LITRG urges digitally excluded taxpayers to consider Making Tax Digital exemption

29 Sept 2025

The Low Incomes Tax Reform Group (LITRG) is encouraging taxpayers who can’t manage their tax affairs online and are due to start using Making Tax Digital (MTD) for Income Tax to check whether they can claim an exemption from the initiative, which launches in six months’ time.

From next April, people who are self-employed and/or landlords and declare more than £50,000 of gross income in their 2024/25 self assessment tax return will be legally required to follow the new MTD rules.1

HMRC has today published new guidance for people who are digitally excluded, setting out how they can obtain an MTD exemption.2 This is in addition to automatic exemptions already in place for certain groups, including for people without a National Insurance number.3 Digitally excluded taxpayers will need to submit an exemption application by phone or post and should receive a response within 28 days.

LITRG is also urging taxpayers already exempt from MTD for VAT to check with HMRC that their exemption will be extended to cover the income tax programme.

Sharron West, LITRG Technical Officer, said:

“MTD is the biggest change to the tax system since self assessment and with its start date on the horizon, it’s time for taxpayers to get ready if they haven’t yet done so.

“The first thing they need to do is complete their 2024/25 tax return, which will contain the figures HMRC will use to work out if they are required to take part.

“Our message to taxpayers who have still to file their return is simple. Do it now. It will maximise the time that they have to get ready for MTD if they need to.

“But, even if they have passed the income threshold and are not automatically exempt, it might still be possible to claim an exemption on the grounds that they are digitally excluded.

“Because HMRC will deal with applications on a case-by-case basis, we don’t yet know how generous their interpretation of the rules will be, but we know that HMRC are keen to see as many people as possible manage their taxes online.

“If you are already exempt from MTD for VAT, HMRC say you should contact them when the exemption application process opens so they can check your circumstances and confirm if you’ll also be exempt from Making Tax Digital for Income Tax.

“The clock is ticking and it’s time to get ready.” 

According to HMRC statistics released last month, tax return data from 2023/24 suggests that around 864,000 taxpayers are expected to be subject to MTD from April 2026.

Around a quarter of these (216,000) are believed to not use the services of an accountant or tax adviser. This will likely include some on low or modest incomes who will be particularly reliant on HMRC for help and guidance.4

Notes:

  1. Time for taxpayers to get ready for Making Tax Digital for Income Tax (LITRG, 21 July 2025) and see Making Tax Digital for Income Tax (LITRG) 
  2. Find out if you can get an exemption from Making Tax Digital for Income Tax - GOV.UK The guidance states: ‘For [MTD], digitally excluded means it’s not reasonable for you to use compatible software to keep digital records or submit them to HMRC”.
    Apply for an exemption from Making Tax Digital for Income Tax if you are digitally excluded - GOV.UK
  3. Find out if and when you need to use Making Tax Digital for Income Tax - GOV.UK 
  4. New HMRC figures show the scale of MTD challenge (LITRG, 15 August 2025). These figures are expected to change once 2024/25 tax returns – the basis for MTD qualification – are processed.