Written by Samina · Published: November 2026 · Last reviewed: November 2026 · Applies to the 2026/27 tax year onwards
Since April 2026, many sole traders and landlords have had to keep digital records and send HMRC quarterly updates. Not everyone has to, though. This guide explains the Making Tax Digital exemptions for Income Tax: which ones apply automatically, which ones last only for a time, and which ones you have to apply for. It also covers what to do if HMRC says no.
You are automatically exempt from MTD for Income Tax if your qualifying income is £20,000 or less, or if you fit certain HMRC categories, such as having no National Insurance number. Other exemptions last for a limited time, based on your 2024/25 tax return. If you can’t reasonably use digital tools, you must apply to HMRC.
- Qualifying income of £20,000 or less is an automatic exemption. Between £20,000 and your start threshold, you’re just not required yet.
- There are three types: automatic permanent, automatic temporary, and exemptions you apply for.
- The October 2026 Budget kept foster carers and some non-residents out of MTD until further notice.
- A VAT exemption doesn’t automatically carry over to Income Tax.
- HMRC aims to reply to an application within 28 days. If it refuses, you have 30 days from the date of the letter to appeal.
Who Is Exempt From Making Tax Digital? The 60-Second Checker
Answer these questions in order to see which Making Tax Digital exemptions, if any, apply to you. Stop at the first “yes”:
- Is your qualifying income £20,000 or less? That’s your self-employment turnover plus gross property income, before expenses. If yes, you’re automatically exempt for as long as it stays there. Nothing to do.
- Is the income earned through a company or partnership? Companies aren’t in MTD for Income Tax, and HMRC hasn’t set a date for partnerships yet. Any self-employment or property income you have personally is still tested on its own.
- Do you fall into an automatic group? For example, you had no National Insurance number before the tax year started, or your 2024/25 return showed a qualifying claim (see the table below). If yes, HMRC applies the exemption for you.
- Do you expect a qualifying claim you didn’t make in 2024/25? If yes, you may need to apply.
- Is using software not reasonably practicable because of age, health, disability, location or religion? If yes, apply as digitally excluded.
- None of these? Check your start date against the threshold that applies to you: MTD thresholds.
| Qualifying income | Position |
|---|---|
| £20,000 or less | Automatically exempt, unless your circumstances change |
| Over £20,000 | Expected to join from April 2028 (based on 2026/27 income) |
| Over £30,000 | Must join from April 2027 (based on 2025/26 income) |
| Over £50,000 | Required from April 2026 (based on 2024/25 income) |
What’s the Difference Between Exempt and Not Required Yet?
These are often confused. Someone on £25,000 isn’t exempt. They’re simply not required to join until the threshold reaches them. Someone on £18,000 is exempt, as long as their income stays at that level. Making Tax Digital exemptions depend on income and circumstances, not on whether you’ve started yet.
| Situation | Do you need to act? | Can it change? |
|---|---|---|
| Qualifying income £20,000 or less | No, it’s automatic | Yes, if income rises above £20,000 |
| Above £20,000 but below your start threshold | Not yet. Watch your income each year | Yes. Lower thresholds bring you in later |
| Automatic exemption from your 2024/25 return | No | Some end in April 2027 or later |
| Digitally excluded or religious grounds | Yes, you must apply | Yes, if your circumstances change |
Making Tax Digital Exemptions: Every Category in One Table (2026/27)
The GOV.UK exemption list groups exemptions by how long they last and whether you need to apply. For 2026/27, they fall into three groups:
1. Automatic and permanent, unless circumstances change
| Who | Basis | Notes |
|---|---|---|
| Qualifying income £20,000 or less | Income level | Automatic Ends if income rises above £20,000 |
| No National Insurance number before the tax year starts | Your NINO status | Automatic Applies for that tax year |
| Declared on the 2024/25 return as not physically or mentally capable, with a power of attorney, deputy or guardian | 2024/25 return | Automatic |
| Trustees filing an SA900 trust return | Acting as trustee | Automatic Covers the trust only, not your own income |
| Personal representatives of someone who has died | Acting for the estate | Automatic Covers the estate only, not your own income |
| Non-resident companies filing SA700 | Company return | Automatic |
Important: being a trustee or personal representative doesn’t exempt your own income. If you also have self-employment or rental income above the threshold, that income can still come under MTD.
