By way of an update from our recent publications regarding Making Income Tax Digital which can be read here, several exemptions have been announced which we detail below.
MTD for Income Tax applies to unincorporated businesses and landlords with UK or overseas property income in excess of £50,000 gross, with effect from April 2026.
Certain taxpayers will be automatically exempt or may need to apply for an exemption.
Automatic Exemptions
You are automatically exempt from MTD for Income Tax if any of the following apply:
- Income threshold
Your qualifying income is below:- £50,000 for 2026/27
- £30,000 for 2027/28
- £20,000
- No National Insurance number
You cannot complete HMRC’s identity verification process if you do not have a National Insurance number. - Ineligible entity types
Partnerships, trusts, estates and non‑resident companies cannot complete HMRC’s identity verification procedures. - Specific self‑employment activities
Your income arises solely from:- Partnerships
- Lloyd’s underwriters
- Qualifying care activities (e.g. foster carers)
- Existing MTD for VAT exemption
You already have an exemption from MTD for VAT and your circumstances have not changed (confirmation from HMRC is still required).
Automatic Exemptions (Effective until at least April 2027, based on your 2024/25 tax return)
You are automatically exempt if, based on your 2024/25 return, you are expected to:
- Complete SA107 (Trust and Estate income)
Where you are likely to receive trust or estate income in 2026/27. - Complete SA109 (Residence, remittance basis, etc.)
Including cases where in 2026/27 you are:- Non‑UK resident
- Claiming split‑year treatment
- Making a claim or election under the Temporary Repatriation Facility (TRF) or Foreign Income and Gains (FIG) regime
- Claiming Business Investment Relief
- Have claimed certain reliefs
Farmers’ averaging relief, artists’ averaging relief or qualifying care relief.
Automatic Exemptions (Effective until at least April 2028 and possibly longer, based on your 2024/25 tax return)
You are automatically exempt if based on your 2024/25 return, you are expected to:
- Complete SA102M (Ministers of Religion)
Where you are a minister of religion of any faith or denomination and required to complete this page in 2026/27. - Receive or transfer certain allowances
- Married Couple’s Allowance (for certain taxpayers born before 6 April 1935), or
- Blind Person’s Allowance.
Exemptions That Must Be Applied For
The following exemptions are not automatic and require an application to HMRC:
- Digital exclusion
You may apply if you are unable to use digital tools due to age, health, disability, religious belief or location.
This exemption is based on your personal circumstances, not those of your agent or adviser, and must be approved by HMRC. - Non‑UK resident foreign entertainers and sportspersons
An exemption must be applied for, even if this status was clear from your 2024/25 tax return. - Other exemptions
If one of the above automatic exemptions apply for 2026/27, but was not apparent from your 2024/25 return, you must apply to HMRC for an exemption.
