Over 1,300 Taxpayers Request HMRC Exemption from New Digital Rules
New data has emerged showing that 1,300 people have applied to HMRC for exemption from the upcoming Making Tax Digital (MTD) requirements, with more than 200 applications already denied. The figures highlight growing concerns among taxpayers as HMRC implements the most significant overhaul of the self-assessment tax system in decades this spring.
Launch of Making Tax Digital Sparks Panic Among Some Taxpayers
The introduction of Making Tax Digital this year is causing anxiety for certain individuals and businesses. Under the new system, tax returns will be submitted differently, with a new requirement for quarterly updates. Ahead of this shake-up, HMRC has allowed those who fall within the scope to request a dispensation based on lack of access or inability to use digital platforms.
According to Labour Party MP Dan Tomlinson, HMRC has received nearly 1,300 applications for exemption. Of these, 70% (881 applications) have been processed and decided, resulting in 661 exemptions granted and 220 denied. This leaves 390 applications outstanding, meaning approximately one in six of the total received so far have been refused.
Exemption Criteria and Government Stance on Accessibility
Mr. Tomlinson commented on the situation, stating: "HMRC has assessed the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords." He added that equalities considerations are part of this assessment, and the government is clear that taxpayers who cannot use MTD due to factors like age or disability can apply for exemption.
From April this year, the starting threshold for MTD is set at £50,000. On 6 April 2027, this threshold will decrease to £30,000. These figures apply to self-employment and property income earned in the 2025-26 tax year. However, certain groups are exempt from using the system regardless of income level.
How to Apply and What Tax Experts Advise
Individuals can apply to HMRC for an exemption if it is not reasonably practical for them to use digital software. Applications are evaluated on a case-by-case basis. Tax experts recommend that taxpayers continue preparing for MTD while awaiting a decision on their exemption request to avoid potential penalties or disruptions.
The rollout of Making Tax Digital represents a major shift in how tax affairs are managed in the UK, aiming to streamline processes but raising accessibility concerns for some. As the system goes live, monitoring application outcomes and taxpayer feedback will be crucial for ensuring fair implementation.
