Making Tax Digital for Income Tax has arrived, but for many people, the rules still feel a little murky, especially when it comes to the exemption rules.
Despite the regime having launched, confusion about who is actually caught by the rules and who might be exempt remains widespread.
HMRC has responded by issuing clearer guidance on both automatic exemptions and a one-year waiver that applies to certain groups.
What are the automatic exemptions for Making Tax Digital?
HMRC has now explicitly confirmed that some individuals are automatically excluded from MTD for Income Tax, with no application required, although some are only temporary exemptions. Many exemptions do still require application to HMRC.
Automatic permanent exemptions include individuals without a National Insurance number, however, it is still worth making sure your tax return and records accurately reflect your situation and speaking to an adviser if you have any doubt.
What is the one-year waiver, and does it apply to you?
Separate from the full exemptions, HMRC has also confirmed a one-year waiver, which is an automatic reprieve from the quarterly reporting requirements for the 2025/26 tax year.
Starting from 6 April 2026, Making Tax Digital (MTD) for Income Tax is mandatory for sole traders and landlords with qualifying income over £50,000.
However, specific taxpayers can benefit from a one-year waiver (or deferral) of these rules until April 2027.
This is not a full exemption, but it does mean that if you qualify, you can file your 2026/27 tax return in the usual way, with a deadline of 31 January 2028.
You will qualify for this waiver if, in your 2024/25 Self-Assessment tax return, you:
- Claimed averaging relief using the SA103 or SA104 supplementary page (relevant to farmers and certain creative professionals, among others)
- Claimed qualifying care relief
- Used the SA107 supplementary page to report trust or estate income
- Used the SA109 supplementary page to report residence, foreign income and gains and were not a UK resident
If you meet these conditions, the temporary waiver will apply, but from the 2027/28 tax year onwards, this waiver will no longer protect you and you will be expected to fully comply with the MTD requirements if you have self-employment and/or property income exceeding the threshold in the 2025/26 tax year.
That is good news in the short term as the waiver buys you one additional year to get your digital record-keeping and software in place, but it does not buy you a way out of MTD altogether.
How to apply for an exemption
If you believe you may qualify for an exemption that is not automatic, for example, based on an inability to use digital tools, you will need to apply to HMRC directly, either by phone or in writing. Your application should include:
- Your personal details
- Your current method of filing tax returns
- A clear explanation of why you are unable to comply with the digital requirements
- Supporting evidence to back up your case
If you are considering applying for an exemption, submitting as soon as possible gives you the best chance of receiving a decision before the first MTD submission of 7 August 2026. HMRC aims to respond to applications within 28 days but acknowledges this can take longer if further information is needed.
Not sure if you meet any of the exemption criteria?
If you are unsure whether you are exempt, whether the one-year waiver applies to you or what your next step should be, the most important thing is not to assume.
The rules are nuanced, the deadlines are firm and the penalties for non-compliance are real (albeit not enforced in the first year).
Whether you need help identifying your status, submitting an exemption application or simply require assistance getting your digital record-keeping set up in time, our team is here to make the process straightforward.
Get in touch today for support and guidance on Making Tax Digital for Income Tax.
