The Changing Face of Tax Returns
Change is coming. The tax world is shifting. You might feel worried. That is normal. Making Tax Digital for Income Tax Self Assessment is the new reality. We call it MTD for ITSA. It becomes mandatory soon. Mark the date: 6 April 2026. This applies to many people.
Self-employed traders are on the list. Landlords are included too. The threshold is specific. Is your combined gross trading and business income £50,000 or more? Then you are in the net. This looks at the 2024/25 tax year.
You must keep digital records. Paper is out. Digital is in. You must submit quarterly updates. A final declaration is also needed. This happens electronically. You must use compatible software. HMRC demands this.
However, not everyone fits this mould. Some cannot go digital. HMRC knows this. They accept that some people are ‘digitally excluded’. You might qualify for an exemption. This blog explores that possibility. We answer the big question. Are you exempt from MTD for ITSA? Let’s find out.
Understanding Digital Exclusion
What Does Digitally Excluded Mean?
HMRC has a definition. They know barriers exist. You might have valid reasons. Digital tools are not for everyone. You can apply for an exemption. But your reason must be solid. It cannot be a preference. It must be a genuine barrier.
Consider your personal situation. HMRC looks at three main areas. These are age, location, and beliefs. Let’s break these down.
Age, Health, and Disability
Your physical health matters. Your mental health counts too. Perhaps your age is a factor. Does a condition prevent you from using technology? Can you use a tablet? Is a smartphone impossible for you?
Maybe you cannot use a computer screen. Disabilities can make this hard. If you cannot keep digital records, tell HMRC. If you cannot submit returns, let them know. This is a valid ground for exclusion. You must prove this difficulty.
Religious Beliefs and Technology
Religion plays a role for some. You might belong to a specific order. Some societies shun modern technology. Your beliefs might be incompatible with digital records. Do you refuse to use computers? Do you avoid smartphones?
This must be consistent. It applies to your whole life. You cannot use tech for personal reasons. It cannot be used for business either. If this is you, exemption is possible. HMRC respects strict religious observance.
Internet Access and Location
Where do you live? Where is your business? Connectivity is not universal. Some places are dead zones. You might have no internet access at home. Your business premises might be offline.
HMRC checks this. Is there a suitable alternative location? Can you go elsewhere? If not, you have a case. Lack of infrastructure is a valid reason. You cannot file what you cannot send. This makes you digitally excluded.
Reasons That Will Be Rejected
Preference is Not an Excuse
You might hate computers. We understand that. However, dislike is not enough. HMRC is strict here. They will reject weak excuses. Do not waste your time with invalid reasons.
“I Always Use Paper”
Habit is not a defence. You might love paper returns. You have filed them for years. That does not matter. The system is changing. You must change with it. Past behaviour does not grant future exemption.
“I Don’t Know the Software”
New software is scary. Learning takes time. Being unfamiliar is not a valid excuse. You are expected to learn. Training is your responsibility. Lack of knowledge will not save you.
“My Records Are Simple”
You might have few transactions. Perhaps your business is small. A small number of records is irrelevant. The volume does not matter. The process is the key. Even small businesses must comply.
“It Costs Too Much”
Money is tight. We get that. Compliance brings extra costs. It takes extra time. Sadly, HMRC ignores this. Expense is not a valid reason. Time constraints are not accepted. You must budget for this change.
The Link Between VAT and ITSA
Existing VAT Exemptions
Do you pay VAT? Are you already exempt from MTD for VAT? This is good news. You are likely digitally excluded already.
HMRC should be consistent. Your circumstances must remain the same. If nothing has changed, you are safe. They will accept your status. You are also exempt from MTD for ITSA.
You Must Still Apply
Do not assume it is automatic. You must still take action. Communication is vital. You need to write to HMRC. Tell them your situation.
Quote your VAT registration number. Give them your National Insurance number. Remind them why you are excluded. Confirm your VAT exemption status. Connect the dots for them.
How to Apply for Your Exemption
The Application Process
You believe you qualify. Now you must act. Are you exempt from MTD for ITSA? Only if you apply successfully. You must write a letter. Phone calls are not the standard path.
Do this early. Act ahead of your start date. Do not leave it until April 2026. Preparation is key to business success.
What to Include in Your Letter
Your letter must be detailed. Include your National Insurance number. Clearly state your name. Write down your full address.
