Quick answer: For clients who may qualify for a digitally excluded, foster carer, or non-resident exemption from MTD for Income Tax, your role is confirming genuine eligibility, helping them apply directly to HMRC (the exemption isn’t automatic), and keeping their ongoing Self Assessment obligations on track separately from any MTD-mandated clients.
Not every client should be onboarded onto MTD software the moment their income crosses the threshold. A small number will genuinely qualify for an exemption, and handling that correctly matters as much as handling standard mandation correctly.
Who to screen for an exemption
The main categories are age, disability, remote location without reliable internet, religious grounds, and foster carers, alongside the specific non-resident easement for those who filed the SA109 pages on their 2024/25 return. See our full explainer on the digitally excluded exemption and MTD for non-UK residents for the detail on each.
Your role in the application
The exemption isn’t granted automatically, even to clients who clearly meet the criteria; someone needs to actively apply to HMRC and set out the circumstances. As their agent, you’re often best placed to prepare that application, particularly gathering the supporting detail HMRC will want (nature of the disability or circumstance, why it makes digital record-keeping genuinely impractical, not just inconvenient).
Managing the client afterward
Once granted, an exempt client continues on the traditional annual Self Assessment process, no MTD software, no quarterly updates. It’s worth keeping a clear internal flag on these clients so they’re not mistakenly swept into your practice’s standard MTD onboarding workflow, and worth checking periodically whether their circumstances (and therefore their exemption) still hold.
Where the bar sits
HMRC’s threshold is genuine impracticability, not client preference for the old system. Setting this expectation clearly with clients who ask about an exemption purely because they’d rather not deal with software saves a difficult conversation later if HMRC declines the application.
Managing MTD across a growing client list? See the CleanBooks AI Partner Programme.
