New tax rules – applications open for Making Tax Digital exemptions

HMRC has opened applications for small businesses to apply for an exemption from new Making Tax Digital rules coming in April. 

Making Tax Digital (MTD) for income tax is being rolled out for sole traders and small businesses with qualifying annual turnover of £50,000 or more. But did you know that you might be able to apply for an exemption?

There are reasons why you won’t have to follow Making Tax Digital rules, including if your annual income is lower than £20,000. However if your income meets the minimum threshold, you still might be able to apply for a digital exemption. Keep reading to find out how.  

Read more: What is Making Tax Digital for income tax?

Making tax digital exemptions – and how to apply

There are exemptions that can mean you’re “digitally excluded” from using MTD software. HMRC defines this as when “it’s not reasonable for you to use compatible software to keep digital records or submit them to HMRC.”

Digital exemptions may apply if you:

• don’t use computers for religious reasons 
• live in an area that doesn’t have access to broadband 
• can’t comply because of your age, disability, or location 

For Making Tax Digital starting in April 2027, applications open from summer 2026. Those due to sign up from April 2028 should apply for an exemption by summer 2027.

Apply for a digital exemption 

You can apply for an exemption yourself by phoning or writing to HMRC. Remember to include as much information as possible in your application.

By phone	By letter
Call HMRC from the UK: 0300 200 3310  Opening times: Monday to Friday, 8am to 6pm. Closed bank holidays.	Write to HMRC:  Self Assessment HM Revenue and Customs BX9 1AS United Kingdom  Make sure you include this title on your letter if you’re writing to HMRC: “Making Tax Digital for Income Tax — digitally excluded application’

To apply for a MTD exemption, you’ll need:

• information about any additional needs so HMRC can offer the right support
• your National Insurance number, name, and address
• details of how you currently file your tax return (and whether anyone helps you)
• the reason you think you should be digitally excluded, with supporting evidence if you can
• details of any agent or accountant you use

Other Making Tax Digital exemptions – applied automatically  

There are some reasons why you might be automatically excluded from Making Tax Digital. If this is the case then you don’t have to apply for an exemption. 

Automatic exemptions include:

• trustees
• those without a National Insurance number on 31 January before the start of the tax year
• tax returns being completed on behalf of someone who’s died
• members of Lloyd’s for underwriting businesses
• non-resident companies

Making Tax Digital for new businesses

If you’ve only just registered for Self Assessment, you’ll need to file your first tax return for the 2024-25 tax year before midnight on 31 January 2026. 

If HMRC sees your annual turnover meets or exceeds the threshold for Making Tax Digital, then you’ll be notified to start quarterly reporting using approved digital software from April 2026.

What this means for small businesses

For many small businesses, the Self Assessment deadline in January 2026 will be the last time they file annual tax returns – and April will mark the beginning of Making Tax Digital. You’ll have a choice whether to provide quarterly updates based on calendar quarters or tax year quarters. 

Use this government tool to check if you’ll need to use Making Tax Digital from April 2026. 

But if your application to be exempt from Making Tax Digital is successful then you won’t need to use approved software and can continue to file annually using the Self Assessment process. 

Keep an eye on the Knowledge centre and sign up to our newsletter to get the latest Making Tax Digital news and reminders about key dates. 

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