property income
• If one of these exemptions applies, there is no need to contact or apply to HMRC.

Making Tax Digital for Income Tax will become necessary in the future. The timeline for this will be set by HMRC at a later date.

NB. If none of these claims or pages were included in the 2024/25 tax return, but they are reasonably expected in the 2026/27 tax return, you should apply for an exemption for Making Tax Digital for Income Tax.

Exemptions You Need to Apply for 

Digitally excluded exemption 

Being digitally excluded from Making Tax Digital for Income Tax means it’s not reasonable for an individual to use compatible software to:

• keep digital records
• send quarterly updates or submit their tax return

There are different reasons why this may apply, for example:

• age, health condition or disability prevents use of a computer, tablet or smartphone to keep digital records or submit them to HMRC
• a practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records, and computers, tablets or smartphones are not used for business or personal use
• internet access is unavailable at your home or business due to location, and access is not available at a suitable alternative location

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
• only a small number of digital records to create each tax year
• it will take extra time or cost to sign up to and use Making Tax Digital for Income Tax

There may be other reasons digital exclusions may or may not apply. HMRC will consider all applications on a case-by-case basis.

You can apply for an exemption for Making Tax Digital for Income Tax if you think you are digitally excluded.

NB. If you have an agent, friend or family member applying on your behalf, the exemption will still be based on your personal circumstances.

If you’re exempt from using Making Tax Digital compatible software for VAT returns 

Self Assessment: general enquiries will need to be contacted by phone or in writing if HMRC previously confirmed an exempt from sending VAT returns using Making Tax Digital compatible software because due to digital exclusion.

Required information:

• National Insurance number
• VAT registration number
• the reason for digital exclusion from sending VAT returns using Making Tax Digital compatible software, and if whether circumstances have changed

If circumstances have not changed, HMRC will confirm that that the exemption also applies to Making Tax Digital for Income Tax. If, however, circumstances have changed, you will need to apply for an exemption.

If a VAT exemption is due to insolvency

If a VAT exemption is due to an ongoing insolvency procedure and an individual is signed up to Making Tax Digital for Income Tax, they will not be exempt and should continue to use the service.

Non-UK resident foreign entertainer or sportsperson

Non-UK resident foreign entertainer(s) and sportsperson(s) will need to apply for an exemption, even if this income was included in the 2024/25 tax return.

Apply for an exemption for Making Tax Digital for Income Tax here.

The current list of exceptions can be found here:

https://www.gov.uk/guidance/find-out-if-you-can-get-an-exemption-from-making-tax-digital-for-income-tax

Click here to view the MTD for IT – Exemptions Guide

Get In Touch

If you this any of this may apply to you, please get in touch with your usual Whitings LLP contact or your local Whitings LLP office.