Can you opt out of Making Tax Digital?

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No, you cannot simply choose to opt out of Making Tax Digital (MTD) just because you prefer the old paper system. If your earnings are above the government’s threshold, MTD is a legal requirement. However, you can apply for an official exemption if it is genuinely impossible or unreasonable for you to use computers or the internet.

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What is Making Tax Digital?

If you are a sole trader or a landlord in the UK, you are probably used to submitting one Self Assessment tax return by the 31st of January every year.

Making Tax Digital for Income Tax changes that entirely. HMRC is moving away from the annual tax return and will soon require you to:

• Keep digital records of all your business income and expenses using approved software.
• Send quarterly updates to HMRC every three months, showing how much you have earned and spent.
• Submit a final declaration at the end of the tax year to tie everything together.

When Do I Have to Join?

You do not have to switch over today, but the rules are rolling out very soon. Whether you have to join depends on your “qualifying income” (your total sales or turnover from self-employment and property before you deduct expenses):

• From 6 April 2026: You must join if your annual income is over £50,000.
• From 6 April 2027: You must join if your annual income is over £30,000.

Note: If you run your business as a Limited Company, these specific income tax rules do not apply to you yet.

Who Can Get an Exemption?

While you cannot just voluntarily opt out to save time, HMRC does recognise that not everyone can use modern technology. If you fall into a group called “digitally excluded”, you can ask HMRC to exempt you from the MTD rules.

You might be eligible for an exemption if:

• You have a disability or health condition that makes it unreasonable or too difficult to use digital software.
• Your location is extremely remote, meaning you have no reliable internet connection.
• Your age makes it practically impossible for you to learn or adopt the required technology.
• Your religious beliefs strictly prevent you from using computers or electronic systems.

How to Apply for an Exemption

You cannot just decide you are exempt and ignore the deadline. If you do not officially arrange it with HMRC, you will be penalized and fined for missing your digital updates.

If you think you qualify:

1. Contact HMRC directly either online, by phone, or by writing them a letter.
2. Explain your situation and provide evidence if they ask for it.
3. Wait for approval. HMRC reviews every application on a case-by-case basis.

If HMRC agrees, they will send you official confirmation. Only then are you safe to keep filing your taxes the old way.

What if My Income Drops Later?

There is one other scenario where you can leave MTD. If you join the system, but your business income later drops below the minimum threshold for three years in a row, HMRC will allow you to officially opt out. Once you opt out, you will stop doing quarterly digital updates and go back to doing a single annual Self Assessment.

Next Steps for the Self-Employed

If your income is over £50,000 and you do not qualify for a digital exemption, the April 2026 deadline is already here. The best thing you can do today is start looking at simple, MTD-approved accounting software or accountant. Easing into digital record-keeping now will make the transition much less stressful when it becomes the law.

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