HMRC has released new guidance for eligible businesses to apply for an exemption from Making Tax Digital (MTD) on the grounds of being “digitally excluded.”<\/p>\n
For many sole traders<\/a> and micro-companies, complying with new and impending MTD regulations has added yet another layer of stress to running a business.<\/p>\n Now, those who genuinely can’t go digital may be allowed to continue filing self-assessment tax returns in the traditional way.<\/p>\n But what exactly does it mean to be “digitally excluded”? And more importantly, how can taxpayers make a successful case for exemption?<\/p>\n Making Tax Digital (MTD)<\/a> for Income Tax is HMRC’s new digital system for reporting income from self-employed work or property. It’s being introduced in stages, affecting:<\/p>\n Even if you’re not legally required to join yet, you can opt in voluntarily. MTD is designed to help taxpayers minimise errors and make returns more accurate. But while there are long-term benefits, for many, its adoption is also creating new challenges in the short-term.<\/p>\n MTD requires taxpayers to adopt compatible accounting software<\/a>, keep digital records, and submit quarterly updates to HMRC, which can be a steep learning curve for smaller businesses that may not already be working with software.<\/p>\n While the introduction is phased, failing to comply once you’re required to do so could lead to penalties, interest charges, and additional administrative headaches.<\/p>\n HMRC recognises that not everyone can realistically make the move to digital reporting. Therefore, its new “digital-exclusion” exemption is designed for taxpayers who genuinely cannot use digital tools to report their income.<\/p>\n According to guidance from the ICAEW’s Tax Faculty<\/a>, those who believe they’ll qualify should apply well before April 2026 if they fall under the first MTD rollout group, to give HMRC enough time to assess their case.<\/p>\n While HMRC continues to encourage all taxpayers to prepare for MTD, the ICAEW advises that even those applying for exemption should keep their paper accounting records up to date, just in case they eventually do need to switch to a digital format.<\/p>\n If initially successful, exemptions can still be reviewed or withdrawn if circumstances change, for instance, if a taxpayer gains reliable internet access or support using digital tools.<\/p>\n You may qualify for exemption on the grounds of being “digitally excluded” if:<\/p>\n The deadline for exemption depends on when MTD becomes mandatory for your income:<\/p>\n To apply, you’ll need:<\/p>\n If you think you qualify, you can apply by calling or writing to HMRC. HMRC aims to process applications within 28 days, so make sure to do so well in advance of your start date in order to receive a timely decision.<\/p>\n Be aware that HMRC can challenge applications, especially in borderline situations. If your exemption is refused, you can appeal the decision, seek help from a tax adviser, or gradually transition to digital tools to become MTD-compliant.<\/p>\n The post HMRC introduces digital-exclusion exemption for MTD<\/a> appeared first on Startups.co.uk<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" HMRC has released new guidance for eligible businesses to apply for an exemption from Making Tax Digital (MTD) on the grounds of being “digitally excluded.” For many sole traders and micro-companies, complying with new and impending MTD regulations has added yet another layer of stress […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-270","post","type-post","status-publish","format-standard","hentry","category-startups"],"_links":{"self":[{"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/posts\/270","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/comments?post=270"}],"version-history":[{"count":1,"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/posts\/270\/revisions"}],"predecessor-version":[{"id":271,"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/posts\/270\/revisions\/271"}],"wp:attachment":[{"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/media?parent=270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/categories?post=270"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.ccsbinc.com\/index.php\/wp-json\/wp\/v2\/tags?post=270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What is Making Tax Digital?<\/h2>\n
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What are the new digital-exclusion exemption rules?<\/h2>\n
Are you eligible for MTD exemption?<\/h2>\n
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How to apply for MTD exemption<\/h2>\n
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