By Shamayun Chowdhury, Senior Accountant, Major Accountancy · Published: 2 November 2026 · Last reviewed: November 2026 · Covers MTD for Income Tax and VAT, including Budget 2026 changes
Many sole traders and landlords hope to find a way out of quarterly updates. Making Tax Digital exemptions do exist, but each one has precise conditions. Some apply automatically, some depend on what you put on your 2024/25 tax return, and some only follow an application to HMRC.
This guide starts with a short checker covering all three thresholds. A single table then shows every exemption, whether it is automatic and how long it lasts, followed by the Budget 2026 changes and a step-by-step HMRC exemption application. The final sections compare VAT and Income Tax and explain the penalty easements for people who are not exempt.
- Qualifying income of £20,000 or less gives an automatic MTD Income Tax exemption for as long as it stays at that level.
- Above £20,000, your start date depends on your income: April 2026, April 2027 or April 2028.
- Several exemptions depend on claims or supplementary pages on your 2024/25 return.
- Budget 2026 made some temporary exemptions last until further notice.
- A VAT exemption does not give you an Income Tax exemption automatically.
Are You Exempt From Making Tax Digital? A 60-Second Checker
Use this checker to test your Making Tax Digital exemption eligibility. Answer the questions in order and stop at the first one that fits.
- Is the income earned through a limited company or a partnership? Companies are outside MTD for Income Tax, and partnerships have not been brought in. A partner’s own self-employment or property income can still count.
- Is your qualifying income £20,000 or less? Qualifying income is your gross self-employment and property income before expenses. At £20,000 or less you are automatically exempt, and you stay exempt while it remains at that level.
- Do you hold an automatic exemption? Examples are having no National Insurance number, acting under a lasting power of attorney or Court of Protection deputyship, or claiming the Married Couple’s Allowance or Blind Person’s Allowance on your return.
- Did your 2024/25 return include a claim that gives a temporary exemption? Examples are trust or estate income, averaging, qualifying care relief or non-residence pages.
- Are digital tools not reasonably practicable for you, or against your religious practice? You may qualify, but you must make an HMRC exemption application.
If none of these apply, MTD applies from the start date that matches your income. HMRC’s tool to find out if and when you need to use MTD for Income Tax gives a personal answer, and our guide to MTD thresholds explains the figures.
Does Low Income Make You Exempt? The Three Thresholds Explained
Your start date is set by your qualifying income in an earlier tax year. Above £20,000 you will have to join at some point. At £20,000 or less, you are exempt automatically.
| Qualifying income | Income year tested | What happens |
|---|---|---|
| Over £50,000 | 2024/25 | MTD from 6 April 2026 |
| Over £30,000, up to £50,000 | 2025/26 | MTD from 6 April 2027 |
| Over £20,000, up to £30,000 | 2026/27 | MTD from 6 April 2028 |
| £20,000 or less | Each year | Automatically exempt while income stays at this level |
The £20,000 figure comes from the government’s policy paper reducing the threshold from April 2028. Your position can change: if a later year’s qualifying income goes above £20,000, the exemption ends and a start date follows.
Which Making Tax Digital Exemptions Apply in 2026/27?
The tables below group all the making tax digital exemptions for Income Tax into three types, so you can tell whether you need to act. They draw on HMRC’s guidance to apply for an exemption from MTD for Income Tax, the Budget 2026 documents and LITRG’s technical summary.
