Key takeaways

  • You cannot simply choose to leave MTD for Income Tax if your qualifying income is over the threshold; you need an exemption.
  • You can opt out if your qualifying income is below the relevant threshold for 3 consecutive tax years, or if you amend last year's return to bring it below the threshold.
  • The opt-out option appears in your HMRC online services account (or agent services account) only if you are eligible.
  • When you opt out, quarterly updates already sent for that tax year are deleted, but you must still file a Self Assessment return.
  • Digitally excluded people apply for an exemption by calling Self Assessment on 0300 200 3310 or writing to HMRC; HMRC aims to reply within 28 calendar days.
  • You can appeal a refused exemption in writing within 30 days of the decision letter.
  • Some people are automatically exempt, including partnerships, people with qualifying income of £20,000 or less, and people without a National Insurance number.

You cannot opt out of Making Tax Digital for Income Tax just because you would rather not use it. HMRC allows an opt-out only when your qualifying income has been below the threshold for 3 consecutive tax years, or when you amend last year’s return to bring it under. If you are over the threshold, the only way out is an exemption, for example because you are digitally excluded.

Can you choose to leave MTD for Income Tax?

No, not if you are required to use it. MTD for Income Tax is mandatory from 6 April 2027 for sole traders and landlords whose 2025/26 qualifying income is over £30,000, and from 6 April 2028 where 2026/27 qualifying income is over £20,000, according to HMRC’s eligibility guidance.

Qualifying income is your total self-employment and property income before expenses. Employment, dividends and pensions do not count. See MTD qualifying income.

When can you opt out?

HMRC’s circumstances guidance, updated 16 October 2026, gives two routes.

RouteWhen it applies
3-year ruleQualifying income below the relevant threshold for 3 consecutive tax years
Amended returnYou amend the previous year’s return and qualifying income falls below the threshold

For the 3-year rule, HMRC uses the income in your fourth quarterly update for the third year. You do not need to wait for that year’s tax return.

A worked example of the 3-year rule

HMRC gives this example. Your qualifying income is £20,000 or less based on:

  1. your 2026/27 tax return,
  2. your 2027/28 tax return, and
  3. your fourth quarterly update for 2028/29, sent by 7 May 2029.

You can then opt out and would not need to use MTD for 2029/30. HMRC does not give an example for someone who joins in April 2027, so check your own dates with your adviser.

How to opt out

You opt out in your HMRC online services account, or your agent does it in their agent services account. HMRC says the option only appears if you are eligible.

Once you opt out:

  • you no longer need to keep digital records or send quarterly updates,
  • updates already sent for that tax year are deleted, and
  • you still file a Self Assessment return, with or without your MTD software.

If you are eligible and do nothing, you stay in MTD as a voluntary user. Your online account will show this.

Who is exempt without applying?

Some people never have to use MTD. HMRC’s exemptions page, updated 28 May 2026, lists them.

  • Partnerships, which do not currently need to use MTD for Income Tax.
  • People with qualifying income of £20,000 or less.
  • People without a National Insurance number before the start of the tax year.
  • Trusts filing an SA900, non-resident companies filing an SA700, and personal representatives of someone who has died.
  • People who cannot provide information to HMRC and have a power of attorney, deputy or guardian.

Some people are exempt until April 2027 at least, such as those who claimed averaging relief or qualifying care relief on their 2024/25 return. Others, such as ministers of religion filing an SA102M, are exempt beyond April 2027. Read our MTD exemptions guide.

How to apply if you are digitally excluded

You apply for a digital exclusion exemption by phone or letter; there is no online form. HMRC’s application guidance, updated 17 August 2026, says to use Self Assessment general enquiries.

  1. Call 0300 200 3310 (Monday to Friday, 8am to 6pm), or +44 161 931 9070 from abroad.
  2. Or write to Self Assessment, HM Revenue and Customs, BX9 1AS, headed “Making Tax Digital for Income Tax: digitally excluded application”.
  3. Give your name, address and National Insurance number, how you file now, and why you think you are digitally excluded.
  4. Wait for a reply. HMRC aims to answer within 28 calendar days.
  5. Appeal in writing within 30 days of the decision letter if refused.

Agents use the Agent Dedicated Line instead. If you must start on 6 April 2027, HMRC says you can apply now.

What counts as digitally excluded?

You are digitally excluded if it is not reasonable for you to use compatible software. HMRC’s examples are age, health or disability, religious beliefs incompatible with digital records, or no internet access at home, work or a suitable alternative place.

HMRC will not accept these reasons on their own: you filed on paper before, you are unfamiliar with software, you keep few digital records, or signing up costs time or money.

What to do now

If you are due to join in April 2027 and want out, follow this order.

  • Check your 2025/26 qualifying income with our MTD checker.
  • Check whether you are automatically exempt.
  • If you are digitally excluded, apply now, before your first update on 7 August 2027.
  • If you have already signed up and your circumstances change, keep using MTD until HMRC replies.

For help with failed or late updates, see MTD penalties.

Frequently asked questions

Can I opt out of MTD for Income Tax if I signed up voluntarily?

Only if you meet one of HMRC’s opt-out conditions, which is shown in your online account. If your income is below the threshold and you do not opt out, you stay in as a voluntary user.

How many years must my income be below the threshold to opt out?

Three consecutive tax years. HMRC checks the third year using your fourth quarterly update.

What happens to quarterly updates if I opt out?

Updates already sent for the tax year you opt out are deleted. You still file a Self Assessment return for that year.

How long does HMRC take to decide a digital exclusion application?

HMRC aims to reply within 28 calendar days, though it may take longer if it needs more information.

Do I keep using MTD while my exemption is decided?

Yes, if you have already signed up. HMRC says to continue using MTD while you wait to hear back.

Sources

Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.