Making Tax Digital for Income Tax (MTD for Income Tax) started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. If you keep your rental records on paper, can't get online, or genuinely can't use a computer, you might not have to go digital at all.
There's a specific route for this. It's called a digital exclusion exemption, and you have to apply for it. It isn't automatic just because you find software hard, and it isn't a way to opt out because you'd rather not bother.
This guide walks you through who qualifies, exactly how to apply by phone or post, how long HMRC takes to decide, and the one thing every landlord gets wrong: an exemption from MTD does not mean an exemption from tax. You still file a return.
It's written for individual landlords, but the same rules apply if you're a sole trader as well.
What is a digital exclusion exemption?
A digital exclusion exemption means HMRC accepts it isn't reasonable for you to use compatible software to keep digital records or send updates, so you don't have to use MTD for Income Tax. You apply for it, and you carry on filing a normal Self Assessment return instead.
MTD for Income Tax normally requires you to keep digital records and send quarterly updates from MTD-compatible software, with no manual copy-paste between programs. For some people that simply isn't workable, so the rules carve out an exemption for those who are "digitally excluded".
The key thing to hold onto: this is an exemption from the digital process, not from reporting your income. We'll come back to that, because it's the point landlords most often misread.
Who counts as digitally excluded?
You can ask to be treated as digitally excluded where it isn't reasonable for you to use compatible software to keep digital records or send your updates and return. According to gov.uk, the grounds are:
- Age, health or disability - "your age, health condition or disability stops you from using a computer, tablet or smartphone to keep digital records or submit them to HMRC".
- Religious beliefs - "you're a practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records, and you do not use a computer, tablet or smartphone for business or personal use".
- No internet access by location - "you cannot get internet access at your home or business because of your location, and cannot get access at a suitable alternative location".
Notice what isn't on the list. "I find software confusing", "I don't want to pay for an app", or "my accountant usually does it" are not, on their own, grounds for exemption. The test is whether it's genuinely not reasonable for you to use software, and HMRC asks you to explain why and send any supporting information.
If you already hold a digital exclusion exemption for MTD for VAT, that's treated as covering MTD for Income Tax too, so you don't need to reapply on the same grounds.
Are some landlords exempt automatically?
Yes. Some landlords don't have to use MTD for Income Tax at all and don't need to apply. Per gov.uk, automatic exemptions (no application needed) include where:
- your qualifying income is £20,000 or less;
- you don't have a National Insurance number on the last day before the tax year starts;
- you're a non-resident company filing form SA700;
- you report through a trust on form SA900;
- you're the personal representative of someone who has died;
- you're a Lloyd's underwriter reporting on the SA103L pages;
- you can't provide the required information and someone holds power of attorney for you; or
- you're already exempt from MTD for VAT because you're digitally excluded.
A quick word on qualifying income, because it decides whether you're in scope in the first place. Your qualifying income is your gross trading and property income added together before expenses. UK property is treated as one property business. Employment and pension income don't count towards the threshold, though you still report them at your final declaration.
So if your rental and any self-employment turnover is £20,000 or less, you're outside MTD automatically and this exemption process isn't something you need to think about yet. For the mechanics of that lower tier, see our guide to the £20,000 MTD threshold and when landlords get caught, and our explainer on whether qualifying income is measured gross or net.
How do I apply for the exemption?
You apply directly to HMRC. There's no online form for the digitally excluded route; you contact HMRC by phone or post using the Self Assessment general enquiries contact details.
Here's how it works in practice:
- Decide who applies. You can apply yourself. An authorised agent can apply for you, and so can a friend or family member if you've authorised them. Agents use the Agent Dedicated Line for Self Assessment or PAYE for individuals.
- Choose phone or post. Phone the Self Assessment helpline, or write to the Self Assessment postal address. If you write, head your letter with the subject line "Making Tax Digital for Income Tax - digitally excluded application" so it's routed correctly.
- Give the required details. See the next section for the full list HMRC asks for.
- Keep a record of when you applied. Note the date you called or posted your letter, so you can track the 28-day window.
Because the application is by phone or post, build in time. If you're applying close to a quarterly update deadline, get the request in early rather than assuming it'll be turned around overnight.
What information do I need to give HMRC?
When you apply for yourself on digital exclusion grounds, gov.uk says you need to provide:
- your National Insurance number, name and address;
- how you currently submit a tax return, including if someone else helps you;
- the reason you think you are digitally excluded, with any information that supports it; and
- any additional needs, so HMRC can give you the right support.
If an agent is applying, they include their own agent details too.
The "reason you think you are digitally excluded" line is the heart of it. Be specific. If it's a health condition or disability, say how it stops you using a device. If it's location, explain that you can't get a connection at home or business and can't reasonably get online elsewhere. The more concrete the explanation, the smoother the decision.
How long does HMRC take to decide?
HMRC aims to respond within 28 calendar days of receiving your application, though it states it may take longer if it needs more information from you.
While you wait, you're not in limbo. You "continue keeping records or supporting documents like you normally do for Self Assessment". In other words, carry on as you are; you don't have to scramble to set up software just in case.
