Understanding Your Obligations, Exemptions, and What Comes Next**
For years, Making Tax Digital (MTD) has been on the horizon, talked about, delayed, adjusted, and debated. But with April 2026 fast approaching, MTD for Income Tax Self Assessment (ITSA) is finally becoming a legal reality for millions of self-employed individuals and landlords across the UK.
The question many people are asking is simple:
“Can Making Tax Digital be avoided?”
The short answer: not for most people.
But the real answer requires a closer look at what MTD actually is, who must comply, and the very limited circumstances in which HMRC allows exemptions.
This article explores these points in practical, expert-led detail, so you know where you stand, what you must do, and when you may not have to comply.
What Is Making Tax Digital?
Making Tax Digital is the government’s long-term initiative to move individuals and businesses away from manual tax processes and into a fully digital reporting system.
While MTD for VAT is already in force, the next phase MTD for Income Tax marks the biggest change to personal tax reporting in decades.
From April 2026, anyone who is:
- self-employed, or
- a landlord,
and earning over £50,000 must comply with MTD rules.
From April 2027, this requirement will apply to those earning over £30,000, and ultimately to those earning above £20,000, potentially from 2028 onward.
Under MTD ITSA, the traditional Self Assessment tax return disappears and is replaced with:
- four quarterly digital updates,
- an end-of-period statement, and
- a final digital tax return.
All records must be kept digitally, using HMRC-approved software or spreadsheets connected through MTD-compatible apps.
Can You Avoid Making Tax Digital?
For the majority of self-employed individuals and landlords, the answer is no. MTD is mandatory if your income exceeds the qualifying threshold.
However, HMRC does recognise that some individuals cannot reasonably comply.
HMRC Exemptions from MTD
You may be exempt from MTD if HMRC agrees that it is not practical or reasonable for you to use digital tools. These exemptions include:
1. Digital Exclusion (Age, Disability, or Health Condition)
You may qualify if:
- You have a physical or mental health condition preventing regular computer use
- You have impaired vision
- You have severe dexterity issues
- You are hospitalised long-term
- You lack mental capacity to manage digital requirements
2. Remote Location With No Reliable Internet Access
This exemption applies only if:
- Internet is genuinely unavailable in your location
- You cannot travel to a location with internet access
3. Religious Grounds
You may be exempt if your faith prohibits the use of electronic communications or devices.
4. Severe Personal Circumstances
For example:
- Long-term care
- Illiteracy
- Barriers that make digital compliance impossible
5. Automatic Exclusions
Some individuals do not need to apply, they are automatically exempt:
- Trustees of deceased estates
- Personal representatives
- Non-resident companies
- Lloyd’s underwriters (in relation to underwriting business)
- Individuals without a National Insurance number by the required deadline
- Individuals earning below £20,000 per year (current threshold)
6. Qualifying Care Providers
Foster carers and shared-lives carers are exempt. Their care receipts also do not count towards the income threshold.
**What About Workarounds?
Can You Restructure to Avoid MTD?**
Some have asked whether they can form a partnership with a spouse, move business ownership, or restructure operations to avoid joining MTD.
While partnerships are not yet required to comply:
- HMRC has confirmed partnerships will be brought into MTD later.
- Artificial restructuring purely to avoid MTD can raise compliance concerns.
- Any new structure must reflect genuine shared ownership and responsibility.
So while it may delay MTD, it cannot avoid it — and may complicate your tax affairs unnecessarily.
Why MTD Shouldn’t Be Ignored
Even if you can delay or avoid MTD, it is important to understand the direction of travel:
- HMRC is building a digital-first tax system
- Non-compliance will lead to penalties
- Late quarterly updates and missing digital records will attract fines
- Digital record-keeping will eventually become the standard across all tax types
Many individuals underestimate the preparation required:
- choosing compliant software
- migrating existing records
- learning digital bookkeeping
- ensuring security and GDPR compliance
A rushed transition often leads to errors, penalties, and unnecessary stress.
So… Can You Avoid MTD?
Yes — but only if you qualify for a recognised exemption.
No — if your income exceeds the thresholds and you do not meet HMRC’s strict exemption criteria.
For most self-employed individuals and landlords, MTD will become a mandatory compliance requirement and preparing early is the safest, most cost-effective approach.
Expert Guidance Strongly Recommended
MTD marks one of the biggest changes to UK tax compliance in a generation. Whether you are assessing your digital readiness, exploring exemptions, or needing help transitioning to compliant software, professional support is essential.
At Morgan Reach Chartered Certified Accountants, we can:
- Assess whether you may qualify for an exemption
- Help you select and implement HMRC-approved software
- Train you or your team to manage quarterly digital reporting
- Ensure you remain compliant and penalty-free
- Guide you through digital record-keeping and security best practices
Need Support with Making Tax Digital?
If you’re unsure whether MTD applies to you or you want help preparing for the transition get in touch with our expert tax team today. We’ll help you determine your obligations, explore possible exemptions, and put the right systems in place so you remain compliant with confidence.