2. Automatic but temporary, based on your 2024/25 return
| 2024/25 return showed… | How long | After that |
|---|---|---|
| Averaging relief (SA103: farmers, creative work) | 2026/27; ends April 2027 at the earliest | Join from 2027/28 if 2025/26 qualifying income is over £30,000 |
| SA107 trust or estate income | As above | As above |
| SA109 residence pages (non-UK residence, split year, remittance basis and similar) | As above. The Budget 2026 change applies to expected non-residents (see below) | Check the updated guidance |
| Qualifying care relief (foster or kinship carers) | Until further notice (Budget 2026) | Not before HMRC announces a date |
| Minister of religion (SA102M), Lloyd’s member (SA103L), Blind Person’s Allowance | Beyond April 2027. Deferred until at least April 2029 under the July 2025 plans | Later date to be set |
| Married Couple’s Allowance received or transferred (born before 6 April 1935 only) | Beyond April 2027 | Later date to be set |
3. Exemptions you must apply for
- Digital exclusion: age, health, disability, location or another reason makes using software not reasonably practicable.
- Religious grounds (see below).
- Expected claims: you didn’t make the claim in 2024/25 but reasonably expect to in 2025/26 or 2026/27. This covers averaging relief, qualifying care relief, SA107 or SA109, partners using SA104 averaging, Married Couple’s Allowance, Blind Person’s Allowance or SA102M. HMRC says not to apply without a good reason to expect the claim.
What Counts as Digital Exclusion?
The digital exclusion exemption is the MTD Income Tax exemption people apply for most often. You can apply if using compatible software isn’t reasonably practicable for you:
| Reasons HMRC may accept | Reasons that won’t work on their own |
|---|---|
| Age, health or disability prevents you using a computer, tablet or smartphone for records | You’ve always filed on paper |
| No internet access at home or work, and no suitable alternative location | You’re unfamiliar with accounting software |
| Other circumstances, considered case by case | You have only a few records each year |
| Extra time or cost to comply |
Can You Get an Exemption on Religious Grounds?
Yes, but only if both conditions are met. You must be a practising member of a religious society or order whose beliefs are incompatible with electronic communications or keeping electronic records. And you must not use a computer, tablet or smartphone for business or personal purposes. Holding the beliefs is not enough on its own, which makes this one of the narrowest Making Tax Digital exemptions.
What Did Budget 2026 Change?
The 28 October 2026 Budget confirmed that these groups won’t have to join MTD for Income Tax until further notice:
- People eligible for qualifying care relief, such as foster carers
- Non-UK resident foreign entertainers and sportspeople
- Expected non-resident taxpayers: people who think their residence status will change for an upcoming tax year
- A small number of taxpayers who become insolvent before signing up and carry on trading
This widens the Making Tax Digital exemptions that applied before. Don’t treat qualifying care relief as ending in April 2027. HMRC says its exemption guidance will be updated, and the change needs legislation. Check the GOV.UK page for the current wording.
How Do You Apply for an HMRC Exemption?
If your exemption isn’t automatic, you can’t apply online. For Making Tax Digital exemptions you call or write to HMRC using the current Self Assessment general enquiries contact details. Agents use the Agent Dedicated Line. Use the contact page rather than an old address, because details change.
- Check you’re not already exempt. If the exemption is automatic, there’s nothing to apply for.
- Gather your details: name, address and National Insurance number, plus a clear reason why you should be exempt and any supporting information.
- For digital exclusion, add more: how you file your tax return now, what stops you using software, any role your agent plays, and any extra support you need.
- Use the right letter title: “Making Tax Digital for Income Tax — digitally excluded application” or “Making Tax Digital for Income Tax — exemption application”.
- Keep a copy of what you sent and the date you sent it.
A family member or agent can help you apply, but the decision depends on your own circumstances.
What Happens After You Apply?
| Stage | What to expect |
|---|---|
| Response time | HMRC aims to reply within 28 calendar days. This is a target, not a guarantee, and it can take longer if HMRC needs more information |
| Accepted | HMRC writes to confirm. Keep the letter with your tax papers |
| Refused | You can appeal in writing within 30 days of the date on the decision letter, titled “…digitally excluded appeal” or “…exemption appeal”. If you need more time, contact HMRC |
| Circumstances change | Tell HMRC. See if your circumstances change |
A refused MTD Income Tax exemption isn’t the end of the road, but while you wait, carry on filing Self Assessment and keeping records. An exemption from MTD isn’t an exemption from tax.
Scenario cards
- An 82-year-old landlord with no broadband and no way to get online: a strong digital exclusion case.
- A builder who “prefers paper” and earns £45,000: likely to be refused. Preference isn’t a ground.
- A foster carer claiming qualifying care relief: outside MTD until further notice following Budget 2026.
Does a VAT Exemption Cover MTD for Income Tax?
