HMRC updates exemption guidance on Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax will soon come into force for self-employed individuals and landlords earning over £50,000 per year.

In the lead-up to this, HMRC has updated its MTD for Income Tax exemption guidance.

What is Making Tax Digital?

Making Tax Digital is a key part of the government’s tax administration strategy – a 10-year plan with the aim of building a ‘trusted and modern’ tax system.

Eventually, all businesses will need to keep digital records by using software that works with MTD and then submit updates every quarter.

This will help to bring the tax system closer to real-time.

If you are self-employed or a landlord, you will be affected from the:

• 6th April 2026 – if you have an annual business or property income of more than £50,000
• April 2027 – if you have an annual business or property income of more than £30,000

Exemption changes to MTD for Income Tax

Previous rules stated that sole traders and landlords who were exempt from MTD for VAT would automatically be exempt from MTD for Income Tax.

However, HMRC has now announced a change to how this process will work.

Those who are exempt from MTD for VAT will now need to contact HMRC to do the same for MTD for Income Tax – once the application process opens.

Who can apply for an exemption?

You can apply for exemption if you are:

• unable to use software to keep digital records or submit them. This might be due to age, disability, location, etc.
• a practising member of a religious society (or order) that doesn’t believe in using electronic communications or keeping electronic records.

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