Making Tax Digital for Limited Companies: Your Essential Guide for 2026
Running a limited company in the UK already comes with enough moving parts, from managing cash flow to keeping up with compliance deadlines. Over the last few years, Making Tax Digital has added another layer to that conversation, often surrounded by uncertainty and changing timelines. As we move into 2026, there is now far more clarity around what MTD actually means for limited companies and, just as importantly, what it does not mean.
While some digital requirements are firmly in place, others that once caused concern are no longer going ahead. This creates a more balanced landscape for company directors, allowing space to plan sensibly rather than react under pressure. Understanding where your company stands now helps you stay compliant without overhauling systems unnecessarily.
What Making Tax Digital Means Today
Making Tax Digital was introduced to modernise the UK tax system by reducing errors and improving the way information is submitted to HMRC. The core principle is simple: businesses keep digital records and submit information to HMRC using compatible software rather than manual processes. For limited companies, this has mainly applied to VAT so far.
MTD first became mandatory for VAT-registered businesses in 2019 and was later extended to all VAT registrations regardless of turnover. This means that if your limited company is VAT registered, you are already required to keep digital VAT records and submit returns through approved software. For many companies, this shift has already become part of day-to-day operations.
What often causes confusion is how MTD affects other taxes. While digital record keeping is encouraged more widely, not every tax falls under MTD rules. Understanding these boundaries is key to avoiding unnecessary work or incorrect assumptions about new obligations.
Corporation Tax & MTD in 2026
For a long time, limited companies were told to expect Making Tax Digital for Corporation Tax, including quarterly reporting and expanded digital requirements. That expectation has now been formally removed. HMRC confirmed in its 2025 Transformation Roadmap that MTD for Corporation Tax will not be introduced in the foreseeable future.
As things stand in 2026, limited companies continue to file Corporation Tax in the usual way. The CT600 is still submitted annually, and tax remains payable nine months and one day after the end of the accounting period. There is no requirement to submit quarterly Corporation Tax updates or adopt specific MTD software solely for Corporation Tax purposes.
That said, penalties around late filing are becoming stricter. From April 2026, missing a Corporation Tax filing deadline triggers an immediate £200 penalty, with further penalties if delays continue. While MTD is not driving these changes, the increased enforcement highlights why accurate record keeping and timely filing still matter.
VAT Requirements Under Making Tax Digital
VAT remains the main area where MTD directly affects limited companies. If your company is VAT registered, you must keep digital records of sales and purchases, including VAT rates and amounts, and submit VAT returns using MTD compatible software. Manual submissions through the old VAT portal are no longer permitted.
Digital records must be linked throughout the process, meaning data flows from your accounting records to HMRC without manual re-entry. While spreadsheets can still be used in some cases, they must be connected through bridging software to maintain proper digital links.
There are no major VAT MTD changes scheduled for 2026, but it is still important to ensure your software remains compliant and up to date. This is particularly relevant for companies using flat rate schemes, partial exemption methods, or complex VAT treatments where errors can creep in unnoticed.
Key Deadlines Limited Companies Should Track
Despite wider digital reforms, many core deadlines remain unchanged. VAT returns are still due one month and seven days after the end of the VAT period, whether you file quarterly or under a special scheme. Missing these deadlines can lead to penalties and interest, even if the figures themselves are correct.
Corporation Tax deadlines also stay consistent. Payment is due nine months and one day after the accounting period ends, while the return itself must be filed within twelve months. With penalty amounts increasing in 2026, punctual filing is becoming more important than ever.
For directors with additional income outside the company, it is worth noting that Making Tax Digital for Income Tax Self Assessment begins from April 2026. While this does not affect company profits, it can apply personally if you have qualifying rental or self-employed income, adding another set of deadlines to manage alongside company obligations.
Penalties & Compliance Expectations
HMRC has made it clear that digital compliance is not optional where MTD applies. For VAT, failure to keep digital records or submit returns through compatible software can result in financial penalties, as well as interest on any late-paid tax. Errors caused by poor record keeping can also trigger enquiries.
Corporation Tax penalties are also tightening, particularly for late filings. Even though MTD is not expanding into Corporation Tax, HMRC expects accurate and timely submissions, with less tolerance for repeated delays.
For those affected by MTD for Income Tax personally, a points-based penalty system applies. Repeated late submissions accumulate points, eventually leading to fines. While HMRC has offered a temporary soft-landing period for new MTD users, this is not permanent and should not be relied upon as a long-term safety net.
Official HMRC Guidance & What It Covers
HMRC’s guidance remains the most reliable source for understanding current obligations. Their Making Tax Digital pages outline which taxes are covered, what software is approved, and how digital records should be maintained. Updates following the 2025 roadmap clarified the cancellation of MTD for Corporation Tax and redirected focus toward voluntary digital adoption.
For VAT, HMRC provides clear instructions on maintaining digital links and correcting errors. For Income Tax MTD, guidance focuses on simplified quarterly reporting rather than full tax calculations, helping taxpayers ease into the new system.
Keeping an eye on official updates is essential, as HMRC continues to refine its approach even where no immediate rule changes are planned.
Preparing Your Limited Company with Confidence
Preparation does not need to be disruptive. For VAT-registered companies, reviewing your current software setup is a sensible first step, ensuring digital links are functioning correctly and records are being captured accurately.
Even though Corporation Tax is not moving into MTD, many companies still choose to adopt cloud accounting software voluntarily. This can improve reporting accuracy, streamline year-end processes, and reduce pressure when filing deadlines approach.
If MTD for Income Tax applies to you personally, now is the time to assess income thresholds, choose appropriate software, and separate personal and company transactions clearly. Early preparation makes future quarterly updates far less stressful.
How Sterling & Wells Supports You
Sterling & Wells supports limited companies through every stage of digital compliance, from VAT submissions to broader tax planning. The team helps ensure MTD requirements are met accurately while keeping systems practical and proportionate to the business.
Support extends beyond VAT, with guidance for directors affected personally by MTD for Income Tax, as well as ongoing advice around Corporation Tax deadlines and reporting accuracy. The focus remains on clarity, compliance, and reducing unnecessary admin wherever possible.
Conclusion
With Making Tax Digital for Corporation Tax no longer on the horizon, limited companies can approach 2026 with greater certainty. VAT obligations remain firmly in place, and personal income considerations may still apply for directors, but the overall picture is far more manageable than once feared.
Staying informed, keeping records organised, and adopting digital tools at the right pace allows compliance to feel routine rather than overwhelming. With the right preparation and support from professionals such as Sterling & Wells, limited companies can move into 2026 confident, compliant, and focused on growth rather than last-minute corrections.
Sterling & Wells
We are Sterling & Wells — a UK-based team of accountants and tax advisors helping individuals and businesses stay fully HMRC compliant. From VAT and bookkeeping to self-assessments and tax planning, we’ve got your finances covered.