MTD exemptions - what's the latest?

MTD exemptions - what's the latest?

​HMRC has clarified when exemption from Making Tax Digital for Income Tax (MTD IT) is automatic and when you need to apply. What's the full story?

​Timetable. As a sole trader or landlord you must use Making Tax Digital for Income Tax (MTD IT) from April 2026 if your annual turnover for 2024/25 exceeded £50,000 (unless you qualify for an exemption). The turnover threshold is less for later years which will bring almost all traders within MTD IT.

​Exclusions. Non-UK resident individuals are not required to use MTD IT until April 2027, while ministers of religion, Lloyd's underwriters, anyone claiming blind person's allowance or married couple's allowance (only applicable if born before 1936) won't be in its clutches until at least 2029.

Tip. HMRC has confirmed that no MTD for corporation tax will be introduced for companies.

​VAT MTD exempt? HMRC has recently changed its stance on MTD IT exemption. It previously said that if you were exempt for MTD for VAT (MTDfM), it would also mean you were exempt from MTD IT. HMRC now says you will be required to apply for the exemption regardless of your MTDfV status.

​Other reasons for exemption. HMRC's latest guidance also says that a business subject to an ongoing insolvency procedure will not be exempt from MTD IT. However, some automatic exemptions apply, including for:

  • Ttrustees and personal representatives

  • ​Income received by foster carers

  • ​Individuals without an NI number on 31 January 2026

  • Taxpayers who have a power of attorney.

​Need to apply. To be exempt from MTD IT for another reason you will have to satisfy HMRC that it's not reasonably practicable to use approved software to keep your business records or submit the MTD returns. Possible reasons are age, disability, remoteness of location or your religion.

Tip. HMRC will consider exemptions when the application window opens in autumn 2025.

​If you're exempt from MTD for VAT this won't automatically extend to MTD IT. Instead, you must make an application for exemption. However, automatic exemption does apply in some circumstances. Check HMRC's guidance for details.

Kelly Anstee