List of MTD exemptions

While Making Tax Digital for Income Tax (MTD ITSA) is legally binding for the vast majority of self-employed individuals and landlords who exceed the income thresholds, certain categories of taxpayers are entirely out of scope, permanently exempt, or benefit from temporary deferrals.

Out of Scope Entirely

Currently, the MTD ITSA regulations only apply to individuals (sole traders and individual landlords). The following legal entities and business structures are completely out of scope of the scheme at this stage:

• Limited Companies: Corporate businesses do not fall under the Income Tax regulations and are therefore not required to register for MTD ITSA.
• Partnerships and LLPs: General business partnerships, limited partnerships, and Limited Liability Partnerships (LLPs) are deferred from the current regulations. However, please note that if an individual partner has a separate personal sole trader business or rental property income that exceeds the threshold on its own, they must register for MTD ITSA for those individual income streams.

Permanent Exemptions

A permanent exemption from MTD ITSA applies to specific taxpayers due to their unique legal status or the nature of their income. These exemptions are automatic and do not require a separate application:

• No National Insurance Number (NINO): Individuals who do not have a NINO on 5 April immediately preceding the relevant tax year are permanently exempt.
• Fiduciary Capacities: Trustees, personal representatives of an estate, and individuals acting in a similar capacity are exempt (only in that specific capacity).
• Foster and Kinship Carers: Carers whose sole business income consists of qualifying care relief and who have no other qualifying trade or property income are fully exempt.
• Power of Attorney and Deputyships: If a taxpayer has a formal Power of Attorney or a Court of Protection Deputyship in place, they are exempt, but only if the donor is no longer capable of providing financial or tax information to HMRC. If the donor remains capable of supplying information, the attorney must comply with MTD on their behalf.