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Making Tax Digital Checklist 2026
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Making Tax Digital (MTD) is mandatory for most UK self-employed people, landlords, and VAT-registered businesses, but not everyone. HMRC grants specific exemptions for taxpayers who genuinely cannot use digital tools, and there are also automatic exclusions for low-income earners.
This guide explains every MTD exemption in plain English: who qualifies, how to apply, and the realistic chance HMRC will approve your exemption. Written by ICAEW chartered accountants who’ve successfully applied for client exemptions in real HMRC cases.
Quick Answer: Who Is Exempt from Making Tax Digital?
You may be exempt from MTD if any of the following apply:
- Qualifying income under £20,000 (for MTD ITSA, automatic, no application needed)
- Digital exclusion due to age, disability, or remoteness preventing computer use
- Religious grounds where your religious beliefs prevent use of electronic communications
- Insolvency if your business is in formal insolvency proceedings
- Trustees of certain trusts (specific HMRC criteria apply)
- Non-resident companies without a UK permanent establishment
Important note: HMRC’s default position is that all qualifying taxpayers must comply with MTD. Exemptions are not granted automatically, most require a formal application with supporting evidence.
Automatic MTD Exemptions (No Application Needed)
Some taxpayers are automatically exempt without needing to apply:
1. Qualifying Income Under £20,000 (for MTD ITSA)
If your qualifying income (self-employment + property combined) is below £20,000, you remain outside MTD ITSA scope through to at least April 2028. HMRC has not currently confirmed any threshold below £20,000.
Income Level | MTD ITSA Status | Notes |
|---|---|---|
Under £1,000 | Trading allowance, no tax return needed | Automatic |
£1,000 – £20,000 | Standard self-assessment continues | No MTD until at least April 2028 |
£20,001 – £30,000 | MTD from April 2028 | Will be in scope |
£30,001 – £50,000 | MTD from April 2027 | Will be in scope |
Over £50,000 | MTD from April 2026 | Already in scope |
Read our full MTD Thresholds guide for detailed examples.
2. Trading Allowance (Under £1,000)
If your total self-employment income is below £1,000 per year, you don’t need to file a self-assessment return at all, and therefore MTD doesn’t apply. This is HMRC’s “trading allowance” and covers small side hustles like occasional Etsy sales or small freelance gigs.
3. Rent-a-Room Income Below £7,500
If you rent rooms in your own home and earn under £7,500 per year, you’re covered by the Rent-a-Room Scheme and don’t need to file rental income on self-assessment. MTD doesn’t apply.
4. PAYE-Only Income
If your only income is from PAYE employment (with no self-employment or rental income), you’re automatically outside MTD ITSA scope. Your employer handles your tax via payroll.
MTD Exemptions That Require a Formal Application
These exemptions need a written application to HMRC with supporting evidence. Approval is not guaranteed,, HMRC’s default position is that everyone should comply.
1. Digital Exclusion: Age, Disability, or Practicality
You may apply for digital exclusion if you can demonstrate that you cannot reasonably use digital tools due to:
- Age – typically older taxpayers unfamiliar with computers or smartphones (no specific age limit, but case-by-case)
- Disability – visual impairment, severe motor impairment, cognitive conditions limiting computer use
- Lack of digital skills – inability to operate accounting software despite reasonable effort
- Cost barrier – in very rare cases where software costs are demonstrably unaffordable
HMRC reality check: “I find computers confusing” is not enough. You must show concrete evidence – medical letters, dyslexia assessments, low-income proof. Many initial applications are rejected and require appeal.
2. Remoteness of Location (No Reliable Internet)
If you live in an area without reliable broadband or mobile internet, you can apply for exemption. This typically applies to remote rural locations in Scotland, Wales, and rural England.
Evidence required:
- Ofcom broadband availability check for your postcode
- Proof of failed installation attempts (BT/Openreach refusals)
- Letters from local authorities confirming connectivity issues
3. Religious Grounds
Certain religious denominations restrict the use of electronic communications. The most commonly cited group is the Plymouth Brethren Christian Church. HMRC has granted exemptions on religious grounds where:
- Religious beliefs genuinely prevent use of computers/electronic systems
- This is a documented practice of an established religious community
- Evidence from religious leaders supports the application
4. Insolvency Proceedings
If your business is in formal insolvency proceedings – administration, liquidation, individual voluntary arrangement (IVA), or bankruptcy – MTD may not apply during the insolvency period. The insolvency practitioner handles tax matters.
5. Trustees of Specific Trusts
Trustees managing certain types of trust may be exempt from MTD ITSA, including:
- Trusts where all beneficiaries are charities
- Some bare trusts
- Pension scheme trusts
Application is required and trust structures are reviewed individually.
