Making Tax Digital: New Exemption Option for the Digitally Excluded
- Styles & Associates
- 11 minutes ago
- 2 min read
HMRC now offers an explicit route for individuals to apply for an exemption from MTD ITSA if they are digitally excluded, that is, unable to reasonably keep digital records or use compatible software.
The updated guidance (published 29 September 2025) clarifies:
Who can apply.
When to apply (before you reach your start-date for MTD) and what information is required.
That applying doesn’t guarantee exemption, HMRC will assess on a case-by-case basis.
Why this matters for landlords & self-employed
MTD ITSA will be phased in for sole traders and landlords:
o From 6 April 2026 for those with qualifying gross income over £50,000.
o From 6 April 2027 when threshold drops to £30,000
o From 6 April 2028 when threshold may reduce to £20,000.
For many landlords and self-employed individuals, this means new quarterly reporting obligations, digital record-keeping and making a final digital declaration.
The exemption path is a key consideration: if a client genuinely cannot comply digitally (due to location, disability, age, religious grounds), applying early allows them to avoid unexpectedly being compelled into the regime without preparation.
Key criteria & steps for exemption
Who might be eligible?
Those who are digitally excluded: age, disability, poor broadband/internet access, location issues or religious beliefs preventing use of digital tools.
Those without a UK National Insurance number by the relevant date.
The exemption doesn’t apply simply because the taxpayer finds software expensive or unfamiliar. HMRC guidance states that lack of business scale, cost alone or preference for paper are not sufficient.
How to apply?
Submit an application by phone or letter to HMRC’s Self-Assessment contact address, titled “Making Tax Digital for Income Tax - digitally excluded application”.
Provide: NI number, name, address, details of current filing method, explanation of why the person is digitally excluded, any agent details.
· HMRC aims to respond within 28 days.
Navigating MTD
The new exemption option gives landlords and self-employed individuals another dimension of flexibility in the lead-up to MTD ITSA. For those genuinely unable to use digital tools, applying may offer relief from the new regime. But for most, planning for digital compliance remains the prudent route.
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