Does Making Tax Digital Apply to Limited Companies? (2026 Guide)

No. HMRC has confirmed that Making Tax Digital for Corporation Tax is not proceeding. Limited companies will not be required to file Corporation Tax returns through MTD-compatible software. Your company's Corporation Tax return (CT600) continues to be filed through the existing HMRC process — either directly or through your accountant. This was originally planned as a future phase of the MTD programme, but HMRC decided not to proceed after consultation. The announcement means there is no scheduled date for limited companies to be brought into MTD through their Corporation Tax obligations. This applies to all types of limited companies: private limited companies (Ltd), public limited companies (PLC), companies limited by guarantee, and community interest companies (CIC). It also applies to limited liability partnerships (LLPs) in respect of their corporate tax obligations. However, this only applies to Corporation Tax. If your limited company is VAT-registered, you are fully in scope for MTD for VAT — which is a completely separate requirement. And if you, as a director, have personal income that falls under Income Tax Self Assessment, you may be personally in scope for MTD ITSA.

If your limited company is VAT-registered, yes — you must comply with MTD for VAT. This has been mandatory since April 2022 for all VAT-registered businesses, and there is no turnover threshold. MTD for VAT requires your company to keep digital VAT records and submit VAT returns through MTD-compatible software. You cannot submit through the HMRC online portal. Your software must connect to HMRC's API and transmit the 9-box VAT return electronically. The VAT registration threshold is currently £90,000. If your company's taxable turnover exceeds this amount in any rolling 12-month period, you must register for VAT and comply with MTD for VAT. If you are voluntarily registered below the threshold, you still must comply. If your company is not VAT-registered and your taxable turnover is below £90,000, MTD for VAT does not apply to you. You have no MTD obligations through your limited company at all, given that Corporation Tax MTD is cancelled. For companies that are newly incorporating and expect to be VAT-registered, plan for MTD for VAT compliance from day one. Choose accounting software that is MTD-compatible before you start trading.

This is where many company directors get caught out. MTD for Income Tax (ITSA) applies to individuals, not companies. If you are a company director who also has personal self-employment income or UK property income — and the gross total of those income sources is £50,000 or more — you are personally in scope from April 2026. Your director's salary paid through PAYE does not count. Dividends from your company do not count. Only your gross self-employment income and gross UK property (rental) income are included in the qualifying income calculation. Common scenarios where company directors are personally affected: 1. You own buy-to-let properties personally (not through the company) with gross rental income of £50,000+ 2. You run a side consultancy as a sole trader alongside your limited company 3. You have rental income of £30,000 and a sole trader side-hustle earning £25,000 gross — combined qualifying income of £55,000 If your personal qualifying income is below £50,000, you are not in scope in April 2026. But check whether you will be caught by the lower thresholds: £30,000 from April 2027 and £20,000 from April 2028. Importantly, even if you do have qualifying income, your limited company itself has no MTD ITSA obligations. It is only your personal income that is in scope.

Use this decision tree to determine whether MTD applies to you and your company. Check each scenario to find your situation. The key principle: your company's Corporation Tax is never in scope (MTD Corporation Tax is cancelled). MTD for VAT depends on your company's VAT registration status. MTD for Income Tax depends on your personal income outside the company. If none of the scenarios below match your situation, you likely have no MTD obligations. However, if your personal income or your company's turnover changes in the future, re-check against the thresholds.

The qualifying income calculation for MTD ITSA only includes two categories of income: gross self-employment income and gross UK property income. These are combined and assessed before any expenses, allowances, or deductions. Income that does NOT count towards the qualifying threshold: - Director's salary (PAYE employment income) - Dividends from your limited company - Savings interest - Pension income - Capital gains - Income from ISAs or other tax-free wrappers - Foreign property income (only UK property income counts) Income that DOES count: - Gross rental income from UK properties owned personally (not through the company) - Gross self-employment income from any sole trader activity - Income from a partnership where you are a partner (when HMRC brings partnerships into scope) The word 'gross' is critical. If you have rental income of £55,000 per year but mortgage interest, repairs, and management fees reduce your profit to £20,000 — your qualifying income is still £55,000. Expenses do not reduce the qualifying income figure. If your qualifying income fluctuates year to year, assessment is based on the previous tax year. If your 2025/26 qualifying income exceeds £50,000, you must comply with MTD ITSA from April 2026.

Your preparation depends on which MTD requirements apply to you. Use the decision tree above to identify your situation, then follow the relevant steps below. If your company is VAT-registered (and you are not already using MTD-compatible software — unlikely but possible if you are newly registered), switch to MTD-compatible accounting software immediately. MTD for VAT has been mandatory since April 2022. If you have personal qualifying income of £50,000 or more and need to prepare for MTD ITSA from April 2026: 1. Calculate your qualifying income. Add gross self-employment income to gross UK property income. Remember: gross means before expenses. 2. Sign up for MTD ITSA through your Government Gateway account (you can do this now, before the mandatory date). 3. Choose MTD-compatible software for your personal income. This can be different from your company's accounting software. 4. Start keeping digital records of your personal rental or self-employment income and expenses. 5. Authorise your software (or your accountant's software) to submit to HMRC on your behalf. If your qualifying income is between £30,000 and £49,999, you have until April 2027. Between £20,000 and £29,999, you have until April 2028. Use this time to get your digital records in order. If you have no personal self-employment or rental income and your company is not VAT-registered, you have no MTD obligations. Continue filing your Corporation Tax return and personal Self Assessment (if applicable) through existing channels.

AccountsOS is built for UK limited company directors — the exact audience navigating these MTD complexities. Here is how it helps: For MTD for VAT: AccountsOS connects directly to HMRC's MTD API. Your company's VAT records are maintained digitally, bank transactions are imported and categorised automatically, and your 9-box VAT return is calculated and submitted without logging into the HMRC portal. Digital links are maintained end-to-end because everything lives in one system. For directors with personal MTD ITSA obligations: AccountsOS can track your personal rental income and self-employment income alongside your company's accounts. When MTD ITSA becomes mandatory, you can submit quarterly updates and your Final Declaration from the same platform. For Corporation Tax (which is not part of MTD): AccountsOS generates Profit & Loss and Balance Sheet reports that feed directly into your CT600. While the CT600 itself is filed through existing HMRC channels, having accurate, real-time financial data makes the process straightforward. AccountsOS is free during Early Access. You can set up your company, connect your bank, and start maintaining MTD-compliant digital records today — well ahead of any personal MTD ITSA deadline.