Certain self-employed workers and landlords could be exempt from Making Tax Digital (MTD) provided they meet certain conditions, according to HMRC guidance. The loophole affects those who are "digitally excluded" – taxpayers who cannot use a computer or smartphone because of their age, a health condition or disability.
Individuals can also apply if they are a "practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records", according to the Labour Party government's tax arm. This exemption applies to those with income above HMRC's thresholds, which start at £50,000 from this April.
Thresholds and Timeline
From this April, the starting threshold is £50,000. On 6 April 2027, the MTD threshold will fall to £30,000. And from 6 April 2028, the threshold will fall further: to £20,000 for property and self-employment income earned in the 2026-27 tax year.
Claire Thackaberry, a technical officer at the Low Incomes Tax Reform Group, highlighted the impact on those affected. The new system for recording and reporting tax information to HMRC affects self-employed people and those with property income above the thresholds.
Expert Views on Exemptions
Chris Etherington, of accountancy firm RSM UK, said HMRC needed to "strike the right balance" and added: "The threshold is likely to be pretty high given only a small percentage of people usually submit paper tax returns, rather than online." He noted that "a lot of landlords may be older in age, but HMRC will still expect the vast majority to have access to the internet and be used to using a computer."
Robyn Milstead, of LKA Chartered Accountants, added: "Of course it is possible to exploit any system that relies on an honest self-evaluation. It's also a subjective system. Those with poor internet access – how bad should it be before one considers exemption?" She warned: "Ultimately though, if the taxpayer has lied or exaggerated their circumstances to gain an exemption from HMRC, this doesn't release them from their legal responsibilities, and they leave themselves open to future consequences."
HMRC Response
A spokesman for HMRC said: "We've published guidance on MTD exemptions and customers who believe they are eligible can apply. All requests are carefully considered by trained advisers." The exemption process relies on self-assessment, and HMRC will consider each case individually.
