How to apply for MTD exemption

How to apply for MTD exemption

If you’re wondering about Making Tax Digital exemptions, or want to find out how to apply, get all the answers you need in this quick guide.

Am I already exempt from MTD?

You might already be automatically exempt from Making Tax Digital! This will apply if your taxable turnover is under £85,000 since April 2019, you are already exempt from filing VAT Returns online, or you or your business is in an insolvency procedure. In these cases, you don’t need to apply for an exemption from HMRC.

But, if your taxable turnover is over £85,000, you will need to follow the rules for Making Tax Digital for VAT unless you apply for MTD exemption.

When can I apply for an exemption?

You can apply to be exempt from Making Tax Digital if you are unable to use a computer, software or the internet. This could be for a number of reasons, including age, disability, location or religious reasons.

How to apply for MTD exemption

To apply for your exemption, you will need to contact HMRC and provide:

  • VAT registration number
  • Business name and address
  • Why you believe you are exempt
  • How you currently file your VAT Return
  • If you’re applying on someone’s behalf, you need authorisation from the business

HMRC will send you a letter confirming their decision. You will need to continue filing VAT Returns in your normal way until you hear from HMRC.

What if I have already voluntarily signed up to pay VAT?

Many smaller businesses voluntarily sign up to pay VAT. But, you can opt out if you signed up for MTD voluntarily and you taxable turnover hasn’t reached £85,000 since you signed up. You can do this by logging in to your VAT online account.

Once you’ve opted out, this will take effect from your next VAT period. So you’ll need to keep digital records and submit your next return using MTD compatible software until then. You also need to wait 48 hours after opting out before you can send your next VAT Return.

Soft landing period

Due to coronavirus, HMRC has extended the soft landing period. Now, you will need to be MTD compliant by your VAT period that starts on or after 1 April 2021. So, businesses that need to follow regulations will have more time to prepare and find an MTD compatible software.

Choosing an MTD accounting software

If your application is denied and you do need to submit a VAT Return with Making Tax Digital, using an easy-to-use free accounting software will help make the process more manageable.

Bokio is a free online accounting software that lets you submit your VAT Return for MTD in minutes. When you do your bookkeeping with Bokio, your VAT Return is automatically generated. So all you need to do is connect to HMRC, check your return, and submit it. It’s that simple!