Who is exempt from Making Tax Digital for Income Tax?

Quick answer: You are exempt from Making Tax Digital (MTD) for Income Tax if your qualifying income is £20,000 or less, if certain automatic exemptions apply (for example you have no National Insurance number, or you are a trust or personal representative), or if HMRC agrees you are "digitally excluded" on grounds of age, disability, location or religion. If you are exempt you still file a normal Self Assessment return. Not sure whether you're even in scope? Start with the MTD scope checker.

Making Tax Digital for Income Tax changes how some sole traders and landlords report to HMRC — digital records plus four quarterly updates and a final declaration, instead of one Self Assessment return. But it does not apply to everyone. This guide sets out who is exempt, the difference between an automatic exemption and one you have to apply for, which income is out of scope, and how to ask HMRC for a digitally-excluded exemption.

Everything below is drawn from HMRC's own guidance — Find out if you can get an exemption from Making Tax Digital for Income Tax and Apply for an exemption if you are digitally excluded. Ledgers is software and general guidance, not personalised tax advice — if your situation is finely balanced, check with HMRC or your accountant.

The single biggest exemption: being under the threshold

Most people who think they might be "exempt" are really just below the income threshold, which means MTD does not apply to them yet at all.

MTD for Income Tax is being phased in by qualifying income — your gross self-employment turnover plus gross property income (rents before expenses), measured on your prior-year Self Assessment return. It is being introduced in waves (all figures use a strict "over", not "at"):

HMRC state that you are automatically exempt if "your qualifying income is £20,000 or less" — there is currently no announced wave below £20,000. This is not something you apply for; it simply means you keep filing Self Assessment as normal. Our MTD deadline calculator shows exactly which wave (if any) you fall into and when.

Two quick clarifications that catch people out:

• Only self-employment and property count. PAYE salary, dividends, savings interest, pensions and partnership income are excluded from the qualifying-income test.
• It's gross, not profit. A landlord grossing £22,000 in rent is over the £20,000 line even if their taxable profit after mortgage interest and costs is far lower.

Automatic exemptions (no application needed)

Beyond the threshold, HMRC list several groups who are automatically exempt and do not have to apply. According to GOV.UK, you do not need to use MTD for Income Tax if any of the following apply:

• You do not have a National Insurance number before the start of the tax year. (You are automatically exempt, and in fact cannot sign up.)
• You are a trust, including charitable trusts and trusts of non-registered pension schemes, submitting an SA900.
• You are a personal representative of someone who has died.
• You are a non-resident company (SA700), or a Lloyd's member reporting through the SA103L page.
• Someone lacks the capacity to manage their own affairs and a power of attorney or appointed guardian is in place.

There are also temporary exemptions lasting until April 2027 at the earliest for certain circumstances flagged on the 2024/25 return — for example those claiming averaging relief (some farmers and creative professionals), qualifying care relief (foster and kinship carers), reporting trust income on SA107, or using the residence/remittance provisions on SA109. HMRC describe these exemptions as either "permanent — unless your circumstances change" or "temporary — lasting until April 2027 at the earliest", so it is worth re-checking your position each year.

Partnerships are a separate case: they do not currently need to use MTD for Income Tax, and HMRC will set out a timeline for them later.

The "digitally excluded" exemption — the one you apply for

If none of the automatic exemptions fit but you genuinely cannot use digital tools, you can apply to be treated as digitally excluded. HMRC define this as it being "not reasonable" for you to use compatible software to keep or submit digital records, and give three grounds:

• Age, health condition or disability — where any of these "stops you from using a computer, tablet or smartphone".
• Location — where "you cannot get internet access at your home or business because of your location".
• Religion — where you are a practising member of a religious society or order whose beliefs are incompatible with using electronic communications, and you do not use a computer, tablet or smartphone for business or personal use.

This exemption is not automatic — you have to ask HMRC, and they decide. A granted digitally-excluded exemption may be permanent depending on your circumstances.