If the exemption is granted, HMRC tells you the period it covers. As an example given in the guidance, if you're approved up to April 2027, you wouldn't need to use MTD until at least the 2027/28 tax year. Keep the confirmation safe, because it's your evidence that you don't have to file digitally.
Do I still file a Self Assessment return if I'm exempt?
Yes. This is the single most important point in this guide. An MTD exemption removes the digital process, not the obligation to report.
gov.uk is explicit: if you're exempt you "will not have to use Making Tax Digital for Income Tax but you must continue to report your income and gains in a Self Assessment tax return as normal". That applies both while your decision is pending and once you're exempt.
So the picture for an exempt landlord stays familiar:
- you keep your rental records the way you always have (paper is fine);
- you file your Self Assessment return by the usual online deadline of 31 January following the tax year, or 31 October for a paper return; and
- you pay any tax due by 31 January, with payments on account on 31 January and 31 July where they apply.
Nothing about the deadlines or the tax itself changes. If you'd like a hand with the return each year, this is exactly what our Self Assessment service is for, and you'll find more landlord-specific guidance on our landlord accounting page.
Illustrative example: deciding whether to apply
Illustrative example. Margaret is 78 and lets two flats. Her gross rental income for 2024/25 was £58,000, so she's over the £50,000 threshold that brought landlords into MTD from 6 April 2026. She has never owned a computer, doesn't use a smartphone, and her daughter currently posts her paper Self Assessment return each year.
On the face of it, Margaret is in scope for MTD. But her circumstances fit the digital exclusion grounds: her age and lack of any device mean it isn't reasonable for her to keep digital records or send quarterly updates from software.
Her daughter, as an authorised family member, phones the Self Assessment helpline and explains the position: Margaret's age, that she has no computer, tablet or smartphone, and that the return is currently filed on paper with help. She gives Margaret's National Insurance number, name and address, and notes any additional support needs.
HMRC aims to respond within 28 calendar days. While they wait, Margaret keeps her records exactly as before. If the exemption is granted, she carries on filing a Self Assessment return as normal, on paper by 31 October or online by 31 January, and pays any tax due by 31 January. No software, no quarterly updates.
The figures here are illustrative. The point is the logic: real digital exclusion, a clear explanation, and a return that still gets filed.
Your MTD exemption decision walkthrough
Use this as a quick self-check before you contact HMRC.
| Step | Question | What it means |
|---|---|---|
| 1 | Is your combined gross trading and property income over the MTD threshold for the year? | If it's £20,000 or less you're automatically outside MTD and don't need to apply. |
| 2 | Do you fall under another automatic exemption (no NINO, trust, personal representative, etc.)? | If yes, no application is needed. |
| 3 | Are you digitally excluded on grounds of age, health or disability, religious beliefs, or no internet by location? | These are the only digital exclusion grounds HMRC lists. |
| 4 | Already exempt from MTD for VAT as digitally excluded? | That's treated as covering MTD for Income Tax too. |
| 5 | None of the above but you genuinely can't use software? | Apply by phone or post, explain why, and keep filing Self Assessment as normal. |
If you reach step 5 and you're unsure whether your situation really meets the test, that's a sensible point to get advice rather than guess.
Frequently asked questions
Is an MTD exemption the same as not having to file a tax return?
No. An exemption only removes the requirement to use MTD-compatible software and send quarterly updates. You still report all your income and gains in a Self Assessment return as normal, by the usual deadlines.
What are the grounds for a digital exclusion exemption?
gov.uk lists three: your age, health condition or disability stops you using a computer, tablet or smartphone; you're a practising member of a religious society or order whose beliefs are incompatible with digital communications or records and you don't use a device at all; or you can't get internet access at home or business because of your location and can't get access at a suitable alternative location.
How do I apply for the MTD exemption as a landlord?
There's no online form for the digitally excluded route. You contact HMRC by phone or post using the Self Assessment general enquiries contact details. If you write, use the subject line "Making Tax Digital for Income Tax - digitally excluded application". You can apply yourself, or an authorised agent, friend or family member can apply for you.
How long does HMRC take to decide?
HMRC aims to respond within 28 calendar days of receiving your application. It may take longer if HMRC needs more information from you. While you wait, you keep your records as you normally would for Self Assessment.
Do I need to apply if my rental income is under £20,000?
No. If your qualifying income (gross trading and property income combined) is £20,000 or less, you're automatically outside MTD for Income Tax and don't need to apply for an exemption. Qualifying income is measured before expenses, and employment and pension income don't count towards it.
What if I just find the software difficult rather than being unable to use it?
Difficulty alone isn't a ground for exemption. The test is whether it's genuinely not reasonable for you to use software, on the grounds HMRC lists. If you can use a device but find MTD daunting, the practical answer is usually support or an agent rather than an exemption. We can help you set up and run MTD properly.
Book a free Tax Health Check →
Want help working out where you stand?
Not sure whether you qualify for an exemption, or whether MTD applies to you at all this year? Book a free 20-minute call with a Zmartly accountant. We'll check your qualifying income, talk through the digital exclusion grounds honestly, and either help you apply or get you set up the easy way. Start with our Self Assessment service or our landlord accounting page.
