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Making Tax Digital: HMRC Can Refuse The Exemption You Apply For

ended 18. August 2026

From 6 April 2027, sole traders and landlords whose qualifying income from self-employment and property was over £30,000 for the 2025 to 2026 tax year must use compatible software to keep digital records and send quarterly updates under Making Tax Digital for Income Tax. Qualifying income is turnover before expenses, not profit. HMRC's guidance now tells that group they can apply for an exemption.

HMRC says an application must be made by phone or by letter, and an agent must apply for each client individually on that client's own circumstances. Digitally excluded applicants are asked whether they have an agent, for example an accountant, and what that agent will do. HMRC's steer is to speak to the agent first: an agent using compatible software to keep digital records and submitting them to HMRC can meet the requirements on a client's behalf, so some people may not need to apply for a digitally excluded exemption. HMRC decides and can refuse, leaving 30 days from the decision letter to appeal. The exemption you have to apply for is not a status you claim. It is a permission you have to win, and the run-up to April 2027 is when to win it.

  1. HMRC's guidance gives two routes and only two, a phone call or a letter, and each application is judged on that person's own circumstances. Is that a proper safeguard for people who genuinely cannot file digitally, or a process most of them will never get through?
  2. HMRC aims to respond within 28 calendar days, and anyone already signed up who applies is told to keep using Making Tax Digital in the meantime. Is that a fair place to leave someone, and who does it fall hardest on?
  3. HMRC's guidance says: “You should speak to your agent about this, as you may not need to apply for a digitally excluded exemption.” Should accountants be working through their client lists on this now rather than in 2027? Do you have a client you believe is genuinely digitally excluded? If so, please give as much colour and detail as possible.

2 responses from the Newspage community

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Editor
Harvey Dhillon
Founder & CEO at Zmartly
Not everyone has to apply. HMRC grants some exemptions automatically from data it holds, so the phone call or letter is for those seeking one. The test itself is a proper safeguard: it sits in law and a refusal can be appealed. What's badly built is the way in: phone and post are HMRC's choice, not the law's. If you're already signed up and your circumstances have changed, carrying on with Making Tax Digital while you wait isn't the unfair part. The wait is. HMRC would have had 28 days to answer under rules revoked before they took effect. What replaced them sets no deadline on HMRC at all. The number made it into the guidance as an aim, the duty never came into force, and that's the wrong half to keep. It falls hardest on the person asked for more information, because HMRC says that may take longer. No one client of mine stands out, but this week's guidance change puts the exemption check on client lists now, not in 2027. Go file by file while an answer still has time to arrive.
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Editor
Guy Skinner
Financial Planner and Director at Citygate Financial Planning
The latest in a long line of reasons why being a landlord is no longer viable. Theoretically it all works, digital records for everything and HMRC expediting what they are owed to help combat national debt. When really, we would be better off with more affordable housing and more landlords in the sector so there is more competition. As always, the cost goes straight to the tenant!