It is possible to make a claim for averaging relief in relation to: 

• self-employment income, using the SA103 supplementary page to the SA tax return (ie, as an individual); or 
• partnership income, using the SA104 supplementary page (ie, as a partner).  

The making of a claim for averaging relief is one of the circumstances in which an exemption may apply from MTD income tax for 2026/27.  

Individuals 

Where an individual made a claim for averaging relief using the SA103 in their 2024/25 SA tax return, they are automatically exempt from MTD income tax for 2026/27. Where this was not the case, but the individual reasonably expects to make a claim for averaging relief in their tax return for either 2025/26 or 2026/27, they must apply to HMRC for exemption. 

Partners 

Although MTD income tax does not apply to partnerships, a partner will be within scope of MTD income tax for 2026/27 where their total gross income from all qualifying sources (sole trades and property businesses) exceeded £50,000 in 2024/25. Where this is the case, they must keep digital records and submit quarterly updates for their qualifying sources, and use MTD-compliant software to file their 2026/27 year end tax return.  

HMRC’s updated guidance states that where the partner claimed averaging relief using the SA104 in their 2024/25 SA tax return, they are not automatically exempt from MTD income tax for 2026/27 and must apply to HMRC for exemption. Previously, HMRC’s guidance stated that the partner would be automatically exempt from MTD income tax in such circumstances.  

As is the case for individuals, a partner must apply for exemption where they reasonably expect to make a claim for averaging relief in their tax return for either 2025/26 or 2026/27.