Is being under the threshold the same as being exempt?

Not quite. Being under the threshold means you're not required to join yet, but you can still choose to join voluntarily. A formal exemption is different and applies regardless of income.

Do I need to apply for an exemption, or does it happen automatically?

Formal exemptions (for reasons like digital exclusion) need to be applied for and agreed with HMRC. They don't apply automatically just because you think you qualify.

MTD exemptions and who is NOT in scope

Not everyone needs to follow Making Tax Digital for Income Tax, at least not yet. Here’s who’s currently out of scope, and the difference between “not yet required” and “formally exempt.”

Below the income threshold

The most common reason you’re not yet in scope is simply income. The threshold phases in over several years:

Over £50,000: from April 2026
Over £30,000: from April 2027
Over £20,000: from April 2028

If your qualifying income from self-employment and property is under the relevant threshold for your tax year, you’re not required to follow MTD yet. Use the free scope checker to see exactly where you stand.

Formal exemptions

Separately from the income threshold, HMRC recognises specific circumstances where someone can be exempt regardless of income, including:

Being unable to use digital tools for reasons of age, disability, location, or other circumstances (sometimes called “digital exclusion”)
Religious objection to using electronic communications, in specific recognised circumstances

These aren’t automatic. You need to apply to HMRC and have the exemption agreed, rather than simply deciding it applies to you.

Income types not covered by MTD for Income Tax (yet)

MTD for Income Tax currently applies to self-employment and UK property income specifically. Other income types (like employment income taxed through PAYE, or most investment income) aren’t brought into MTD’s quarterly update requirement through this route, though they may still need to be reported on your annual return as usual.

Under the threshold now: what changes later?

If your income grows past the threshold in a later year, you’ll be brought into MTD from the tax year that applies to your new threshold band. It’s worth rechecking the scope checker if your income changes significantly, rather than assuming your status is fixed.

Not sure which applies to you?

If none of the above clearly applies and you’re still unsure, that uncertainty is worth resolving with HMRC or an accountant directly, getting it wrong in either direction (registering when you don’t need to, or not registering when you do) is avoidable with a five-minute check.