SAM144001 | Making Tax Digital for income tax Self-Assessment: digital exemptions: introduction

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is a new way for some sole traders and landlords to report their income and expenses to HMRC.

Under MTD for ITSA, customers with qualifying income are required to:

• keep digital records and

• send updates to HMRC each quarter using compatible software

Legislation recognises that some customers cannot reasonably meet these digital requirements. In these cases, the customer may be exempt from MTD for ITSA.

Digital Exemption applies where a customer is digitally excluded. This means that, due to their personal circumstances, it is not reasonable for them to use compatible software.

Where a customer is granted a Digital Exemption, they are not required to meet the digital obligations of MTD for ITSA.

However, the customer will remain within Self-Assessment and must file their tax returns annually until they notify HMRC that they are no longer exempt. The customer must continue to meet their Self-Assessment obligations, including reporting their income and gains through a Self-Assessment tax return.