The UK tax collector has exempted 661 people from moving to quarterly software-based reporting under its Making Tax Digital (MTD) scheme, about half the number who have applied.

UK treasury minister Dan Tomlinson said that as of January 31, HM Revenue and Customs had received 1,271 applications for MTD exemption, decided on 881, turned down 220, and allowed 661.

"Where a taxpayer cannot use MTD for Income Tax, for example due to age or disability, they can apply for exemption from the MTD requirements," he said in a [1]written parliamentary answer to independent MP James McMurdock.

[2]

Those exempted so far make up less than 0.1 percent of the 780,000 sole traders and landlords who by virtue of making more than £50,000 in the 2024-25 tax year must shift to MTD for Income Tax for the tax year starting on April 6.

[3]

[4]

This requires reports every three months through government-approved software, rather than annual use of HMRC's existing online services or a paper return.

HMRC said that more than 37,000 people have registered so far and more than 13,500 have submitted a test quarterly update. "We're working closely with businesses, agents and software providers, and we're on track to launch Making Tax Digital for Income Tax in April," said a spokesperson.

[5]

"Thousands more customers are signing up every day and we urge customers to check out our guidance on GOV.UK to find out what they need to do."

HMRC said it has run more than 300 online and face-to-face events, and is writing to those affected before April with a QR code and URL linking to explanatory pages on GOV.UK.

Those in scope need to file their first quarterly report by August 7 and HMRC will not start issuing penalty points until the 2027-28 tax year, after which it will fine those who rack up four late submissions.

[6]£111M later, frictionless post-Brexit border dream 'brought to early closure'

[7]UK watchdog to rule on £246M Post Office subsidy over Horizon scandal and IR35

[8]UK tax collector plans £2B tech binge as legacy systems refuse to die

[9]SAP scores £275M award from UK tax collector – sans competition

HMRC's list of approved software includes free options and "bridging" software that can extract the required numbers from spreadsheets, but many sole traders and landlords will pay. In a [10]previous assessment , HMRC estimated that those earning more than £50,000 will pay about £350 each to make the transition and then annual costs of £115.

In April 2027, a further 970,000 sole traders and landlords who make more than £30,000 in the current tax year will have to move to MTD. HMRC's assessment reckoned that the two groups will pay a total of £561 million in one-off costs and spend £196 million more each year as a result, while it expected to spend around £500 million on IT and other costs by end of March 2028.

[11]

However, it estimated that the move will bring in £780 million more tax in the 2028-29 financial year, including through reduced customer errors. It also claims MTD will benefit businesses by saving them time on their annual tax return – which will still be required, although it will be populated with data from the quarterly reports – and improving their productivity.

Following a government decision in March 2025, a further 975,000 people who make more than £20,000 in the 2026-27 tax year will have to shift to MTD in April 2028. Businesses registered for value-added tax (VAT) have been required to use MTD software for quarterly reporting since April 2019. ®

Get our [12]Tech Resources



[1] https://questions-statements.parliament.uk/written-questions/detail/2026-02-09/112075

[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aZg-zxlWRpXa-EiSsOkQWwAAAEg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aZg-zxlWRpXa-EiSsOkQWwAAAEg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aZg-zxlWRpXa-EiSsOkQWwAAAEg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aZg-zxlWRpXa-EiSsOkQWwAAAEg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[6] https://www.theregister.com/2026/02/17/uk_single_trade_window/

[7] https://www.theregister.com/2026/02/04/post_office_horizon_subsidy/

[8] https://www.theregister.com/2026/01/28/hmrc_tech_pipeline/

[9] https://www.theregister.com/2026/01/22/sap_275_million_award_from/

[10] https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords

[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aZg-zxlWRpXa-EiSsOkQWwAAAEg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[12] https://whitepapers.theregister.com/