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Making Tax Digital Income Tax

With Making Tax Digital (MTD) for Income tax coming into force from April 2024, HMRC have clarified the reasons to apply for exemption.

MTD for Income Tax is a new way of reporting earnings to HMRC. You’ll use software to keep digital records and send Income Tax updates instead of filing a Self Assessment tax return.

Quarterly reporting of income tax via MTD will come into force for landlords and sole trader from April 2024, after a one-year delay following the pandemic disruption.

Taxpayers will be able to apply for an exemption from using Making Tax Digital for Income Tax for the following reasons:

  • it’s not practical to use software to keep digital records or submit them — this may be due to your age, disability, location or another reason;
  • you are a practising member of a religious society (or order) whose beliefs are incompatible with using electronic communications or keeping electronic records.

It is important to explain how these reasons apply to your own circumstances so HMRC can make a decision on eligibility for an exemption.

If HMRC has already confirmed a taxpayer is exempt from MTD for VAT for one of these reasons, then they will not need to apply for an exemption for MTD for Income Tax.

HMRC will consider the information and will contact taxpayers to let them know that they are either exempt or if not exempt, will provide details of how to appeal the decision.

If the reason for an exemption no longer applies it is necessary to tell HMRC within three months.

If you have further questions on MTD for income tax contact AJR & Co Ltd.