HMRC previously announced that those newly in scope of the online tax regime could request a dispensation on the grounds of lack of access or ability to use digital platforms

HM Revenue and Customs has received almost 1,300 applications from citizens seeking exemption from necessary compliance with the new digital income tax regime – with more than one in six having already been formally denied the dispensation by the department.

From the first week of April, about 780,000 citizens will need to begin keeping online records and filing income tax self-assessment submissions via HMRC’s Making Tax Digital (MTD) system. Further tranches of 970,000 and 975,000 people will come in scope of MTD in 2027 and 2028 – all of whom will be required to adopt a compatible software platform accredited by the department.

Five months ago, HMRC revealed that individuals can be given an exemption from the newly mandatory electronic filing if they are considered digitally excluded.

Applications for this exemption opened in late September and, as of the end of January, 1,271 people had applied, according to recent comments from exchequer secretary to the Treasury Dan Tomlinson.

The minister revealed that almost 70% – 881 applications – have been processed and decided, with 661 granted an exemption, and 220 denied. This means that 390 are outstanding. With 30% of cases still awaiting decision, about one in six of the total received so far have already been refused.

Guidance issued by HMRC last year advised that users could be formally considered digitally excluded if “your age, health condition or disability stops you from using a computer, tablet or smartphone to keep digital records or submit them to HMRC; you’re a practising member of a religious society or order whose beliefs are incompatible with using digital communications or keeping digital records;… [or] you cannot get internet access at your home or business because of your location, and cannot get access at a suitable alternative location”.

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Exemptions will not be granted if users believe that MTD will cost them more money or take more time than the current regime, nor on the grounds of a lack of knowledge of the necessary software, the guidance advised. The advice document also discouraged applications from those who wish to be exempt because they only “have a small number of digital records to create each tax year” or simply because they “previously filed a paper return”.

Tomlinson, who was answering a written parliamentary question from independent MP James McMurdock, added that the department had undertaken thorough examinations of the potential impact on users of the ongoing digitisation of the UK’s tax system.

“HMRC has assessed the potential impact of MTD for Income Tax the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords,” he said. “Equalities are also considered as part of this impacting. The government is clear that 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.”

With just six weeks to go until the introduction of the new mandatory digital system, PublicTechnology revealed earlier this month that only one in 26 of the 780,000 taxpayers required to migrate to MTD this year are currently signed up to do so.