HMRC confirms taxpayers can now apply for MTD exemptions for 2027-28

HMRC has updated its Making Tax Digital (MTD) guidance and confirmed that taxpayers who are required to sign up to MTD for the first time in 2027-28 can now apply for exemptions.

Sole traders and landlords who are not already required to be signed up to MTD for the 2026-27 tax year, and who have qualifying income above £30,000 in their 2025-26 self-assessment tax return, will be required to sign up for MTD for the 2027-28 tax year unless they are exempt.

HMRC has confirmed that these taxpayers can now apply for an MTD exemption.

Automatic exemptions

A taxpayer will be automatically exempt from MTD for 2027-28 if they have no National Insurance number at 5 April 2027.

If the taxpayer is non-UK resident in 2027-28, they will also be automatically exempt for that year in respect of their self-employment or property income from non-UK sources only.

The following exemptions are automatic for 2027-28 if the relevant and sufficient information is included in the 2025-26 Self Assessment return, filed by 31 January 2027, to enable HMRC to confirm that the taxpayer qualifies:

• Lloyd’s underwriters and ministers of religion.
• Taxpayers without the mental or physical capacity to provide information to HMRC who, under the relevant legislation:
  • Has given a lasting (continuing in Scotland) or enduring (welfare in Scotland) power of attorney.
  • Has had someone appointed to act as a deputy (guardian in Scotland).
• Taxpayers who have claimed or transferred the Married Couples Allowance and/or the Blind Persons Allowance.
• Non-resident companies submitting form SA 700 (Non-resident Company Income Tax Return).

The taxpayer or their agent must apply for the above exemptions if:

• The circumstances for exemptions at points 1 and 2 only arose after 5 April 2026; or
• Those at points 3 and 4 are reasonably expected to be included in the 2026-27 or 2027-28 self-assessment return.

Exemptions which must be applied for

Digital exclusion

A taxpayer or their agent must apply for an exemption if the taxpayer is digitally excluded. This means it is not reasonably practicable for them to use electronic communications or keep digital records, or their religious beliefs prevent them from doing so.

A taxpayer who is exempt from MTD for VAT on grounds of digital exclusion should contact HMRC to confirm their exemption for MTD for Income Tax.

If this exemption is granted, it applies until the taxpayer’s circumstances change and they are no longer eligible. The taxpayer must notify HMRC of any change in circumstances within three months.

‘New’ non-UK residents

Taxpayers who are UK resident in 2025-26 but will be, or reasonably expect to be, non-UK resident in 2027-28 can apply for an exemption.

This applies to their non-UK source self-employment and property income only.

Other activities

The following MTD exemptions for 2027-28 must be applied for unless the taxpayer has filed a return containing sufficient information to satisfy HMRC that the activity qualifies: 

• Trading or property activity carried on by a trustee or personal representative in that capacity.
• UK activities of visiting performers.
• Provision of qualifying care.

Taxpayers carrying out these activities will still be required to sign up for MTD in 2027-28 if they have qualifying income above £30,000 from other sources (eg  a trustee or personal representative in their personal capacity).

Temporary exemptions that no longer apply for 2027-28

Importantly, there are a number of MTD exemptions which were available to taxpayers required to join MTD in 2026-27 but will no longer apply to taxpayers mandated for 2027-28.

These include taxpayers who:

• Receive income from trusts and estates as a beneficiary or the settlor of a settlor-interested trust.
• Claim averaging relief.
• File SA 109 non-residence supplementary pages.
• Would otherwise have had to join MTD in 2026-27 but who:
  • Claimed qualifying care relief.
  • Were a visiting performer.

What to do now

If you or your clients will be required to sign up to MTD for the 2027-28 tax year, you can now apply for any exemptions you or your clients are entitled to.

Links to all current HMRC MTD guidance can also be found on our MTD Hub.

Let us know what you think

We respond to tax consultations and calls for evidence and attend meetings with HMRC at which service levels, delays and other issues you raise with us are discussed. We welcome input from members to inform our work.