Worked example

Margaret, 74, lets one flat grossing £26,000 a year. On paper she is over the £30,000... no — she's over the £20,000 line but under £30,000, so on gross rents of £26,000 she would be pulled into MTD from April 2028 (the £20,000 wave). But Margaret has a health condition that prevents her using a computer or smartphone, and she has no one who manages her affairs for her digitally. She writes to HMRC well before April 2028 explaining her circumstances and applies for a digitally-excluded exemption. If HMRC agree, she keeps filing a paper/assisted Self Assessment return and never has to keep digital records or send quarterly updates. If they refuse, she'll need MTD-compatible support from April 2028. Use the MTD scope checker to confirm the wave and date before applying.

How to apply for a digitally-excluded exemption

You cannot do this online — you call or write to HMRC:

• Apply for yourself, or on behalf of a friend or family member (with their authorisation), using the contact details on HMRC's Self Assessment: general enquiries page.
• Agents apply through the Agent Dedicated Line: Self Assessment or PAYE for individuals for each authorised client.
• If writing, HMRC ask you to use the subject line "Making Tax Digital for Income Tax — digitally excluded application".

When to apply, by wave:

• 6 April 2026 cohort — the application process is open; apply now.
• 6 April 2027 cohort — apply from summer 2026 onwards.
• 6 April 2028 cohort — apply from summer 2027 onwards.

HMRC aim to respond within 28 calendar days. Apply in good time so you have a decision before your mandation date. For the full source, see Apply for an exemption from Making Tax Digital for Income Tax if you are digitally excluded.

Important: exempt from MTD is not exempt from tax

Being exempt from MTD changes the method, not the duty. HMRC are explicit: "If you are exempt, you will not have to use Making Tax Digital for Income Tax but you must continue to report your income and gains in a Self Assessment tax return as normal."

So if you're exempt you'll still:

• keep records good enough to complete an accurate return;
• file Self Assessment by 31 January each year; and
• pay any tax due on the normal Self Assessment schedule.

If you are not exempt and do fall into a wave, it's worth understanding what's coming — see our guide to submitting an MTD quarterly update to HMRC and the MTD penalty calculator for the new points-based late-submission regime. Landlords should also read Making Tax Digital for landlords, since all your UK rental properties count as one property business.

Where Ledgers fits

If you're in scope, Ledgers keeps the digital records, tracks the quarterly deadlines and prepares the updates and final declaration for you — transaction-led, so the books stay right underneath. If you think you're exempt, the honest answer is you may not need software like ours at all — and we'd rather tell you that than sell you something. Either way, the MTD scope checker and self-employed tax calculator are free to use.

Frequently asked questions

Who is exempt from Making Tax Digital for Income Tax?

You are exempt if your qualifying income (gross self-employment plus gross property income) is £20,000 or less, if an automatic exemption applies (for example no National Insurance number, trusts on SA900, personal representatives, non-resident companies, or where a power of attorney is in place), or if HMRC grants you a "digitally excluded" exemption on grounds of age, disability, location or religion. In every case you still file a normal Self Assessment return.

What does "digitally excluded" mean?

HMRC use it to describe people for whom using compatible software isn't reasonable — because age, a health condition or a disability stops them using a computer, tablet or smartphone; because they can't get internet access at home or business due to their location; or because their religious beliefs are incompatible with electronic communications. It is not automatic — you must apply and HMRC decide.

Do I have to apply for an exemption if my income is under £20,000?

No. Being at or below £20,000 qualifying income is an automatic exemption — there's nothing to apply for and you simply continue with Self Assessment. You only apply to HMRC for the digitally-excluded exemption, or in the specific circumstance-based cases HMRC list.

How do I apply, and how long does it take?

You call or write to HMRC using the Self Assessment: general enquiries contact details (agents use the Agent Dedicated Line), with the subject line "Making Tax Digital for Income Tax — digitally excluded application". HMRC aim to respond within 28 calendar days, so apply well before your mandation date.

If I'm exempt, do I still have to file a tax return?

Yes. HMRC state that if you are exempt you must continue to report your income and gains in a Self Assessment tax return as normal, and pay any tax due on the usual schedule — the exemption only removes the digital record-keeping and quarterly-update requirements.