1. Automatic exemptions that are not time-limited
| Exemption | How HMRC knows | 2026/27 | After April 2027 | Your other self-employment or property income |
|---|---|---|---|---|
| Qualifying income £20,000 or less | Your tax returns | Exempt | Exempt while income stays £20,000 or less | Counts towards the £20,000 test |
| No National Insurance number by 5 April before the tax year | HMRC records | Exempt | Exempt until you have a number in time for a later year | Covered |
| Lasting power of attorney or Court of Protection deputyship | Tell HMRC if it does not already know | Exempt | Exempt | Covered |
| Married Couple’s Allowance (you or your spouse born before 6 April 1935) or Blind Person’s Allowance | Allowance received or transferred on your 2024/25 return | Exempt | Exempt | Covered |
| Minister of religion | Minister pages (SA102M) on your return | Exempt | Exempt | Covered |
| Lloyd’s underwriter | Lloyd’s pages (SA103L) on your return | Exempt | Exempt | Covered |
Role-based exemptions: only the role is covered
Some exemptions apply to the role you hold, not to you personally. Trustees filing a trust return (SA900) and personal representatives dealing with someone’s estate do not use MTD for that work. If you also have your own self-employment or property income above the threshold, MTD can still apply to that income.
2. Automatic exemptions based on your 2024/25 return
| Exemption | What your 2024/25 return must show | 2026/27 | After April 2027 |
|---|---|---|---|
| Trust or estate income | Trusts or estates pages (SA107) | Exempt | Ends. MTD applies if you are over the threshold |
| Averaging adjustments (farmers, creative artists) | An averaging claim | Exempt | Ends. MTD applies if you are over the threshold |
| Qualifying care relief (foster and shared lives carers) | A qualifying care relief claim | Exempt | Exempt until further notice (Budget 2026) |
| Expected to be non-UK resident | Residence pages (SA109) | Exempt | Exempt until further notice (Budget 2026) |
| Non-UK resident foreign entertainers and sportspeople | Relevant non-residence entries | Exempt | Exempt until further notice (Budget 2026) |
3. Exemptions you must apply for
- Digital exclusion: digital tools are not reasonably practicable because of age, disability, location or another reason.
- Religious grounds: you are a practising member of a religious society or order with the conditions explained below.
- Expected future claims: you qualify for an exemption-linked claim, such as Married Couple’s Allowance or qualifying care relief, but it was not on your 2024/25 return. Tell HMRC so the exemption can be applied.
What Changed for MTD Exemptions at Budget 2026?
At the Autumn Budget on 28 October 2026, the government changed the making tax digital exemptions by extending the groups exempt from MTD for Income Tax until further notice. Three groups are named in the Budget measures:
- people eligible for qualifying care relief, such as foster carers and shared lives carers, who were previously exempt for 2026/27 only
- non-UK resident foreign entertainers and sportspeople
- taxpayers expected to be non-UK resident
The government intends to put these exemptions into law through secondary legislation. Read the official position in the Budget 2026 overview of tax legislation and rates and the Budget 2026 tax-related documents. HMRC has also said it cannot yet provide a digital service for a small number of customers, including some in insolvency, and it will not require them to join until it can.
What Counts as a Digital Exclusion Exemption?
Of all the making tax digital exemptions, the digital exclusion exemption is the one people ask about most. It is for people who cannot reasonably keep digital records or use software, because of age, disability, location or another reason. It is not enough that MTD is inconvenient, and HMRC considers each case on its own facts.
| Reasons HMRC may accept | Reasons HMRC usually refuses |
|---|---|
| A disability or health condition that makes computers or phones impractical | Preferring paper records |
| Advanced age combined with no realistic way to use technology | The cost of software on its own |
| No reliable internet connection where you live or work | Low confidence with computers |
| Several factors that together make digital records unrealistic | Having a small business or few transactions |
Age alone does not qualify. An older landlord who banks online and uses email is unlikely to succeed, but one with poor eyesight and no broadband may well qualify.
Religious grounds: all conditions must be met
A religious exemption needs more than a belief that conflicts with technology. You must be a practising member of a religious society or order whose beliefs are incompatible with electronic communications or records. You must also not use a computer, tablet or smartphone for business or personal purposes. If you use a smartphone at home, this ground is unlikely to apply.
How Do You Make an HMRC Exemption Application?
There is no special form. Here is how an HMRC exemption application for MTD for Income Tax works in practice.
Step 1: Check whether you are already exempt
Use the tables above. If an automatic exemption fits and your 2024/25 return shows it, you may not need to apply.
