Exemptions from Making Tax Digital for Income Tax obligations

HMRC has outlined specific categories of individuals who are exempt from Making Tax Digital (MTD) for Income Tax obligations where compliance would be unduly onerous or technically complex. This exemption applies if a person falls into a specified description during the previous filing tax year or notifies HMRC after the start of the digital obligation tax year.

What it means for a practice

• You must identify if any of your clients meet the criteria for these exemptions, which include specific categories related to lasting or enduring powers of attorney, appointed deputies, guardians, or controllers.
• Other exempt groups include ministers of religious denominations and underwriting members of Lloyd’s.
• Where an exemption is valid, any MTD obligation is treated as never having arisen, provided the power has not been revoked and the donor is not capable of providing financial information themselves.
• Ensure you maintain accurate records regarding client status and formal notification to HMRC to support any claims for exemption from digital filing.