Who Is Exempt from Making Tax Digital?

Most VAT-registered businesses and (from April 2026) higher-earning sole traders and landlords must follow Making Tax Digital. A small group are exempt. Here's who, and how to apply.

The four exemption grounds

HMRC will consider an exemption from MTD if one of these applies:

1. It's not reasonably practicable for you to use digital tools — for example, age, disability or location (areas without reliable internet).
2. You're a member of a religious society whose beliefs are incompatible with using electronic communications or keeping electronic records.
3. You're insolvent (subject to an insolvency procedure).
4. Any other reason HMRC accepts as making digital filing impossible.

Crucially, not wanting to use software is not a valid reason.

Below the threshold

You're also outside MTD if your qualifying income is below the threshold:

• MTD for VAT: VAT-registered businesses must comply regardless of turnover unless exempt. The £90,000 VAT-registration threshold is not an MTD exemption for a registered business.
• MTD for Income Tax (ITSA):
  • From April 2026: required if combined self-employment + property income > £50,000.
  • From April 2027: > £30,000.
  • From April 2028: > £20,000.

How to apply for an exemption

1. Phone HMRC's MTD helpline (0300 200 3700 for VAT) before your first MTD-mandated return is due.
2. Explain the grounds and provide supporting information.
3. HMRC writes back with a decision — usually within a few weeks.
4. If granted, the exemption normally lasts indefinitely unless your circumstances change.

What if HMRC refuses?

• You can ask for a statutory review within 30 days.
• After that, you can appeal to the First-tier Tribunal.
• While the appeal is in progress you must still try to comply, but HMRC will usually pause penalties.

Already exempt from online VAT?

If HMRC previously exempted you from filing VAT online, that exemption automatically carries over to MTD for VAT — you don't need to re-apply.

Practical tips

• Apply early — don't wait until the deadline.
• Keep evidence of any disability, religious membership or connectivity issue.
• Even if exempt, you must still keep accurate records of income and expenses; the exemption is from how you submit, not whether you pay tax.

Summary

MTD exemptions are narrow but real. If digital filing is genuinely impossible for you, apply by phone with supporting evidence — and don't wait for the deadline.

The thresholds use qualifying gross self-employment and property income for 2024/25, 2025/26 and 2026/27 respectively. See HMRC’s start-date rules.