Making Tax Digital for Limited Companies — What's Coming and How to Prepare

MTD Is Already Here for Some

Making Tax Digital is not a future concept — it's already live for VAT (since 2019) and rolling out for Income Tax from April 2026. For limited companies, MTD for Corporation Tax is the next phase. Understanding the direction of travel now allows you to build the right habits and systems before compliance becomes mandatory.

MTD for VAT — Already Mandatory

If your company is VAT-registered, you're already subject to MTD. You must keep digital VAT records and submit VAT returns using MTD-compatible software. If you're not already doing this, you need to act immediately — non-compliance carries penalties.

MTD for Income Tax — Relevant for Director-Shareholders

If you're a director who also receives income from self-employment or property (in addition to your salary and dividends from the company), MTD for Income Tax may apply to you personally from April 2026 if your qualifying income exceeds £50,000. This is separate from the company's obligations.

MTD for Corporation Tax — What We Know

HMRC has confirmed that MTD for Corporation Tax will be introduced, but the timeline has been pushed back. A pilot is expected before mandatory rollout. The likely requirement will be quarterly digital updates of income and expenses, followed by a final Corporation Tax return — mirroring the MTD for Income Tax model.

How to Prepare Now

Use MTD-compatible accounting software from the start — QuickBooks, Xero, FreeAgent, and Sage are all HMRC-recognised. Keep digital records of all income and expenses. Reconcile your accounts regularly rather than leaving it to year end. These habits will make MTD compliance straightforward whenever it becomes mandatory for your company.

Read next: Making Tax Digital for Income Tax — What Sole Traders and Landlords Need to Know

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This article is for educational and informational purposes only and does not constitute legal, financial, or professional advice. Always verify current requirements and consult a qualified professional for your specific situation.