In just over six months, HMRC will begin rolling out the Making Tax Digital for Income Tax (MTD IT) programme. This marks the next stage in HMRC’s plan to modernise the tax system by requiring individuals to keep and submit their tax information digitally.
It will not be necessary for everyone to take part, though. While some people might be excluded by default, others might be able to apply for an exemption under specific circumstances. Knowing who must comply and who is qualified for an exemption is essential to maintaining compliance and avoiding unnecessary stress.
MTD for Income Tax: Exemptions Explained
As the commencement date approaches, it is increasingly important to understand who is and is not affected by Making Tax Digital for Income Tax. While MTD aims to improve tax administration efficiency through digital reporting, HMRC recognises that every taxpayer’s situation is unique. Certain individuals may qualify for exemptions due to their occupation or special circumstances that make it difficult for them to keep digital records. If you know whether these regulations apply to you, you may plan ahead and maintain compliance without worrying about it.
Here is what we will cover in this article:
- What is MTD for Income Tax?
- Who needs to join from April 2026?
- Who is automatically exempt?
- Can I apply for an exemption?
- What should I do if I think I’m exempt?
What is MTD for Income Tax?
HMRC’s broader aim for digital transformation includes Making Tax Digital for Income Tax. By doing away with paper records and manual inputs, it seeks to make tax reporting easier, more accurate, and more efficient.
From April 2026, MTD for Income Tax will apply to:
- Self-employed individuals with a qualifying income of £50,000 or more
- Landlords with a qualifying property income of £50,000 or more
Those affected will need to:
- Keep digital records of their income and expenses using approved accounting software
- Send quarterly updates to HMRC instead of filing once a year
- Submit an annual end-of-period statement digitally
Giving taxpayers and HMRC a more accurate, up-to-date picture of income over the course of the year is intended to lower the likelihood of errors and last-minute shocks when filing taxes.
Who Needs to Join from April 2026?
The first group required to join MTD IT will be self-employed individuals and landlords with a total qualifying income above £50,000 for the 2024–25 tax year.
A second group, with income between £30,000 and £50,000, is expected to join from April 2027.
Partnerships are not yet included, although HMRC may expand MTD IT to cover them in the future.
Those earning below £30,000 will not be required to join, but they may choose to use digital tools voluntarily if they wish.
Who is Automatically Exempt?
Certain types of income are excluded from MTD. These include:
- Partnership income – money earned through a business partnership
- Qualifying care income – income from providing care in your home
However, these exemptions only apply to those income types. If you also earn other qualifying income (for example, if you are a self-employed carer who also rents property), you may still need to comply with MTD IT rules.
Can I Apply for an Exemption?
Even if your income normally falls within MTD, you may be able to apply for what’s called a digital exclusion exemption.
This exemption is for people who cannot reasonably use digital tools due to:
- Age or disability
- Remote location with poor internet access
- Religious beliefs that prevent the use of electronic devices
- Other practical reasons making digital use impossible or very difficult
You must apply directly to HMRC for this exemption. Each case is reviewed individually.
If you already have a digital exclusion exemption for Making Tax Digital for VAT, you will still need to apply separately for MTD for Income Tax. HMRC expects only a small number of people to qualify for this exemption.
What Should I Do if I Think I’m Exempt?
If you believe you may be exempt — either automatically or through digital exclusion — it’s best to seek advice early. You can:
- Speak with your accountant or tax adviser to confirm your position
- Contact HMRC directly to verify your eligibility
- Start keeping digital records now, even if you are unsure, so you are prepared for any changes
Even if you are exempt, using digital systems can still make managing your finances easier, reduce errors, and help you stay organised throughout the year.
Key Takeaway
From April 2026, MTD for Income Tax will become a legal requirement for many self-employed individuals and landlords with income over £50,000.
While some people will be exempt automatically, others may be able to apply for digital exclusion. It’s important to understand your situation early, gather the right evidence if applying for exemption, and seek advice where needed.
By preparing now, you can make sure you are ready for the changes — whether that means going digital or confirming that you are exempt.