MTD for Income Tax exemptions — who is exempt?

Under the threshold is not an exemption

If your qualifying income is below the relevant threshold you simply aren't mandated yet — you carry on with Self Assessment as normal. That is different from an exemption, which excuses someone who would otherwise be in scope. It matters because the thresholds are scheduled to fall — over £50,000 from April 2026, over £30,000 from April 2027, over £20,000 from April 2028 — so being under the line today doesn't mean you always will be. Check your position with our does MTD apply to me? guide.

The automatic exemptions

Some people don't have to apply — they're exempt by category. These include the trustees of certain trusts, personal representatives of someone who has died, and non-resident companies. If you fall squarely into one of these groups you're outside MTD for Income Tax without needing to make a case for it. Most ordinary sole traders and landlords, though, will not be automatically exempt — for them the route is digital exclusion, below.

Digital exclusion — the main route to apply

You can apply for exemption if it isn't reasonably practicable for you to use digital tools to keep records and send updates. The recognised grounds include:

• Age — where it genuinely prevents you using software.
• Disability — a condition that makes digital record-keeping impracticable.
• Location / no reliable internet — remoteness with no dependable connection.
• Religious grounds — beliefs incompatible with using computers.

HMRC assesses each application on its facts — there's no automatic pass simply for disliking technology.

How to apply — and what exemption does and doesn't do

You apply to HMRC — by phone or in writing — explaining why the requirements aren't reasonably practicable for you. If you already held a digital-exclusion exemption from MTD for VAT, that can carry over. Until HMRC confirms, keep going as you are — don't assume it's granted. And remember what an exemption is: relief from the digital record-keeping and quarterly-update mechanics, not from tax. You still report income and pay what's due, typically through Self Assessment.

If you're not exempt, the next steps are the MTD sole trader checklist, what to send HMRC each quarter, and the deadlines & penalties guide.

FAQ

Who is exempt from MTD for Income Tax?

Some people are automatically exempt (for example the trustees of certain trusts, personal representatives of someone who has died, and non-resident companies), and others can apply for exemption on the grounds of digital exclusion — it's not reasonably practicable for them to use digital tools because of age, disability, location or religion. Being under the income threshold is a separate thing and is not an exemption.

What counts as digital exclusion?

Broadly, that it isn't reasonably practicable for you to use software to keep digital records and send updates — for reasons such as age, a disability, living somewhere with no reliable internet access, or religious beliefs that prevent you using computers. HMRC assesses each application on its facts; there's no automatic pass just for being uncomfortable with technology.

Is being under the £50k / £30k / £20k threshold an exemption?

No. If your qualifying income is below the threshold you simply aren't mandated yet — you carry on with Self Assessment as normal. That's different from being exempt, which means you're excused even though you would otherwise be in scope. The thresholds are also scheduled to fall, so 'under the line' today can change.

How do I apply for an exemption?

You apply to HMRC — by phone or in writing — explaining why it isn't reasonably practicable for you to meet the MTD requirements digitally. If you already had an exemption from MTD for VAT on digital-exclusion grounds, that can carry over. Keep going as you are until HMRC confirms the exemption; don't assume it's granted.

If I'm exempt, do I still pay tax and file?

Yes. An exemption is from the digital record-keeping and quarterly-update requirements, not from tax itself. You still report your income and pay what's due — typically through Self Assessment in the usual way. Exemption removes the MTD mechanics, not the underlying obligation.