Making Tax Digital for Limited Companies: What You Need to Know

What Is Making Tax Digital?

MTD will eventually require all businesses to keep digital records via compatible HMRC-approved software and then submit their figures every quarter.

This is to create a ‘trusted and modern’ tax system that will bring figures closer to real time, as well as:

• Making it easier for both individuals and businesses to get their taxes right and avoid making errors that could lead to fines.
• Making it possible for people to integrate tax management with a range of business processes via software.
• Contributing to wider productivity gains for businesses by encouraging digitalisation.
• Helping to reduce the amount of tax lost to avoidable errors.

What Are the New Making Tax Digital Rules?

The most recent changes took effect on the 6th of April 2026: Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA).

This new system will change the way in which self assessment works.

Responsibilities include:

• Keeping digital records of your income and expenses using HMRC-compatible software.
• Submitting quarterly updates to HMRC on: 7th August, 7th November, 7th
• February and 7th May. These do not trigger a payment each time – they’re more like progress snapshots of your records that will give you an estimated tax bill as you go along and can be corrected later if needed.
• Completing a final end-of-year declaration – you’ll do this after your fourth quarterly update. This replaces the traditional self assessment return and is where everything is checked, corrected and finalised.

The year MTD for ITSA becomes mandatory will depend on earnings.

You will be affected from:

• 6th April 2026, if you have an annual business or property income of more than £50,000
• April 2027, if you have an annual business or property income of more than £30,000
• April 2028, if you have an annual business or property income of more than £20,000

Does MTD for ITSA Affect Limited Companies?

No. These new rules do not apply to limited companies, just sole traders and landlords.

This is because limited companies deal with Corporation Tax instead of Income Tax, which is not currently part of any plans within the MTD system.

Making Tax Digital for VAT, however, does affect certain limited companies.

Making Tax Digital for VAT and Limited Companies

Many businesses will already be operating in a partially digital tax environment due to the introduction of MTD for VAT.

It has helped to push those affected towards digital bookkeeping, cloud accounting software and more regular financial monitoring.

MTD for VAT applies to all VAT-registered businesses above the VAT threshold (which is currently £90,000 taxable turnover – May 2026), as well as those who register for VAT voluntarily.

MTD for VAT responsibilities include keeping digital records using compatible software on things like:

• Business name and VAT number
• VAT accounting schemes used
• VAT on sales and purchases

And then submitting them to HMRC.

As with MTD for ITSA, failure to comply can lead to late filing and late payment penalties and compliance issues.

Do I Need an Accountant?

While you can, of course, file your MTD VAT returns yourself, you can also hire an accountant to do this on your behalf.

A good accountant will be able to give you expert advice and guidance on Making Tax Digital and will help to put your mind at ease if you’re unsure of how it all works.

They can also help with:

• Filing tax returns, saving you time and leaving you to concentrate on other aspects of your business.
• Helping you to keep on top of your financial responsibilities and deadlines.
• Providing you with financial advice that could save you money in the long run.

If you do want to hire an accountant, make sure you do your research, looking at reviews and asking colleagues and friends for recommendations.

Find a professional company with a good reputation and preferably one that offers fixed packages to avoid any unexpected bills at the end of the year.

If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com. Alternatively, contact us via live chat.