Are you exempt from MTD for ITSA? - Go Figure Financial | Bookkeeping Services Manchester

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is mandatory from 6 April 2026 for self-employed traders and landlords whose combined gross trading and business income in 2024/25 is £50,000 or more. Those within MTD for ITSA must maintain digital records and submit quarterly updates and a final declaration to HMRC electronically using software compatible with MTD for ITSA.

As the name suggests, MTD for ITSA relies on digital record-keeping and communication. HMRC recognise that not everyone is able to operate in a digital world and those who they accept as being ‘digitally excluded’ can apply for an exemption from MTD for ITSA.

Meaning of ‘digitally excluded’

HMRC acknowledge that there are various reasons why a person may consider themselves digitally excluded. For example, a person may be digitally excluded because:

· their age, a health condition or a disability prevents them from using a tablet, computer or smartphone to keep digital records and to submit returns to HMRC;

· they are a practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records and they do not use a computer, tablet or smartphone for business or personal use; or

· they cannot get internet access at their home or business because of their location, and they are unable to get access at a suitable alternative location.

However, HMRC will not accept an application for exemption from MTD for ITSA if the only reason for the application is one of the following:

· the person previously filed a paper tax return;

· the person is unfamiliar with accounting software;

· the person only has a small number of records to create each year; or

· the person will spend extra time or incur additional costs as a result of complying with MTD for ITSA.

Where a person has an existing exemption from MTD for VAT because they are digitally excluded, providing that the person’s circumstances have not changed, HMRC will accept that they are also exempt from MTD for ITSA.

Applying for an exemption

To apply for an exemption from MTD for ITSA on the grounds of digital exclusion, a person will need to write to HMRC ahead of their MTD for ITSA start date. They must provide the following information:

· their National Insurance number;

· their name and address;

· details of how they currently submit their returns (including the use of an agent or other person to submit them on their behalf);

· the reason that they think that they are digitally excluded, including information in support of their claim;

· whether they have an accountant or agent and what they do for them; and

· any additional needs that they have.

An application can be made by an agent on behalf of someone who is digitally excluded.

It should be noted that if a person is unable to use digital returns themselves, for example because of age or disability, but they have an agent or someone else who can keep digital records and file digital returns on their behalf, an exemption will not be forthcoming.

The application should be sent to:

Self Assessment

HM Revenue and Customs

BX9 1AS

Where a person is already exempt from MTD for VAT because they are digitally excluded, they will also need to write to HMRC to apply for an exemption from MTD for ITSA, providing their National Insurance number, their VAT registration number and the reason that they are digitally excluded from submitting their VAT returns using software that is compatible with MTD for VAT.

An agent can apply for an exemption on a client’s behalf.

Other exemptions

The following are automatically exempt from MTD for ITSA and are unable to sign up voluntarily:

· those completing a tax return as a trustee, including a trustee of a charitable trust or a non-registered pension scheme;

· a person who does not have a National Insurance number on 31 January before the start of the tax year;

· a person completing a tax return as the personal representative of someone who has died;

· a Lloyd’s underwriters in respect of their underwriting activity; and

· a non-resident company.

Anyone in the above groups does not need to apply for an exemption as it is automatic.

Are you exempt from MTD for ITSA? - Go Figure Financial | Bookkeeping Services Manchester

Find Out More