As HMRC prepares to implement its Making Tax Digital (MTD) system for income tax returns this April, more than 1,600 individuals have already applied for exemptions on the grounds of “digital exclusion.” This figure comes from a recent Freedom of Information (FoI) request obtained by Saffery, the accountancy firm.
Out of these applications, 855 have been approved, meaning nearly 47% were rejected. Under the new MTD rules, individuals with self-employed or property income over £50,000 will be required to maintain digital records and submit quarterly updates to HMRC rather than the traditional annual tax return.
Zena Hanks, partner at Saffery, commented: “HMRC appears to grant exemptions only in the clearest cases of digital exclusion, although defining and proving digital exclusion is often complicated. With the initial roll-out scheduled for April, it’s likely that exemption requests have continued to rise since mid-February.”
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Hanks added that many of the challenges linked to digital exclusion could be mitigated through increased support, training, or guidance. “While Making Tax Digital aims to modernise the tax system, these statistics highlight that a significant group of taxpayers may struggle with the transition,” she said.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, emphasised that MTD represents a generational shift. “Quarterly updates are not full tax returns—they are straightforward summaries generated by software which help spread the administrative burden throughout the year instead of accumulating it all at the January Self Assessment deadline.”
These new digital reporting requirements apply not only to landlords but to all individuals reporting income as sole traders. This includes around 3,000 self-employed people in the property industry alone, plus an additional 400,000 across other sectors.