6. Non-Resident Companies Without UK Permanent Establishment
If you operate a non-UK company that has UK property income but no UK permanent establishment, MTD ITSA may not apply. However, the Non-Resident Landlord (NRL) Scheme still applies separately.
Read our Non-Resident Landlords & MTD guide for details.
MTD for VAT Exemptions
MTD for VAT exemptions follow similar criteria to MTD ITSA, but the application is to HMRC’s VAT compliance team rather than ITSA team. The grounds are the same:
- Age, disability, or digital exclusion
- Religious grounds
- Remoteness of location / no internet
- Insolvency
Note: There is NO turnover-based exemption for MTD VAT. Once you’re VAT-registered (voluntarily or mandatorily at £90k), MTD applies in full unless you successfully apply for one of the exemptions above.
Read our complete MTD for VAT guide for VAT-specific MTD rules.
Age Exemption for Making Tax Digital
There is no automatic age exemption for MTD. However, age is a factor HMRC considers under the broader digital exclusion criteria.
How Age Affects MTD Exemption Applications:
- HMRC does not specify a minimum age for exemption
- Older taxpayers (typically 70+) have a stronger case for digital exclusion
- Applications must show genuine inability to use software, not just unfamiliarity
- Help from a family member or accountant is generally expected before exemption is granted
Pro tip: If you’re older and find software intimidating, you may not need an exemption – you can hire a chartered accountant to handle all MTD submissions on your behalf. This is often easier and faster than fighting for an exemption that may be refused.
How to Apply for MTD Exemption: Step-by-Step
If you believe you qualify for one of the application-based exemptions, here’s the process:
Step 1: Confirm Your Grounds
Identify which exemption criteria you fall under (digital exclusion, religious, remoteness, insolvency). Gather supporting evidence:
Medical letters for disability
Religious community statement for religious grounds
Ofcom broadband checker results for remoteness
Insolvency practitioner correspondence
Step 2: Write to HMRC
There is no online MTD exemption application form (as of 2026). You must write to HMRC explaining:
Your name, address, and UTR (Unique Taxpayer Reference)
Your grounds for exemption
Evidence supporting your application
How you intend to file your returns instead (paper, agent, etc.)
Address: HM Revenue & Customs, Self Assessment, BX9 1AS (for ITSA) or HMRC VAT (for VAT exemptions).
Step 3: Wait for HMRC’s Decision
HMRC typically responds within 4-8 weeks. Decisions can be:
Approved: you receive written confirmation of exemption
Refused: you receive reasons; can appeal
Information requested: provide additional evidence
Step 4: Appeal if Refused
If HMRC refuses your exemption, you have 30 days to appeal in writing. Many initial refusals are overturned on appeal with stronger evidence or chartered accountant representation.
Chartered accountant tip: A formal letter from an ICAEW/ACCA chartered firm supporting your exemption application carries significant weight with HMRC. We’ve successfully helped clients secure exemptions that were initially refused.
What If You’re Not Exempt; What Are Your Options?
If you’re in MTD scope and don’t qualify for an exemption, you have three realistic options:
Option 1: DIY with MTD Software
Use HMRC-approved software (Xero, QuickBooks, FreeAgent, Zoho Books) to manage your own quarterly submissions. Best for:
-
Tech-comfortable individuals
-
Simple income (single self-employment or 1 property)
-
Cash basis accounting
-
Time-rich, money-poor taxpayers
Option 2: Use Bridging Software with Excel
If you’re comfortable with Excel but want simpler bridging software (£12-£25/year), tools like 123Sheets, VitalTax, and Easy MTD VAT can submit your returns. Best for:
-
Existing Excel users
-
Budget-conscious self-employed
-
Simple income streams
Read our MTD Spreadsheets & Bridging Software guide for details.
Option 3: Hire a Chartered Accountant
If you find digital tools overwhelming, your tax is complex, or you want to focus on your actual business, hire an ICAEW chartered accountant. We handle everything, including the digital element on your behalf.
Hiring an accountant is the SAME as having an exemption in practical terms, you don’t touch the software, you just provide receipts/invoices, and your accountant files everything digitally for you. Often this is the easiest, fastest, and most affordable solution for non-tech-savvy taxpayers.
Common Mistakes People Make About MTD Exemptions
Mistake 1: Assuming Older Age Automatically Exempts You
There is no automatic age cut-off for MTD. Many older taxpayers think they’re automatically exempt, they aren’t.
Mistake 2: Thinking “I’m Not Good With Computers” Is Enough
HMRC requires evidence of genuine inability, not just unfamiliarity. You’re expected to ask for help (from family, friends, or an accountant) before claiming digital exclusion.
Mistake 3: Believing Low Income Exempts You from MTD VAT
MTD for VAT has NO income or turnover threshold, it applies to ALL VAT-registered businesses. Income-based exemptions only apply to MTD ITSA.
