MTD exemptions: who doesn't have to comply, and how to apply

Not everyone caught by the income thresholds actually has to follow Making Tax Digital. HMRC recognises several exemptions — but most of them are not automatic. If you qualify, you (or your agent) must apply, and until HMRC confirms the exemption in writing, the rules still apply to you.

Who can be exempt

• The digitally excluded — people for whom using software is not reasonably practicable due to age, disability, remoteness of location, or any other reason (no reliable internet access is the classic case).
• Religious grounds — practising members of religious societies whose beliefs are incompatible with using electronic communications or keeping electronic records.
• Foster carers — income from qualifying care relief is excluded from MTD entirely.
• No National Insurance number — those without a NINo at the relevant date are deferred.
• Personal representatives of the deceased — estates are outside the quarterly regime.

What is NOT an exemption

Being "bad with computers", disliking software, or your accountant preferring paper are not grounds HMRC accepts. Nor is having simple affairs — a landlord with one tenant and £52,000 of rent is fully in scope. And crucially, income below the threshold is not an exemption you apply for — you're simply not mandated yet, though the threshold keeps falling: £30,000 from April 2027 and £20,000 from April 2028 (see our guide to who's affected and when).

How to apply

Applications are made to HMRC by phone or post (fittingly, not online), explaining why using software is not reasonably practicable for you. HMRC aims to respond within 28 days. Key points:

• You can apply for yourself, or an agent can apply for you.
• If you're already exempt from MTD for VAT, you're automatically exempt for Income Tax too — no new application needed.
• Keep complying until you hear back. A pending application does not pause the quarterly deadlines or the penalty points system.
• If refused, you can ask for a review or appeal.

The practical takeaway

Genuine digital exclusion is rarer than people hope, and HMRC assesses each case individually. If your real objection is effort rather than ability, modern software has quietly removed the effort: uploading a bank statement CSV and confirming categories takes minutes, not evenings. Apply if you truly qualify — prepare if you don't.