In a few months, it will become mandatory for sole traders and landlords earning more than £50,000 a year to use Making Tax Digital (MTD) – unless they are eligible for an exemption.
HMRC will make exemptions for traders or landlords who are ‘digitally excluded’ – which means they can’t switch to the new digital platform due to their age, health condition or disability, lack of broadband access, or inability to use a computer because of religious reasons.
Wondering whether you can avoid the MTD requirements? Here’s how valid exemptions will work.
What counts as digital exclusion from MTD?
For HMRC to allow you to avoid using MTD software, you must meet at least one of the following criteria:
- No internet access – Your home or business must be in a location where you can’t access the internet, and there must not be a suitable alternative location with access.
- Age, health, or disability – You must prove that your age, health condition, or disability prevents you from using a computer, tablet, or smartphone to manage digital records.
- Religion – You must show that you are a practicing member of a religious society that doesn’t use computers, tablets, or smartphones for business or personal purposes.
There may be other reasons for digital exclusion, so HMRC will consider them on a case-by-case basis.
If you have already been granted an exemption from using MTD software for VAT returns, then you will also be exempt from MTD for Income Tax as long as your circumstances stay the same.
Who isn’t digitally excluded from MTD?
HMRC will not accept applications for MTD exemption if the only reason for applying is that:
- You previously only submitted paper tax returns
- You’re unfamiliar with digital accountancy software
- You only have a few digital records each tax year
It’s expected that switching to and using MTD software may require additional costs and extra time at first, so HMRC won’t consider these valid reasons for exemption, either.
You can find more information about applying for an exemption from MTD on the government website, but you should only submit an application if you have a valid reason for digital exclusion.
Do you need help with MTD accounting?
If you want to apply for a Making Tax Digital exemption, you can either apply yourself or get someone else to apply on your behalf using HMRC’s contact details for general enquiries.
Even if you are unable to set up or use MTD software yourself, an easy way to comply with HMRC is to hire an agent who can use the digital software to manage your records and file returns for you.
Here at gbac, we have a team of experienced Barnsley accountants who can handle your digital accounts for you, ensuring efficient tax management year-round.
For more information on how we can help, call us on 01226 298 298 or email info@gbac.co.uk.