HMRC has specific scenarios for a person o be excluded from Making Tax Digital
HMRC has confirmed that individuals who cannot reasonably use digital tools to manage their tax affairs can now apply for an exemption from the Making Tax Digital (MTD) rules
Taxpayers who are required to comply with MTD income tax must use compatible software to keep digital records and submit quarterly returns to HMRC.
MTD income tax will be phased in for sole traders and landlords with total qualifying income from those activities of:
- £50,000 or more for 2024/25, from April 2026;
- £30,000 or more for 2025/26, from April 2027; and
- £20,000 or more for 2026/27, from April 2028
However, if you cannot use a computer, tablet, or smartphone to keep your tax records, you may no longer have to follow the new Making Tax Digital (MTD) rules. HMRC has confirmed that individuals and businesses can now apply for a new exemption. This applies if you are considered ‘digitally excluded’.
Who cannot apply for MTD exemption?
The ICAEW reported that HMRC says that it will not accept that a person is digitally excluded where the only reason they are applying for exemption is because they:
- previously submitted a paper tax return;
- are unfamiliar with accountancy software;
- only have a small number of digital records to create each tax year; or
- are concerned about the time and/or cost pressures of signing up and using MTD income tax.
Who can apply for MTD exemption?
HMRC accepts that some people cannot use digital tools. This is true even if they are given help to do so.
You may be eligible to apply for the MTD exemption if one of these reasons applies to you:
- Age: You are older and find digital tools too difficult to use
- Disability: You have a disability that stops you from using computers
- Location: You live in a remote area with very poor internet access
- Religious Belief: Your religious beliefs prevent you from using digital tools
How to get the exemption
The accountancy body ICAEW reported this change. They confirm that the process for applying is now open.
If you meet the criteria, you should apply to HMRC directly.
The application should be made in advance of the relevant start date by calling or writing to HMRC. HMRC’s guidance includes suggested timeframes for submitting applications based on the dates that taxpayers expect to be mandated to use MTD income tax.
-ICAEW
If you are already registered for Self Assessment and are eligible, HMRC will write to you. They will confirm that you do not need to follow the MTD rules.
It is important to remember what ‘digital exclusion’ means. It is about not being able to use a digital device. It is not about choosing not to use one. HMRC will check all applications carefully.
This is a welcome step for thousands of taxpayers. It ensures that MTD rules do not unfairly punish those who cannot go digital.
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