Step 2: Gather your details and evidence
- your name, address, National Insurance number and Unique Taxpayer Reference
- your VAT registration number, if you have one
- how you keep records and file your return today, including any help from an accountant
- the exact reason you cannot use digital tools, and how it affects you day to day
- supporting evidence, such as a doctor’s letter or proof that broadband is not available at your address
Step 3: Contact HMRC by phone or in writing
Use the current details on HMRC’s Self Assessment contact page, and check the exemption guidance for any specific instructions. Phone numbers and postal addresses can change, so do not rely on an old letter or website. If you write, head your letter “Making Tax Digital for Income Tax: digital exclusion exemption application”.
Step 4: Get help if you need it
A relative, a friend or your accountant can help you apply. An agent applying for you must be authorised to act on your behalf.
Step 5: Keep records while you wait
Keep copies of your application, the evidence you sent and your normal business records. If you are already in MTD and are applying because your circumstances have changed, you may need to keep using MTD until HMRC decides.
Be specific: “I am registered blind and cannot read a screen” is clearer than “I find computers difficult”.
Explain why help is not enough, if someone else keeping your records is not practical.
Say how long it will last: permanent, or likely to change.
Evidence: send copies, never originals.
Who Is Likely to Qualify? Scenario Cards
These examples show how making tax digital exemptions tend to work in practice. They are illustrative, and HMRC decides each case on its facts.
| Person | Situation | Likely outcome |
|---|---|---|
| Margaret, 82, landlord | Gross rent £34,000, no broadband at home and failing eyesight | Strong digital exclusion case. She joins from April 2027 unless exempt, so she should apply now. |
| Tom, sole trader | A medical condition that makes long screen use impossible, with evidence | Strong case, although HMRC may ask whether a helper could keep records. |
| Ruth, market trader | Practising member of a religious community, uses no computer, tablet or smartphone | May qualify on religious grounds. |
| Gary, builder | Earns £60,000 and uses a smartphone daily, but prefers paper | Likely refusal. Preference is not a ground. |
| Aisha, foster carer | Claimed qualifying care relief on her 2024/25 return | Exempt for 2026/27, and exempt until further notice after Budget 2026. |
| Dev, part-time landlord | Gross rent £18,500 and no other qualifying income | Automatically exempt while qualifying income stays £20,000 or less. |
What Happens After You Apply?
- Decision: HMRC aims to reply within 28 calendar days. This is a target, not a guarantee. The letter says whether an exemption is granted and for how long.
- Refusal: prepare to comply. You can appeal within 30 days of the date of the decision letter, which explains how.
- Change of circumstances: tell HMRC if your situation changes, for example if broadband reaches your home or your health improves.
- Self Assessment continues: an MTD exemption does not remove your duty to keep records and file an annual tax return.
How Do Making Tax Digital Exemptions for VAT and Income Tax Differ?
MTD for VAT has covered all VAT-registered businesses since April 2022. HMRC’s guidance to apply for an exemption from MTD for VAT uses similar grounds, but the two exemptions are separate.
| Point | MTD for VAT | MTD for Income Tax |
|---|---|---|
| Who must comply | All VAT-registered businesses | Sole traders and landlords with qualifying income over £20,000, phased in from 2026 |
| Digital exclusion | Apply to HMRC | Apply to HMRC |
| Religious grounds | Apply to HMRC | Apply to HMRC |
| Insolvency | A business in an insolvency procedure is exempt | No automatic exemption on this ground |
| Does one exemption cover the other? | No | No |
If you hold a VAT exemption for digital exclusion, you do not need a full new application. Contact HMRC, give your National Insurance number and VAT registration number, confirm that nothing has changed and ask for the exemption to be confirmed for Income Tax. A VAT exemption based on insolvency does not give you an Income Tax exemption. See our page on MTD for VAT for the VAT rules.
When Should You Apply?
