Making Tax Digital Limited Companies

Making Tax Digital limited companies rules split in two. If the company is VAT registered, it already keeps digital records and files VAT returns through software. For Corporation Tax it does not: the quarterly regime that began for sole traders and landlords in April 2026 does not reach companies, and HMRC has said it has no plans to extend it to Corporation Tax. Directors can still be caught personally

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Making Tax Digital Limited Companies: What Applies in 2026/27

By Oroni Chowdhury· Reviewed by Shamayun Chowdhury, CIMA · Tax year 2026/27 · Last reviewed [9/24/2026]

Quick answer

On this page

Does Making Tax Digital apply to limited companies?

Partly. A limited company deals with Making Tax Digital through VAT, and through nothing else. Ask whether making tax digital ltd company obligations exist and the honest answer depends entirely on the VAT registration.

Tax	Inside Making Tax Digital?	What the company does
VAT	Yes, if registered	Digital records, returns filed through compatible software
Corporation Tax	No	Annual accounts and a CT600, as before
PAYE for directors and staff	No, separate rules	Real Time Information reports each payday
Director’s own income	Possibly	Quarterly updates where personal trade or rent passes the threshold

Search for making tax digital ltd companies and you will find the same split described in a dozen ways. So do limited companies have to do Making Tax Digital? For VAT, yes, and that has been the case since April 2022. For company profits, no. The confusion is understandable, because the April 2026 headlines were about quarterly reporting, and plenty of readers assumed every business was included.

The part that does apply: VAT

Making Tax Digital limited company duties start and end with VAT. Every VAT-registered business carries the digital obligations, and a company is no exception. Turnover is irrelevant: a company registered voluntarily on modest sales has the same duties as one turning over millions.

In practice that means three things for limited company Making Tax Digital compliance:

Sales and purchases recorded digitally, transaction by transaction
HMRC-recognised software, or bridging software linked to a spreadsheet
Unbroken digital links, so nobody retypes a figure between systems

Our guide to Making Tax Digital VAT returns covers the records, deadlines and penalties in full.

Corporation Tax and the quarterly rules

There is no quarterly reporting for company profits, and none is planned. Making Tax Digital for Corporation Tax was consulted on years ago and piloted in outline, but HMRC’s Transformation Roadmap, published in July 2025, confirmed it does not intend to bring it in. The Chartered Institute of Taxation welcomed the decision, pointing to the cost quarterly filing would have imposed on companies for little practical gain.

Is Making Tax Digital for limited companies likely to return later? Nothing has been ruled out permanently, and HMRC continues to modernise Corporation Tax filing in other ways. What matters now is that no company faces quarterly profit updates, and no date exists to prepare for. We update this page whenever HMRC’s position changes.

What did change for companies in 2026

No quarterly updates, but the way you file the CT600 changed completely on 1 April 2026. HMRC closed CATO, the free Company Accounts and Tax Online service that had let small companies file accounts and the tax return together since 2011. It is gone permanently, along with access to the filings stored in it.

The practical effects:

Commercial software is now the only route. Every CT600, with its accounts and computations, must be filed in iXBRL format through approved software or by an agent who uses it.
Accounts and tax return are separate jobs again. With the joint submission gone, each filing travels on its own path: accounts to Companies House, the CT600 to HMRC.
Rejections count as non-filing. If HMRC’s validation rejects a return over iXBRL tagging, it has not been filed. Discover that on the deadline and the return is late.

Companies moving from CATO for the first time should set the software up months ahead, not in the week the return is due. In that sense the digital direction has reached companies, just not through the quarterly door everyone was watching.

Directors: where you are caught personally

This is the trap. The company sits outside the Income Tax rules, but you do not, and HMRC tests you as an individual.

However much the company pays you in salary or dividends, none of it counts when HMRC measures you against the limit. What counts is self-employment income and rent in your own name. A director with a small consultancy on the side, or a couple of rental flats held personally, is judged on those figures alone.

Illustrative example

Naomi runs a design agency through her company, paying herself a small salary and £68,000 in dividends. None of that touches Making Tax Digital. She also owns two flats in her own name, producing £34,000 of rent. That rent alone puts her inside the rules from 6 April 2027, with quarterly updates for the property business while the company carries on filing annual accounts. Figures are invented to explain the rule.

If that sounds like your position, our pages on the Making Tax Digital thresholds and HMRC landlords Making Tax Digital rules set out what you would need to do.

Does Making Tax Digital apply to partnerships?

Not yet. General partnerships were once lined up for an early start date, that plan was dropped, and HMRC has not named a replacement. Partnership profits are therefore still reported on the partnership return and each partner’s own tax return, in the traditional way.

Partnership Making Tax Digital status does not protect the partners themselves, though. Each partner is tested on their own qualifying income, and a partner’s share of partnership profit is left out of that test. What counts is any trade they run alone and any property they let personally. Sit two partners from the same practice side by side and one may be inside the rules while the other is not.

Limited liability partnerships follow the same position as general partnerships for now, and a partnership that is VAT registered has been inside the VAT rules since April 2022 regardless.

Making Tax Digital, trusts and estates

Making Tax Digital trusts questions come up constantly with property held in trust. The answer is straightforward: trustees are outside the Income Tax regime, as are personal representatives dealing with the estate of someone who has died. Trust and estate income carries on being reported annually.

Two caveats are worth noting. A beneficiary receiving income in their own name is judged on their own circumstances, and a trust that is VAT registered, perhaps because it runs a trading activity or has opted to tax property, still files VAT returns digitally.

Making Tax Digital and company formation

Since companies avoid the quarterly Income Tax rules, incorporation has started to appear in conversations about Making Tax Digital and company formation. It does work, in the narrow sense: move a trade or property business into a company and the personal quarterly updates stop.

