Making Tax Digital (MTD) for Income Tax is rolling out soon and most self-employed people and landlords will need to use compatible software (like Coconut) to keep records and submit updates to HMRC.
But not everyone has to use MTD. In some cases, you might be able to get an exemption. Here’s what that means, who it applies to and how to apply.
What does “digitally excluded” mean?
If HMRC decides it’s not reasonable for you to use digital software to keep tax records or send them online, you’re considered digitally excluded.
That could be because:
- You have a health condition, disability or age-related issue that makes using a computer, smartphone or tablet difficult.
- You’re a practising member of a religious group whose beliefs mean you don’t use digital technology.
- You can’t get reliable internet where you live or work and there’s no suitable alternative nearby.
If that sounds like you, you may be able to get an exemption from MTD for Income Tax.
What doesn’t count as an exemption
There are a few reasons HMRC won’t accept, such as:
- You’ve always filed paper returns.
- You’re not confident with software.
- You only have a few records to keep each year.
- You’d prefer not to spend the time or money on digital tools.
Basically, it’s got to be unreasonable, not just inconvenient.
Already exempt from MTD for VAT?
If HMRC has already confirmed that you’re exempt from MTD for VAT because you’re digitally excluded then good news, you might also be exempt from MTD for Income Tax.
You’ll need to contact HMRC’s Self-Assessment team (by phone or post) to confirm your circumstances haven’t changed.
How to apply
If you think you qualify, you’ll need to contact HMRC directly to apply for an exemption.
You can do this by phone or in writing as there’s no online form.
When applying, you’ll need:
- Your National Insurance number
- Your name and address
- Details of how you currently submit your tax return
- The reason you believe you’re digitally excluded
If you have an accountant or agent applying for you, the exemption will still depend on your personal circumstances.
HMRC aims to get back to you within 28 days, though it can take longer if they need more info. While you wait, they recommend preparing as if you’ll still need to use MTD, just in case your application isn’t approved.
What happens next
If HMRC agrees that you’re digitally excluded, they’ll confirm that you don’t need to follow the MTD rules for Income Tax.
If they don’t agree, or your circumstances change later, you can appeal or reapply.
In short
Most people will need to follow Making Tax Digital for Income Tax, but a small number may qualify for an exemption.
If you’re not sure whether this applies to you, it’s worth checking sooner rather than later. You can find all the official guidance and contact details on GOV.UK.
And if you’re not exempt? Don’t panic. Coconut makes MTD simple, quick and stress-free, so you can keep on top of everything without the headache.
Not exempt? No worries. Try Coconut free for 30 days and see how easy MTD for Income Tax can be. Start your 30-day free trial here.
