Who Qualifies for MTD Exemptions and How to Apply?

Making Tax Digital (MTD) is mandatory for most landlords, requiring digital record-keeping and quarterly updates. However, not every landlord is legally required to comply. Outside of those that don’t meet the qualifying income requirements, HMRC have also specified that they will allow some exemptions in specific circumstances.

Understanding who qualifies and how to apply is crucial. Assuming an exemption without following the correct process can lead to fines, penalties, and extra stress.

Types of MTD Exemptions

HMRC has specified on their website that they will allow a few limited grounds for exemption from MTD for Income Tax. 

To be exempted from MTD, you will need to apply on the HMRC website. 

HMRC guidance clearly states that exemptions are exceptional, and landlords must provide evidence to support their claim.

1. Digital Exclusion

Landlords who cannot use digital tools may be able to apply for a digital exclusion exemption. Those who qualify include individuals:

• Whose age or disability prevent online access.
• Who live in a location with no reliable internet connection.

There is no specific age cut-off for this exemption, so if you think you might qualify, talk with your accountant. 

2. Religious Grounds

Landlords whose religious beliefs prevent them from using electronic communications may apply.

3. Insolvency

Landlords who are adjudged insolvent or facing serious financial difficulties can be considered for exemption.

Scenarios

• Elderly landlord: May qualify for exemption if unable to use digital technology due to age or disability.
• Landlord with poor rural broadband: Can apply for exemption citing connectivity issues.
• Busy landlord claiming “no time to comply”: Not a valid reason. HMRC will not grant exemptions based on convenience or workload.

How to Apply for an Exemption

Landlords can request an MTD exemption through HMRC either online or by phone. Here’s a step-by-step approach:

1. Access HMRC portal or call their helpline.
2. Provide details of your circumstances (e.g., age, disability, or connectivity issues).
3. Submit supporting evidence (medical certificate, proof of location, or other relevant documents).
4. Accountant submission: You can authorise your accountant to apply on your behalf.

HMRC will review the application, but approval is not guaranteed, so it’s important to make a plan for MTD compliance regardless.

Risks of Assuming an Exemption

• Fines for non-compliance: Simply assuming you are exempt can result in penalties.
• Applications may be denied: HMRC grants exemptions rarely and only in exceptional circumstances.

Even if you believe you qualify, it’s safer to be prepared with digital record-keeping tools in place.

Why Most Landlords Should Still Prepare for MTD

Exemptions are the exception, not the rule. HMRC rarely grants them, and relying on them can leave you exposed. Keeping digital records is best practice, making tax filing easier and reducing the risk of errors.

How Landlord Studio Reduces the Burden

Landlord Studio is designed for landlords of all tech levels:

• User-friendly mobile app: Even landlords who aren’t confident with technology can record income and expenses digitally.
• Customer support: Guidance is available to help you stay compliant.
• Automated features: Bank feeds, receipt capture, and MTD-ready submissions simplify the process.

With these tools, landlords who might otherwise consider exemptions can manage compliance quickly and efficiently.

Conclusion

Exemptions from MTD exist, but they are rare and require evidence. Assuming you qualify without applying correctly can lead to penalties. For most landlords, preparing for digital compliance is the safest option.

Even if you think you might qualify for an exemption, trialing Landlord Studio ensures your records are compliant, secure, and ready for submission—taking the stress out of Making Tax Digital.