HM Revenue and Customs (HMRC) has confirmed that some people who cannot use the new digital tax system can apply for a temporary or potentially permanent exemption from Making Tax Digital for Income Tax.
Thousands of self-employed workers and landlords are being moved onto the new digital tax reporting rules. Those affected must keep digital records and use compatible software to send information about their income to HMRC.
However, HMRC has confirmed that people who are unable to meet the requirements in certain circumstances can apply to be exempt. This includes people considered to be digitally excluded, while temporary exemptions are also available in some circumstances.
Who can apply for an exemption
HMRC says people who are not automatically exempt can contact it to apply for either a temporary exemption or an exemption because they are digitally excluded. A digitally excluded exemption may be permanent depending on the person's circumstances.
People can apply themselves, or an authorised tax agent can make an application on their behalf. A friend or family member can also apply for someone, provided they have that person's authorisation.
However, HMRC makes clear the decision will be based on the circumstances of the person who needs the exemption, rather than those of whoever makes the application. People who use an accountant or another agent may not need an exemption if the agent can use compatible software to keep their digital records and make the necessary submissions to HMRC on their behalf.
When to apply and what information is needed
People should apply before they are required to start using Making Tax Digital for Income Tax. Those required to use the system from April 6, 2026 or April 6, 2027 can apply for an exemption now. People who will not be brought into Making Tax Digital until April 6, 2028 are being advised to wait until summer 2027 before applying.
Anyone who has already signed up but whose circumstances have changed can also apply for an exemption. However, HMRC says they should continue using Making Tax Digital while waiting for a decision.
Someone applying for themselves will need to provide their National Insurance number, name and address. They will also need to explain why they believe they should be exempt and provide any additional information that supports their application.
Those applying because they believe they are digitally excluded will need to give HMRC more information. This includes how they currently submit their tax return, whether anyone helps them, why they believe they are digitally excluded and whether they use an accountant or another agent. They should also tell HMRC about any additional needs so appropriate support can be provided.
How to apply and what happens next
Applications can be made by calling or writing to HMRC using its Self Assessment contact details. People applying by post for a digitally excluded exemption should mark their letter: “Making Tax Digital for Income Tax - digitally excluded application”. Those applying for another type of exemption should use: “Making Tax Digital for Income Tax — exemption application”.
HMRC says people whose health or personal circumstances make it difficult to contact the department can also access additional support.
HMRC aims to respond within 28 calendar days of receiving an application, although it warns this may take longer if further information is required. Applicants should continue keeping their normal Self Assessment records while waiting.
If an exemption is granted, HMRC will write to the applicant confirming what type of exemption they have received and how long it will last. Someone granted an exemption until April 2027 will not have to start using Making Tax Digital for Income Tax until the 2027/28 tax year at the earliest.
People whose applications are rejected will receive a letter explaining the decision. Anyone who disagrees can appeal, normally within 30 days of the date on HMRC's decision letter. The appeal must be made in writing and applicants can provide new information for HMRC to consider.
People should also prepare to use Making Tax Digital in case their appeal is unsuccessful. An exemption from Making Tax Digital does not remove a person's wider tax responsibilities. Those granted one must continue reporting their income and gains through Self Assessment and pay any tax they owe as normal. Full details about exemptions can be found on GOV.UK.
