Not sure if you’re exempt from Making Tax Digital for Income Tax? HMRC clarifies the rules

The first phase of Making Tax Digital (MTD) for Income Tax is underway, yet taxpayers are still unsure about who the rules apply to.

HMRC has set the record straight in its latest guidance on exemptions and the year one waiver.

However, the time to apply for an exemption is ticking, so you need to be clear on the rules and whether you are eligible.

Am I exempt from Making Tax Digital?

HMRC has clarified the automatic exemption for individuals who are not physically or mentally able to submit digital records, those without a National Insurance number and certain non-resident taxpayers who file using supplementary pages.

They have also cleared up any confusion on its one year waiver.

This is an exemption from quarterly reporting for the first tax year of MTD for Income Tax for some taxpayers.

You might qualify for this if, in your 2024-25 Self-Assessment tax return, you:

• Claimed averaging relief using the SA103 or SA104 supplementary page
• Claimed qualifying care relief
• Used the SA107 supplementary page to report trust or estate income
• Used the SA109 supplementary page to report residence, foreign income and gains and were not a UK resident

If you fall into one of these categories, you do not need to worry about following the MTD requirements straight away. You can submit your 2025-26 tax return as normal by 31 January 2027.

HMRC has also confirmed that this is an automatic exemption.

However, this is not permanent and the waiver only lasts one year.

From the 2027-28 tax year, most individuals earning over £30,000 will need to comply and you need to make sure you are following the rules.

Where do I apply for an MTD exemption?

You might be eligible for some of these exemptions, but you need to check if it is automatic or if you need to apply for it to HMRC by phone or in writing.

These applications should include your personal details, current method of filing tax returns, an explanation of why you cannot comply and supporting evidence.

You have until 7 August 2026 to get your application sent off and approved for this tax year.

Missing this deadline will mean you automatically fall into MTD for Income Tax requirements for this tax year.

HMRC aims to respond to applicants within 28 days, although it can take longer if further information is required.

While you wait for your confirmation, you need to continue with your digital reporting to stay compliant.

What if I am not exempt from MTD for Income Tax?

Most landlords and sole traders are not exempt and you need to be preparing your digital record-keeping and quarterly submissions.

You also need to mark your calendars and start getting everything in order for the first submission deadline on 7 August 2026.

If you do believe you are exempt, we can help guide you through the application process.

We know that MTD for Income Tax can feel overwhelming for all taxpayers, so we’re here to guide taxpayers through these new rules and keep you compliant.

For further guidance on MTD for Income Tax, contact our team.