As HMRC moves forward with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), not everyone will be required to join the digital system. HMRC has set out several exemptions to ensure fairness and accessibility for individuals and businesses who may not be able to comply.
Here’s a breakdown of who may qualify for exemption:
Who Is Exempt?
- Low-income individuals – Those with qualifying income of £20,000 or less.
- Digitally excluded individuals – Where age, health, disability, religious beliefs, or lack of internet access make digital compliance impossible.
- Trustees – Including charitable trustees and trustees of non-registered pension schemes.
- Those without a National Insurance number – For tax years where no NI number is held by 31 January before the start of that tax year.
- Personal representatives – Completing returns for someone who has died.
- Lloyd’s members – In relation to underwriting businesses.
- Non-resident companies.
What Counts as Digital Exclusion?
You may apply for an exemption if:
- Your age, disability, or health condition prevents you from using a computer, tablet, or smartphone.
- You are part of a religious order whose beliefs prevent the use of digital tools.
- You cannot access the internet due to your location and have no alternative access available.
HMRC will assess exemption requests case by case. However, note that the following do not qualify as reasons for exemption:
- Preferring paper returns.
- Lack of familiarity with accountancy software.
- Having only a small number of records.
- The time or cost of signing up to MTD for ITSA.
VAT Exemptions Carrying Over
If HMRC has already granted you an exemption from Making Tax Digital for VAT because you’re digitally excluded, you may also qualify for exemption from MTD for Income Tax. However, you must confirm your circumstances have not changed.
If your exemption was due to insolvency, it does not apply to MTD for Income Tax.
What To Do If You Think You’re Exempt
- Contact HMRC through Self Assessment: general enquiries (by phone or in writing).
- Be ready to provide your National Insurance number, VAT registration number (if applicable), and the reason for exemption.
✅ At Cloud 9 Accounting Services, we help individuals and businesses navigate HMRC rules, ensuring you know if you qualify for exemptions or need to prepare for digital compliance.
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