MTD for Income Tax — Exemptions, Deferrals, and Who Does Not Need to Join
Making Tax Digital for income tax is not universal. A number of groups are either permanently exempt or temporarily deferred. If you think MTD may not apply to you, here is who qualifies for an exemption, who is deferred, and what action — if any — you need to take.
Who Is Permanently Exempt?
The following groups are excluded from MTD for income tax entirely:
Digitally excluded individuals — if you cannot use a computer because of age, disability, location, or religious beliefs, or it is not reasonably practicable for any other reason, you can apply for an exemption. This must be applied for — being exempt from MTD for VAT does not automatically carry over to income tax.
Trustees and personal representatives — exempt automatically, no application required.
Non-UK resident companies chargeable to income tax on property income — exempt automatically.
Individuals without a national insurance number — exempt automatically if they have no NI number as of 31 January before the relevant tax year.
Foster carers and shared lives carers — those with qualifying care receipts are exempt automatically.
Those with a Power of Attorney in force — exempt under provisions announced following Spring Statement 2025.
If HMRC cannot provide a digital service for a taxpayer, that taxpayer is also exempt.
Who Is Deferred?
Several groups are deferred — they will eventually join MTD but not at the initial April 2026 date:
| Group | Deferral |
|---|---|
| Taxpayers filing the SA109 residence pages | Deferred to April 2027 |
| Ministers of religion | Deferred during the current Parliament |
| Lloyd's underwriters | Excluded for at least the duration of this Parliament |
| Married Couple's Allowance claimants | Deferred during the current Parliament |
| Blind Person's Allowance claimants | Deferred during the current Parliament |
| Partnerships (general, LLP, limited, corporate) | No mandated start date yet announced |
Non-UK resident foreign entertainers and sportspeople with no other qualifying income sources are also exempt under the March 2025 announcements.
The Low Income Exemption
Even without one of the specific exemptions above, you may be outside MTD's scope if your qualifying income is below the threshold. For 2026/27, MTD does not apply if your combined trading and property gross income on your 2024/25 return (filed by 31 January 2026) was below £50,000.
This test is applied each year using the threshold relevant to that year. Once you join MTD, you remain in it even if your income subsequently drops below the threshold — unless your income has been below the threshold for each of the previous three consecutive years, at which point you can apply to exit.
What About Becoming Digitally Excluded After Joining?
If your circumstances change after you have joined MTD — for example you develop a disability that makes digital record keeping impractical — HMRC treats this as a change in circumstances. You notify HMRC and can claim the digital exclusion exemption from that point. Under Finance Bill 2026, HMRC can also treat an exemption as applying retrospectively, meaning historical non-compliance before the exemption is granted can be wiped out.
Combined Trading and Property Income — What Counts?
The threshold is based on all qualifying income reported under self assessment — trading income and property income combined. The following are not included in the threshold calculation:
- Partnership income (partnerships are not yet within MTD)
- Rent-a-room income within the allowance
- Income not required to be reported under self assessment
If you are VAT-registered and use the cash basis, you can choose to report income including or excluding VAT for income tax purposes. Reporting the higher VAT-inclusive figure may push you above the threshold sooner.
Frequently Asked Questions
Q: I am exempt from MTD for VAT — am I automatically exempt from MTD for income tax? A: No. The exemptions are separate. If you are exempt from MTD for VAT due to digital exclusion, you still need to contact HMRC separately to confirm your position for MTD for income tax.
Q: I am in a partnership — do I need to join MTD? A: Not yet. Partnerships have no mandated start date. However, if you have individual sole trader or property income above the threshold that is separate from your partnership income, that income alone could bring you within scope of MTD for income tax.
Q: How do I apply for a digital exclusion exemption? A: You apply directly to HMRC. The application process is separate from any VAT exemption you may already hold. HMRC will assess your circumstances and confirm whether the exemption applies.
Not sure whether MTD applies to you? Contact Liberate Accountants for a free consultation, or learn more about our self assessment service.
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