Making Tax Digital and your limited company: what actually applies

Making Tax Digital generates more confused enquiries than any other single subject, mostly because the name suggests it applies to everything and it does not.

What is live right now

Making Tax Digital for Income Tax is mandatory now, not coming, for anyone with qualifying income over £50,000. It started on 6 April 2026. The rollout continues:

• Over £50,000: live since 6 April 2026
• Over £30,000: from 6 April 2027
• Over £20,000: from 6 April 2028

Below £20,000 nothing has been decided.

The bit that matters to company directors

Qualifying income means sole trade and property income only. Your salary from your own company is not in it. Your dividends are not in it. If your only income is a director’s salary and dividends from your company, Making Tax Digital for Income Tax does not apply to you, whatever the total is.

Where it does catch directors is the second income. A rental property, or consultancy invoiced personally rather than through the company. Add that up and if it crosses the threshold, you are in, and the company being separate does not change it.

Making Tax Digital for Corporation Tax was scrapped

This one is worth saying plainly because the myth is persistent. MTD for Corporation Tax was dropped in HMRC’s Transformation Roadmap in July 2025. There is no start date because there is no scheme. If anyone quotes you a date for it, they are working from old material.

The penalty regime changed too

For anyone inside MTD, late submissions move to a points system. One point per late submission, and a £200 penalty at four points, which for quarterly filers means a year of missed deadlines. There is a soft landing on the first cohort’s four quarterly updates for 2026/27, but note carefully that the final declaration is not covered by it. The points regime extends to all income tax self assessment from 6 April 2027.

If you are not in MTD, the old penalties still apply to your 2025/26 return, which is due on 31 January 2027: £100 immediately, then £10 a day up to £900 after three months, then further charges at six and twelve months.

What to actually do

1. Add up your sole trade and property income, before expenses, and see which threshold you cross and when.
2. If you are in, get the bookkeeping on software that files quarterly, and get it on there before the quarter you are mandated, not during it.
3. If you are not in, do not buy anything to solve a problem you do not have.
4. Ask whether income you are currently invoicing personally would sit better in the company. That is a structuring question with its own answer, and Making Tax Digital is only one input to it.

Getting this right, every year

Tax 4 Pros looks after limited company directors on a fixed monthly fee. Accounts and filings done properly, and the pay, structure and planning decisions looked at before the year end rather than after it. Every package and every price is published, so you can see what you would pay before you speak to anyone.

See the packages and prices, or book a fifteen minute call and we will tell you which one you need, including if that is the cheapest one.

Figures are current for the 2026/27 tax year at the date of publication. The Autumn Budget on 28 October 2026 may change several of them. This is information, not personal advice, and your own facts change the answer.

Written by Sarah Charlton, tax strategist and founder of Tax 4 Pros.