Who is Exempt from Making Tax Digital (MTD) for Income Tax?

Making Tax Digital for Income Tax is a UK government initiative that requires taxpayers to maintain digital records and submit tax information electronically. HMRC is rolling out the initiative in three phases: mandatory from April 2026 for self-employed individuals and landlords with income above £50,000; from April 2027 for those above £30,000; and from April 2028 for those above £20,000. Most affected taxpayers will need to comply, but HMRC does grant exemptions in specific circumstances. MTD exemptions are not automatic: they require a formal application to HMRC with supporting evidence, and a rejected application means you must comply from your relevant mandation date. Read on to find out who qualifies for an exemption, what evidence you need to provide, and how Rayner Essex can support your application.  

Who is exempt from Making Tax Digital?

Making Tax Digital exemption eligibility falls into three categories. Each category requires a separate application to HMRC. Eligibility is assessed on a case by case basis, and is not guaranteed. 

Digital exclusion

A digital exclusion from MTD applies to individuals who cannot reasonably use digital tools due to age, disability, or limited internet access. To qualify for Making Tax Digital exemption, you must apply directly to HMRC. You will need to provide supporting evidence relevant to your specific reason — medical documentation for disability-based claims, or evidence of connectivity limitations for location-based claims. HMRC does not grant digital exclusion exemptions without a formal application and supporting documentation.

A common mistake is assuming eligibility without approval, which can result in penalties if HMRC later enforces compliance.

Income thresholds

HMRC uses income thresholds to determine who is exempt from Making Tax Digital. The rollout of MTD for Income Tax happens in phases:

• From April 2026: individuals earning over £50,000
• From April 2027: individuals earning over £30,000
• From April 2028: individuals earning over £20,000

These thresholds will continue to evolve as part of the ongoing Making Tax Digital for Income Tax extension, highlighted in the 2025 Spring Statement.

H3: Other temporary or specific exemptions

There are additional situations where an exemption for Making Tax Digital may apply. 

Temporary exemptions from MTD: HMRC may grant temporary exemptions from MTD in cases of system failures or where you can demonstrate a reasonable excuse for non-compliance.

Individual circumstance: HMRC may grant a Making Tax Digital exemption where it recognises a defined list of specific individuals and circumstances. These include: 

• Ministers of religion
• Lloyd’s underwriters
• Individuals claiming Married Couples’ or Blind Person’s Allowance
• Power of attorney holders
• Non-UK entertainers
• Individuals requiring supplementary residence pages
• Individuals with religious objections
• Personal representatives of deceased individuals
• Individuals holding power of attorney
• Trusts, estates, pension scheme trustees

HMRC reviews each exemption on a case-by-case basis and does not guarantee eligibility, as approval depends on the strength of your application. If you fall into one of these categories and are unsure whether an exemption applies to your specific circumstances, Rayner Essex can assess your position before you apply.

How to apply for an MTD exemption

If you believe you qualify for an exemption under MTD, you must submit a formal application to HMRC. MTD exemptions are not automatic- they require clear justification. 

Your application should include relevant details and supporting evidence, such as medical documentation, proof of limited digital access, or legal authority (e.g. power of attorney). HMRC will review your request and may approve it, reject it, or request further information. If HMRC rejects your request for an MTD exemption, you must comply with MTD rules. 

Acting early and ensuring your application is complete can significantly improve your chances of success.

What are the challenges around MTD exemptions?

Here are the most common MTD exemption criteria challenges, and how to navigate them: 

Uncertainty around eligibility

Many taxpayers incorrectly assume they qualify for a Making Tax Digital exemption, which can result in missed deadlines or penalties if HMRC disagrees. To avoid the risks of incorrect assumptions, it’s best to work with accountants with dedicated Making Tax Digital services and accounting solutions. They can provide clear guidance and a formal eligibility review before applying to help to strengthen your exemption case. 

Lack of awareness or delayed action

Waiting too long to apply for an exemption for Making Tax Digital can result in rushed decisions, inaccurate submissions, and potential fines. Taking early action is essential to stay compliant.

If you think you may qualify for an exemption, or are unsure how MTD applies in specific scenarios (for example MTD for landlords and the self-employed individuals), please contact our MTD specialists as soon as possible. 

Application complexity

HMRC requires detailed evidence for MTD exemptions, resulting in a complex and lengthy application process. Applications that are unclear or incomplete are often rejected by HMRC. This complexity can cause confusion and hesitation, particularly for those unfamiliar with tax processes. Professional support can help ensure your MTD exemption application is accurate and complete.

Why expert guidance on MTD exemption matters

Understanding who is exempt from Making Tax Digital and successfully securing a Making Tax Digital exemption often requires specialist knowledge. Working with an expert can simplify the process and increase the likelihood of a successful exemption application. Professional guidance can: 

• Help businesses and individuals to avoid common mistakes
• Support smooth and accurate communication with HMRC
• Assist in the preparation and submission of MTD exemption applications
• Provide strategic advice during the Making Tax Digital for Income Tax extension
• Future-proof your compliance as MTD evolves

How Rayner Essex can help with MTD exemptions

Rayner Essex provides Making Tax Digital exemption support for self-employed individuals, landlords, property income clients, and small businesses across all three exemption categories. These include digital exclusion, income threshold assessment, and specific individual circumstances. 

Our MTD services include a free initial consultation to assess whether you are likely to qualify for an exemption. We identify the evidence required for your specific category, and outline the application process and timeline. For clients who proceed with an application, we prepare and review submissions before sending them to HMRC. We manage HMRC communications, and advise on compliance requirements if an application is unsuccessful.

For clients who are not exempt, Rayner Essex provides cloud accounting solutions. These are configured for MTD compliance, covering digital record-keeping, quarterly submission requirements, and integration with HMRC’s systems. This supports clients to manage the transition to MTD as a single process rather than a series of separate problems.

To find out where you stand, book a free MTD exemption review with our team. We will assess your income, circumstances, and exemption eligibility and give you a clear picture of your obligations and options.