SAM144030 - Making Tax Digital for income tax Self-Assessment: digital exemptions: after a customer has applied for a digital exemption – what happens next?
HMRC will aim to respond within 28 calendar days of receiving their application. It may take longer if we need them to provide more information.
When reviewing their application, HMRC may:
- verify the information they have provided to confirm it is accurate
- ask them for more information, if we need any
We’ll then send them a letter confirming if their application for digital exemption has been accepted or not and what they need to do next.
If they receive a decision before 1 April 2026, it will take legal effect from 1 April 2026.
If HMRC accept their application
The letter will explain the type of exemption and how long it will last.
If they are exempt until April 2027, they will not need to sign up and use Making Tax Digital for Income Tax until the 2027 to 2028 tax year at the earliest.
Whilst they are exempt during the 2026 to 2027 tax year, they will remain on the current late payment and late filing penalties for Self-Assessment.
If their exemption is temporary, they will need to sign up and use Making Tax Digital for Income Tax if their qualifying income is above the relevant threshold.
If the customer or primary agent submits a digital exemption application and has further questions in relation to their application, follow Making Tax Digital ITSA: Request for Digital Exclusion - Step 1
If HMRC does not accept their application and they disagree with the decision
If their application is not accepted, their decision letter will explain why and how to appeal.
When they must appeal depends on when they receive a decision letter.
If they get a decision before 1 April 2026
They must appeal by 30 April 2026.
HMRC will start to review these appeals from 1 April 2026.
If they get a decision on or after 1 April 2026
They can appeal up to 30 days after the date on the letter.
If they need more time to appeal:
- if they are appealing for themselves or on behalf of a friend or family member,they must call or write to us
- if they are an agent applying on behalf of someone else, contact the Agent Dedicated Line
They need to send their appeal in writing and:
- use the title ‘Making Tax Digital for Income Tax — digitally excluded appeal’ for a digitally excluded exemption appeal
- use the title ‘Making Tax Digital — exemption appeal’ for any other exemption appeal
- send it to the address provided in their decision letter and include any new information they want us to consider
If you are a decision maker processing a digital exemption claim, follow MTD ITSA Digital Exclusion – Decision Makers - Step 1
Note: Only authorised Decision Makers can deal with MTD Digital Exclusion claims.
Customer has a change in circumstance
If they have already signed up to MTD ITSA and their circumstances have changed, they should apply for an exemption and continue to use Making Tax Digital for Income Tax whilst they wait to hear from us.
If they have signed up to MTD ITSA voluntarily and think they have become exempt, they should opt out using their HMRC online services account.
They may have been granted a digital exemption, which is about to cease, or has now ceased.
They will need to notify us if their circumstances have changed and they can now:
- keep digital records, and
- send updates to HMRC each quarter using compatible software
If they believe they should still be digitally exempt, they can re-apply by either calling or writing to HMRC, using the contact details in Self-Assessment general enquiries.