Mistake 4: Stopping Communication After Refusal
If HMRC refuses your exemption, you must continue to comply with MTD until your appeal succeeds. Ignoring the system causes penalties to accumulate.
Mistake 5: Confusing “Threshold Exempt” with “Application Exempt”
Being under the £20,000 threshold means you’re automatically outside scope, you don’t need to apply for an exemption. Application-based exemptions are for those IN scope who can’t use digital tools.
MTD Exemptions: Frequently Asked Questions
Who is exempt from Making Tax Digital?
Automatic exemptions: those under £20,000 qualifying income (for MTD ITSA), under £1,000 trading allowance, and PAYE-only earners. Application-based exemptions: digital exclusion (age, disability), religious grounds, remoteness, insolvency, certain trusts, non-resident companies without UK permanent establishment.
Is there an age exemption for Making Tax Digital?
There is no automatic age exemption. Age is a factor HMRC considers under the broader “digital exclusion” exemption, but you must demonstrate genuine inability to use digital tools.
What is the HMRC exemption for Making Tax Digital?
HMRC grants exemptions on 4 main grounds: digital exclusion (age/disability/skills), religious grounds, remoteness of location (no internet), and insolvency. Applications must be made in writing with evidence.
Can I get a Making Tax Digital exemption for being self-employed under £20,000?
Yes, automatically. If your qualifying income is under £20,000, you remain outside MTD ITSA scope (currently through to April 2028). No application is needed.
Is there a Making Tax Digital VAT exemption?
Yes, but only on narrow grounds: digital exclusion, religious, remoteness, or insolvency. There is NO turnover-based VAT exemption, all VAT-registered businesses must comply with MTD VAT.
How do I apply for an MTD exemption?
Write to HMRC at Self Assessment, BX9 1AS (for ITSA) explaining your grounds and providing evidence. There is no online form. HMRC typically responds within 4-8 weeks.
Can I appeal a refused MTD exemption?
Yes. You have 30 days from HMRC’s refusal letter to appeal in writing. Many initial refusals are overturned with stronger evidence or accountant representation.
Does the Rent-a-Room Scheme exempt me from MTD?
If your room rental income is under £7,500/year (the Rent-a-Room threshold), you don’t need to declare it and MTD doesn’t apply. Above £7,500, normal MTD rules apply if you’re over the qualifying income threshold.
Can I be exempt from MTD on religious grounds?
Yes. HMRC grants exemptions where your established religious beliefs genuinely prevent the use of electronic communications. Evidence from religious leaders is typically required.
What if I have no internet at my home?
You can apply for exemption based on remoteness of location. Evidence needed: Ofcom broadband availability check, failed BT/Openreach installation attempts, and council confirmation of connectivity issues.
Can my accountant apply for MTD exemption on my behalf?
Yes, and a chartered accountant’s involvement significantly improves your chances. A formal supporting letter from an ICAEW/ACCA chartered firm carries weight with HMRC.
Does MTD exemption mean I don’t file a tax return at all?
No. An MTD exemption simply means you don’t have to use MTD software or quarterly submissions. You’ll still file annual self-assessment returns by 31 January using older methods (paper, phone, agent).
How long does an MTD exemption last?
Most exemptions are reviewed periodically (typically every 2-3 years) to check if your circumstances have changed. Some are granted indefinitely.
What’s the difference between MTD exemption and threshold exclusion?
Threshold exclusion: automatically below the qualifying income limit (under £20k currently). Exemption: in scope but excused due to digital exclusion, religious grounds, etc.
Are charities exempt from MTD?
Charities are not automatically exempt. If a charity is VAT-registered (some are), MTD for VAT applies. If a charity has self-employment or rental income above the threshold, MTD ITSA applies, though most charities have specific accounting rules that may reduce this risk.
Not Sure If You Qualify for MTD Exemption? Get Expert Help
Determining whether you genuinely qualify for an MTD exemption, and successfully applying for one, is harder than it looks. Initial HMRC refusals are common, and incorrect assumptions can leave you exposed to penalties for non-compliance.
At MTD – Making Tax Digital (part of B1 Accountants), our ICAEW chartered accountants can help you:
- Assess whether you genuinely qualify for an exemption
- Prepare a strong written application with supporting evidence
- Represent you to HMRC if needed
- Appeal refused exemption decisions
- OR if exemption isn’t viable, handle MTD compliance for you completely
Book your free 30-minute MTD exemption review — we’ll assess your situation honestly and give you a clear path forward.
📞 BOOK YOUR FREE EXEMPTION REVIEW →
Or call us directly: +44 (0) 75 079 66252
Bilal Chudher
(FCCA, FCA, TEP & MBA) Chartered Accountant