Applications for making tax digital exemptions take time, so apply well before your start date.
| Start date | Applies if qualifying income is | When to apply |
|---|---|---|
| 6 April 2026 | Over £50,000 in 2024/25 | You should already have applied |
| 6 April 2027 | Over £30,000 in 2025/26 | Now, before April 2027 |
| 6 April 2028 | Over £20,000 in 2026/27 | From summer 2027 |
What Penalty Easements Apply if You Are Not Exempt?
Penalty easements are not making tax digital exemptions. You still have to keep digital records and send quarterly updates, but late updates are treated more leniently in your first year.
| Group | Easement | What it does not cover |
|---|---|---|
| Joined from April 2026 | No penalty points for late submission of the first four quarterly updates in 2026/27 (announced at Budget 2025) | Late filing of the 2026/27 tax return, due 31 January 2028 |
| Joining from April 2027 | No penalty points for late quarterly updates in 2027/28 (announced at Budget 2026) | Late filing of the 2027/28 tax return |
| Both groups | Quarterly updates must still be sent before the tax return can be filed | Late payment rules still apply |
Our guide to MTD penalties explains how the points system works after the first year.
Not Exempt? Can Someone Else Handle MTD for You?
Many people who search for making tax digital exemptions really want to know whether they must use the software themselves. They do not. An accountant can keep your digital records, send your quarterly updates and file your tax return. This is not an exemption, but it meets HMRC’s requirements and takes the work off your hands. MTDFix does this for sole traders and landlords, and our guides to MTD for landlords and MTD for sole traders explain what is involved.
What Are the Most Common Mistakes With Making Tax Digital Exemptions?
| Mistake | What to do instead |
|---|---|
| Assuming age alone is enough | Explain how age, health or access actually stops you using digital tools |
| Forgetting that income can rise above £20,000 | Check your qualifying income every year |
| Treating a trustee or executor exemption as personal | Check whether your own income needs MTD |
| Assuming a VAT exemption covers Income Tax | Ask HMRC to confirm the Income Tax exemption separately |
| Not reporting a change of circumstances | Tell HMRC as soon as your situation changes |
| Confusing a penalty easement with an exemption | Keep sending updates. See our MTD penalties guide |
Making Tax Digital Exemptions FAQs
Who is exempt from Making Tax Digital?
Anyone with qualifying income of £20,000 or less is exempt from MTD for Income Tax. So are people without a National Insurance number, those under a power of attorney or deputyship, certain allowance claimants and some others. People for whom digital tools are not reasonably practicable can apply for an exemption.
Are pensioners exempt from MTD?
Not automatically. Pension income is not qualifying income, so a pensioner is only affected if their self-employment and property income is over £20,000. Older people can apply for a digital exclusion exemption if technology is not practical for them.
Is there an MTD exemption form?
No. You apply to HMRC by phone or in writing, using the contact details on GOV.UK, and include your reasons and evidence.
How long does HMRC take to decide?
HMRC aims to decide within 28 calendar days, but this is a target rather than a guarantee. Keep preparing for MTD while you wait.
Can my accountant apply for me?
Yes. An authorised agent can make the application, and a family member or friend can help you apply yourself.
Are foster carers exempt from Making Tax Digital?
Foster carers and shared lives carers eligible for qualifying care relief are exempt for 2026/27, and Budget 2026 extended this until further notice.
Does an MTD for VAT exemption cover Income Tax?
No. If your VAT exemption is for digital exclusion, ask HMRC to confirm it for Income Tax. An exemption based on insolvency does not carry over.
Final Word on Making Tax Digital Exemptions
When checking making tax digital exemptions, start with your qualifying income: at £20,000 or less, you are exempt. Above that, check the automatic and return-based exemptions, note the Budget 2026 extensions, and apply early with clear evidence if digital tools are genuinely out of reach. If you are not exempt, an accountant can handle MTD for you.
Every exemption, threshold and time limit was checked against HMRC guidance on GOV.UK and the Budget 2026 documents, with professional-body summaries used only as cross-checks. The scenario cards are illustrative. This guide is general information, not advice for your circumstances, and HMRC decides every exemption application individually.