Not automatically. Making Tax Digital exemptions for VAT and for Income Tax are handled separately:
| Your VAT position | What it means for Income Tax |
|---|---|
| Exempt from MTD for VAT as digitally excluded | Contact Self Assessment general enquiries with your NI number, VAT registration number and the reason. If nothing has changed, HMRC confirms the Income Tax exemption. If something has changed, apply |
| Exempt from MTD for VAT because of insolvency | Not an Income Tax exemption. If you’ve signed up, keep using MTD. Budget 2026 separately excludes a small group who become insolvent before signing up and keep trading |
Not Exempt? How the Penalty Easements Work
If none of the Making Tax Digital exemptions fit you, there’s still some short-term leeway on MTD penalties:
| Group | Easement | What still applies |
|---|---|---|
| Joined April 2026 (over £50,000) | No penalty points for late quarterly updates in 2026/27 | Points apply from the first 2027/28 deadline, 7 August 2027 |
| Joining April 2027 (over £30,000) | No penalty points for late quarterly updates in 2027/28 | The 2027/28 tax return is still due 31 January 2029, and normal late-filing penalties apply |
The easement covers quarterly updates only. It doesn’t remove the duty to send them, and it doesn’t excuse a late tax return. Our MTD deadlines guide lists the dates, and signing up for Making Tax Digital explains how to join.
Common Mistakes With MTD Exemptions
Most mix-ups over Making Tax Digital exemption eligibility come from a few assumptions:
| Mistake | Why it’s a problem |
|---|---|
| Assuming age alone qualifies | You must show that using digital tools isn’t reasonably practicable |
| Treating “under my threshold” as exempt | Only £20,000 or less is an exemption. Above that, lower thresholds will bring you in |
| Thinking a trustee role covers your own income | Your own trading or rental income is tested separately |
| Relying on a VAT exemption | Income Tax needs separate confirmation or a separate application |
| Stopping MTD while an application is pending | If you’re already signed up, keep going until HMRC decides |
| Not telling HMRC about a change | An exemption can end when your circumstances change |
Most people asking about Making Tax Digital exemptions really want to know whether they can avoid the extra admin. For most sole traders and landlords over £20,000, the honest answer is no. But an agent can handle the quarterly updates for you. That isn’t an exemption. It just takes the work off your hands.
Making Tax Digital Exemptions FAQs
Who is exempt from Making Tax Digital?
Anyone with qualifying income of £20,000 or less, people with no National Insurance number, certain groups identified from their 2024/25 return, and people HMRC accepts as digitally excluded or exempt on religious grounds.
Are pensioners exempt from MTD?
Not because of age alone. Pension income isn’t qualifying income, so many pensioners fall below £20,000 anyway. Others can apply if age or health makes digital tools impractical.
Is there an MTD exemption form?
No. For an HMRC exemption application you call or write to HMRC using its Self Assessment general enquiries contact details, giving your NI number and the reasons for your application.
How long does HMRC take to decide?
HMRC aims to respond within 28 calendar days, but it can take longer if more information is needed.
Can my accountant apply for an exemption for me?
Yes. An agent can contact HMRC through the Agent Dedicated Line, but the decision depends on your own circumstances.
Are foster carers exempt from MTD for Income Tax?
Yes. Following Budget 2026, people eligible for qualifying care relief won’t be required to join until further notice.
Does an MTD for VAT exemption cover Income Tax?
A digital exclusion VAT exemption can be confirmed for Income Tax if nothing has changed, but you must contact HMRC. An insolvency-based VAT exemption doesn’t carry over.
Final Verdict: Making Tax Digital Exemptions Are Narrow but Real
Most Making Tax Digital exemptions are narrower than people hope. Check your qualifying income first: £20,000 or less means you’re exempt. Then see whether an automatic category covers you, and remember that some last only for a time. If you genuinely can’t use digital tools, apply, keep records while you wait and appeal within 30 days if you’re refused. Everyone else should prepare for their start date.
- Work out your qualifying income for 2024/25, 2025/26 and 2026/27.
- Check your 2024/25 return for any of the automatic categories.
- If you need to apply, use HMRC’s current contact details and keep a copy of what you send.
- Not exempt? Read what Making Tax Digital means for you.
✓ Quarterly updates and tax return filed for you
✓ MTD for Income Tax from £15/month
Why trust this guide
- Exemption categories, application steps and appeal times come from HMRC’s GOV.UK exemption guidance, checked in November 2026.
- Includes the October 2026 Budget changes and penalty easements.
- Last reviewed: November 2026.
- GOV.UK – Find out if you can get an exemption from Making Tax Digital for Income Tax
- GOV.UK – Apply for an exemption from Making Tax Digital for Income Tax
- GOV.UK – Self Assessment: general enquiries
- GOV.UK – If your circumstances change (MTD for Income Tax)
- GOV.UK – Making Tax Digital for Income Tax and penalty reform (July 2025)
- GOV.UK – Apply for an exemption from Making Tax Digital for VAT
- Chartered Accountants Ireland – UK Autumn Budget 2026: personal tax measures
- LITRG – Making Tax Digital exemptions