Explain your current method. How do you file now? Do you use a paper form? Does an agent help you? Be specific.
State Your Reasons Clearly
Why are you excluded? Explain your barrier. Is it health? Is it location? Provide information to support this. Evidence helps your case.
Do you have an accountant? Tell HMRC. What do they do for you? Do you have additional needs? List them all. Paint a full picture.
Using an Agent
Agents can help. A friend can help. They can apply on your behalf. This is useful for the elderly. It helps those with disabilities.
However, there is a catch. Read this carefully. Can your agent use digital tools? Can they file for you? If yes, you might be denied.
HMRC might say “use your agent”. If someone can do it for you, you are not excluded. The exemption is for the process, not just the person.
Where to Send Your Application
Get a stamp. You need to post this. Send your application to the following address:
Self Assessment
HM Revenue and Customs
BX9 1AS
Keep a copy. Proof of postage is wise. Never trust the post blindly.
Automatic Exemptions
Who Gets a Free Pass?
Some groups are lucky. They do not need to apply. Exemption is automatic. Are you exempt from MTD for ITSA? If you fit these groups, yes.
Trustees and Charities
Are you a trustee? Do you handle a charitable trust? Perhaps it is a non-registered pension scheme. If so you are exempt, furthermore you cannot sign up voluntarily.
Personal Representatives
Death brings tax issues. Someone must handle the estate. Are you a personal representative? Are you filing for someone who died? You are automatically exempt. You do not need to worry about MTD.
Lloyd’s Underwriters
This is a niche group. Are you a Lloyd’s underwriter? Does this relate to underwriting activity? You are exempt. This is a specific business rule.
Non-Resident Companies
Where is your company based? Is it a non-resident company? In other words, you are exempt. The UK digital rules do not apply.
No National Insurance Number
Check your paperwork. Do you have a National Insurance number? Look at the date. Is it 31 January before the tax year starts?
If you have no number, you are exempt. This is a technical exemption. It is automatic.
Why You Should Not Ignore This
Face the Numbers
Ignoring MTD is dangerous. April 2026 feels far away. It is not. Time moves fast in business. You need a plan.
Are you exempt from MTD for ITSA ? Maybe you are not exempt. That is okay. Digital records can help you. They give you clarity. You see your numbers in real-time. This helps you make better decisions.
Get Professional Help
Unsure about your status? Confused by the rules? Ask for help, ask your accountant, if you don’t have one, choose one , cough cough –we support small businesses and help you navigate HMRC.
Conclusion
Take Action Today
Do not bury your head. Check your income. Check your eligibility. Are you exempt from MTD for ITSA? Know the answer for sure.
If you are exempt, apply now. Write that letter. Above all, if you are not exempt, start preparing. Look for software. Get your records ready.
Business is about control. Know your tax position. Control your future.
Stop The Software Tax
The way you file your taxes is changing. And if we don’t act now, it is going to cost you money.
For years, the deal has been simple for many. You earn money, owe tax, log onto the government website, file your return for free, and pay what you owe.
But from April 2026, HM Revenue & Customs (HMRC) is breaking that deal.
They are turning off the free online tax return portal for millions of self-employed people and landlords. They are replacing it with Making Tax Digital for Income Tax (MTD ITSA).
At I Hate Numbers, we are fans of digital accounting. We know that for many businesses, moving to the cloud saves time and boosts profits. But we draw the line at the government mandating a digital system without providing the basic tools to use it.
We are launching the Stop The Software Tax campaign. Our message is simple: If the government mandates it, they must provide it.
More Final Words
I have written a book for you, called “I Hate Numbers“. One readers quote
“When I say this is an easy read, it’s a compliment. Mahmood Reza gives a clear, jargon-free, practical guide to bookkeeping, budgets, tax and the financial building blocks of business. It’s such an insightful read and an essential reference book for anyone who struggles with – or like me, is intimidated by – figures and accounting. Brilliant to have on the bookshelf for whenever you need to demystify the world of numbers. Highly recommended!”Your business journey matters. Your numbers tell a story. You need the right mindset. You need the right tools.
Buy the book I Hate Numbers today. It will change how you view your business. It turns anxiety into profit. Click the link. Get your copy. Start your journey to financial confidence.
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