Calibra Accountancy

Does Making Tax Digital apply to limited companies?

A short, clear answer on whether Making Tax Digital applies to UK limited companies, what does apply today, and what is coming next.

Short answer: Making Tax Digital for Income Tax does not apply to limited companies. Making Tax Digital for VAT does, if your company is VAT registered. A separate Making Tax Digital for Corporation Tax regime has been floated by HMRC but has no confirmed start date.

Here is the fuller picture.

MTD for Income Tax: not limited companies

Making Tax Digital for Income Tax (MTD ITSA) is aimed at individuals with self-employment or rental income. It replaces annual Self Assessment with quarterly digital updates from April 2026 for people over £50,000.

Limited companies do not file Self Assessment on their trading profits, so MTD ITSA does not apply to the company itself.

Two things to watch for as a director:

  • If you take dividends and salary from your Ltd, that goes on your personal Self Assessment. On its own it does not pull you into MTD ITSA (dividends and PAYE do not count towards the £50,000 threshold).
  • If you also have a side self-employment or personal rental income over the threshold, you as an individual are in scope for MTD ITSA even though your company is not.

MTD for VAT: yes, if your company is VAT registered

Since April 2022, every VAT-registered business, including limited companies, has been required to:

  • Keep VAT records in HMRC-compatible software.
  • File VAT returns through the software (not manually via the HMRC portal).

This applies regardless of turnover. If your Ltd is VAT registered, MTD for VAT is already live for you. Xero, QuickBooks, FreeAgent and Sage all handle it out of the box.

MTD for Corporation Tax: not yet

HMRC consulted on extending Making Tax Digital to corporation tax and originally floated a 2026 start. That has been shelved. There is currently no confirmed date, and HMRC has said any launch will come with a lead time and a voluntary pilot first.

Realistically, corporation tax filings will stay as they are (annual CT600 through compatible software) for some time yet.

What limited companies should actually do

Even without MTD ITSA, the direction of travel is the same: digital records, cloud accounting software, and a monthly rhythm rather than a year-end scramble. The companies that will be least disrupted when MTD for Corporation Tax eventually lands are the ones already doing this.

If your Ltd is on paper, on spreadsheets, or on desktop-only software, moving to cloud accounting now costs nothing extra and makes VAT, payroll, statutory accounts and any future MTD change massively easier to run.

More on what we do for limited companies: Corporation Tax, Annual Financial Statements, and Bookkeeping and VAT. For directors with a personal side hustle or rental income, our Making Tax Digital package covers the ITSA side.

Frequently asked questions

Does Making Tax Digital apply to limited companies?
MTD for Income Tax does not apply to limited companies. MTD for VAT does, if the company is VAT registered. A separate MTD for Corporation Tax regime has been consulted on but has no confirmed start date.
Is my limited company affected by MTD for Income Tax in 2026?
No. MTD ITSA is aimed at individuals with self-employment or rental income. Company profits are not in scope. Directors with personal side income over £50,000 may still be personally in scope.
Do I need MTD software if my Ltd is VAT registered?
Yes. Since April 2022 every VAT-registered business must keep digital VAT records and file VAT returns through HMRC-compatible software, regardless of turnover. Xero, QuickBooks, FreeAgent and Sage all handle this.
When will Making Tax Digital for Corporation Tax start?
There is no confirmed start date. HMRC has said any launch will include lead time and a voluntary pilot first, so it is not something limited companies need to act on today.
Should limited companies move to cloud accounting anyway?
Yes. Even without MTD for Corporation Tax, cloud accounting makes VAT, payroll, statutory accounts and any future HMRC change much easier to run. Companies already on Xero or QuickBooks will barely notice when MTD for Corporation Tax eventually arrives.