HMRC have published new guidance on applying for an exemption from Making Tax Digital (MTD) for Income Tax for those who are digitally excluded.
In addition to the new guidance, existing HMRC guidance on digital exclusion has also been updated to:
- Provide more information on what it means to be digitally excluded.
- Explain what to do if a taxpayer is already Digitally excluded for MTD for VAT purposes.
The MTD legislation defines digitally excluded individuals as those who are unable to use electronic communications or keep electronic records due to their religion, age, disability, location, or any other reason.
HMRC's guidance gives the following examples:
- An individual’s age, health condition or disability stops them from using a computer, tablet or smartphone to keep digital records or submit them to HMRC
- An individual is a practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records, and does not use a computer, tablet or smartphone for business or personal use.
- An individual cannot get internet access at their home or business because of location, and cannot get access at a suitable alternative location.
To be exempt from the MTD for Income Tax requirements, HMRC must agree that an individual is digitally excluded.
HMRC will not accept applications for an exemption if the only reason for applying is one of the following:
- The individual previously filed a paper return.
- The individual is unfamiliar with accountancy software.
- The individual has a small number of digital records to create each tax year.
- It will take extra time or cost for the individual to sign up for and use MTD for Income Tax.
There may be other reasons for being digitally excluded. HMRC say that they will consider all applications on a case-by-case basis.
Individuals are encouraged to apply before their mandate date. The first group of individuals (those with turnover above £50,000 in 2024-25) will be mandated from 6 April 2026.
How to apply
To apply for a digital exclusion, an individual or their representative should either call HMRC’s self-assessment general enquiries line (0300 200 3310) or write to:
Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom.
Authorisation can be given to a friend or family member in a signed letter to HMRC or over the phone.
Written applications should use the following title: ‘Making Tax Digital for Income Tax - digitally excluded application’.
The application should include the following information:
- The individual’s name, address and National Insurance number.
- Details of how they currently submit their tax return (including if someone else helps them do this).
- The reason they think they are digitally excluded. This should include any additional information to support the claim.
- Whether they have an agent (for example, an accountant) and what they will do for the individual.
- Any additional needs the individual has, so that HMRC can provide the right support.
What happens after applying?
HMRC should respond within 28 days. They may ask for more information. HMRC will then send a letter saying whether the application has been accepted or not.
If the individual disagrees with HMRC’s decision, they can appeal, in writing, to the address provided in the decision letter.
- Appeals should be headed ‘Making Tax Digital for Income Tax - digitally excluded appeal’.
- Any additional information should be included in the appeal.
Individuals are also required to notify HMRC if their circumstances change so that they are no longer digitally excluded.
Individuals who are already digitally excluded for VAT purposes
HMRC advises that individuals who are already exempt from MTD for VAT should contact HMRC by phone or in writing, using the contact details provided above. HMRC will need the following information:
- The individual’s National Insurance number.
- The individual’s VAT registration number.
- The reason the individual is digitally excluded from sending VAT returns using MTD compatible software, and if their circumstances have changed.
If circumstances have not changed, HMRC will confirm that the individual is also exempt from MTD for Income Tax. If they have changed, it may be necessary to apply for an exemption for MTD for Income Tax.
If an individual is exempt from MTD for VAT because they are subject to an insolvency procedure, they will not be exempt from MTD for Income Tax.
Useful guides on this topic
MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? When will MTD for Income Tax become mandatory? How will it work? Which clients will be excluded? What planning needs to be undertaken?
Making Tax Digital: Survival guide (for the self-employed & landlords)
The way that some self-employed taxpayers report their business profits to HMRC is set to change under the Making Tax Digital (MTD) for business regime, when it begins to apply to Income Tax reporting.
Making Tax Digital: MTD Roadmap Infographic
A downloadable Making Tax Digital for Income Tax Roadmap Infographic which sets out the new rules in a graphical format, ideal for ‘visual learners’ and those who don’t like reading! This infographic is designed to allow you to add your firm’s branding.
Making Tax Digital for Income Tax: Information required by HMRC
What information should you submit under Making Tax Digital for Income Tax? What are the requirements for relevant persons under the VAT threshold? What are the categories of information required?
External links
Find out if you can get an exemption from Making Tax Digital for Income Tax - GOV.UK
Find out if and when you need to use Making Tax Digital for Income Tax - GOV.UK