Can’t use digital tax software? Here’s how to apply for an MTD exemption
From April 2026, millions of self-employed workers and landlords will need to comply with Making Tax Digital for Income Tax (MTD ITSA). The system is designed to make tax reporting easier and more accurate, but only if you can use MTD software comfortably.
If you can’t, don’t worry. HMRC recognises that some people are digitally excluded, for example, because of age, disability, poor internet access or religious reasons. If this sounds like you, you can apply for an exemption so you’re not forced to use MTD software.
This blog will guide you through what counts as digital exclusion, whether you qualify, and how to apply for an exemption.
What “digitally excluded” means (and who may qualify)
First, what does HMRC mean by “digitally excluded”? According to HMRC, you are digitally excluded if it’s not reasonable for you to use compatible software to keep digital records or submit them.
In practice, digital exclusion can arise because of:
- Age, health condition or disability – that prevents you from using a computer, tablet or smartphone in the way needed for MTD.
- Location/connectivity issues — for example, you can’t access a reliable internet connection at home or another suitable place.
- Religious beliefs — you follow a religion or belong to a religious community that prohibits the use of electronic devices or keeping digital records.
It’s important to note what is not sufficient justification alone:
- You haven’t used software before, or you’re unfamiliar with it
- You file relatively few digital records.
- It would take time, effort or cost to adopt a software system.
HMRC states that these reasons by themselves won’t qualify you for digital exclusion. Each application is assessed on its individual merits. Also, there are automatic exemptions you should check first (you won’t need to apply):
- Trustees, personal representatives, certain non-resident companies, etc.
- If you don’t have a National Insurance number on 31 January before the tax year, you are automatically exempt for that year.
If you are already exempt on one of these automatic grounds, you do not need to apply for digital exclusion.
If you have already been exempted from using MTD-compatible software for VAT because you are digitally excluded, HMRC may confirm you are also exempt for MTD for Income Tax (if your circumstances haven’t changed).
Timing: When to apply
To avoid surprises, you must apply before you are required to use MTD ITSA for your tax affairs.
Key dates:
- For those who must adopt MTD from 6 April 2026 (based on qualifying income thresholds), the exemption process is already open
- For later phases (6 April 2027, 6 April 2028), HMRC advises you to apply starting from the summer of the previous year (i.e. summer 2026, summer 2027).
- You should ideally aim to submit your application well ahead of the date you must comply, so HMRC has time to decide.
While awaiting HMRC’s decision, you should continue to prepare as if you might have to use MTD (e.g. begin organising your records) in case the exemption is not granted.
What information you need to provide
Whether applying for yourself or on behalf of someone else, you’ll need to provide some basic information. HMRC will want to understand your situation clearly.
If you’re applying yourself, include:
- NI number, name, and address
- How you usually file Self Assessment
- Why you’re digitally excluded (and any proof — such as medical evidence, connectivity problems, or religious reasons)
- Your agent’s details if someone helps you with tax
- Any additional communication support you might need
If someone else applies on your behalf:
- Your consent (written or verbal)
- Their relationship to you (e.g. accountant, relative)
- Your key details and explanation for digital exclusion
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How to apply
When making your application, you have two main routes:
- Call HMRC (via Self Assessment general enquiries)
- Write to HMRC
If writing, use the heading “Making Tax Digital for Income Tax digitally excluded application” on your letter.
In your call or letter, clearly set out:
- Your details and NI number
- How you currently deal with your tax return
- Why digital methods are not reasonable for you (with supporting explanations)
- Whether someone is applying on your behalf
- Any additional needs or context (health, location, etc.)
After applying, HMRC aims to respond within 28 days. However, if your application lacks clarity or necessary detail, it may take longer.
You should keep doing your usual tax preparations while you wait, in case your exemption is not accepted.
After you apply, what to expect
Once HMRC decides:
- They will send you a letter confirming whether your exemption has been accepted or declined.
- If accepted, the letter will explain what you must do going forward. If you disagree with the decision, you have 30 days from the date of the letter to appeal. If you need more time, contact HMRC to explain
- If your life circumstances change (e.g. you become able to use digital tools), and you are no longer digitally excluded, HMRC expects you to notify them. The original decision letter will include instructions on this.
Also:
- If you had voluntarily signed up for MTD before but now believe you are digitally excluded, you can apply to opt out. Until HMRC confirms the exemption, you must continue using MTD.
- HMRC may ask for extra information or to verify aspects of your claim during their assessment.
How to make your application stronger
- Be honest and detailed: clearly explain why digital methods are not reasonable for you. Don’t rely on general statements.
- Where possible, attach evidence (e.g. medical reports, proof of remote address, connectivity limitations)
- If someone is applying for you, make sure the authorisation is properly documented.
- Apply early; don’t wait until the last moment.
- Continue organising and updating your records in case your exemption is rejected — this will ease the transition.
- Keep a copy of your application and any correspondence.
What if you don’t apply, or the exemption is refused?
If no exemption is granted and you are in scope for MTD ITSA, you will be required to:
- Use compatible software to maintain digital records
- Submit quarterly updates to HMRC.
- Submit a final declaration annually to confirm your income and expenses.
Failing to comply may attract penalties under the new regime. Contact us if you need help with the application. We will guide you through the process and make sure your request is clear and complete.
Author
Mukund is a founding member of the Affinity Associates Group and has been with the practice for nearly 40 years. After completing his degree in Accounting and Finance, he went on to qualify with both ACCA and ICAEW in 1991. Over the years, he’s built deep expertise in consultancy, tax, business development, and corporate group structures. Mukund is known for helping clients make sense of complex financial challenges and turning them into opportunities for sustainable growth.