On its own, though, it seldom justifies the move. Forming a company changes far more than your filing pattern:

	Sole trader or landlord	Limited company
Reporting rhythm	Four quarterly updates plus a tax return	Annual accounts and CT600, plus VAT and payroll where relevant
Public record	None	Accounts and officer details filed at Companies House
Getting money out	Drawings, taxed as profit	Salary and dividends, with their own rules
Property transfers	Not applicable	Possible Stamp Duty Land Tax and Capital Gains Tax on the move, plus lender consent
Running costs	Lower	Higher: accounts preparation, filings, often payroll

For a landlord in particular, incorporating an existing portfolio can trigger tax charges that dwarf any admin saved. Treat it as a commercial decision about profits, borrowing and succession, with the reporting question as a footnote. Take advice before acting.

What a company still owes HMRC and Companies House

Staying outside the quarterly regime is not the same as having less to do. A typical trading company files:

Annual accounts at Companies House, normally within nine months of the year end
A Corporation Tax return (CT600) with HMRC, within twelve months of the year end
Corporation Tax payment, due earlier than the return: nine months and one day after the year end for most companies
A confirmation statement at Companies House each year
VAT returns, digitally, where registered
Payroll reports each time directors or staff are paid
The director’s own tax return, which may now sit inside Making Tax Digital

Both bodies fine independently, so a bad year can cost twice. Companies House penalties for late accounts start at £150 for a private company and reach £1,500 once filing is more than six months late, doubling if you are late two years running. HMRC charges its own fixed penalty for a late CT600 from day one, a second at three months, then tax-geared penalties at six and twelve months. The fixed amounts were increased for returns due on or after 1 April 2026, so check the current figure before assuming it is the old £100.

Companies House reforms directors should watch

Separate from tax, the Economic Crime and Corporate Transparency Act is reshaping Companies House, and two changes matter to owner-managed companies.

Identity verification. New directors, LLP members and people with significant control have had to verify their identity since 18 November 2025. Existing directors are being brought in during a transition period running to November 2026, usually alongside the confirmation statement. Missing it eventually blocks filings.

Software-only accounts filing, on hold. Companies House had planned to close WebFiling and paper filing for accounts, abolish abridged accounts and make small companies publish a profit and loss account. Those reforms were paused in January 2026, with a promise of at least 21 months’ notice before any new date. Guides still quoting April 2027 are out of date, but the direction has not changed, so accounts production software remains worth having.

Fees moved too: from 1 February 2026 the annual confirmation statement costs £50 and digital incorporation £100.

Help from MTDFix

MTDFix looks after both sides of this for owner-managed businesses: the company’s statutory work, and the director’s personal position under Making Tax Digital.

Limited company

£25 a month

Year-end accounts
Corporation Tax return (CT600)
Companies House filing

Director inside MTD personally

£15 a month

Software included
Records for your trade or rentals
Quarterly updates filed
Personal tax return

Not sure which applies to you? Talk it through with a Making Tax Digital accountant at MTDFix.

Check the company and your own position

Tell us what the company does, whether it is VAT registered, and what income you hold personally. We will set out what each one has to file, with a fixed fee before any work begins.

📞 0116 403 0595 | 📧 mtdfix@yahoo.com | 🌐 mtdfix.com

MTDFix, 6 Egginton Street, Leicester, LE5 5BA · Working with companies UK-wide

FAQs

My company is not VAT registered. Is there anything to do?

Nothing under Making Tax Digital. The company files accounts and a CT600 as usual. Keep an eye on turnover, because VAT registration brings the digital rules with it.

Do dividends count towards my personal threshold?

No. Dividends, salary, pensions and interest are all excluded. Only self-employment turnover and rent in your own name are measured.

I hold rental property through a company. Which rules apply?

Rental profit earned inside the company is taxed under Corporation Tax, which keeps it clear of the quarterly Income Tax rules. Property you own personally is judged separately, in your own name.

Will incorporating stop my quarterly updates?

For the income moved into the company, yes. Anything you keep personally still counts. Incorporation carries its own tax and admin consequences, so weigh the whole picture rather than the filing alone.

Does a dormant company need to worry about this?

No. Dormant accounts go to Companies House, and where HMRC accepts the company as dormant for Corporation Tax, that is the end of it. Making Tax Digital only appears if it registers for VAT.

I used HMRC’s free service for my CT600. What now?

CATO closed on 31 March 2026 and past filings are no longer available from it. Returns since then go through commercial software, or through an accountant who files on your behalf.

Could quarterly reporting reach companies in future?

Government policy can change, but HMRC’s current published position is that it does not intend to introduce Making Tax Digital for Corporation Tax, and no timetable exists.

General guidance on the position in 2026/27, not advice for your company. Incorporation, property transfers and trust taxation are complex, so take advice before acting.

About the author

Written by Oroni Chowdhury · Reviewed by Shamayun Chowdhury

Written by Oroni Chowdhury, Eternity Accountants.
Reviewed by Shamayun Chowdhury, Senior Accountant at Major Accountancy and Lecturer in Accounting at Nottingham Trent University. CIMA qualified. Based in Leicester, England.

CIMA qualified accountant with 15+ years of UK practice experience
Lecturer in Accounting, Nottingham Trent University
Senior Accountant at Major Accountancy, Leicester
500+ UK businesses supported across Self Assessment, Corporation Tax, VAT, and MTD compliance
LinkedIn: Shamayun Chowdhury on LinkedIn
Facebook: Shamayun Chowdhury on Facebook

Last reviewed: [9/24/2026]