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Making Tax Digital for Limited Companies

What You Need to Know about Making Tax Digital for your Limited Company

Making Tax Digital for limited companies is coming. Find out when MTD for Corporation Tax starts, how to comply, and how your company can prepare now.

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If you run a limited company in the UK, you may already be familiar with Making Tax Digital (MTD). While MTD for VAT is fully in place for VAT-registered companies, HMRC has halted plans to roll out MTD for Corporation Tax. This means there are currently no confirmed requirements for companies to keep Corporation Tax records or file CT600 returns through MTD.

This guide explains what MTD means for limited companies today, how VAT is affected, and what steps you can take to stay digitally prepared as HMRC continues to modernise the tax system.

Does MTD Apply to Limited Companies?

Yes but only for VAT at present.

  • MTD for VAT: If your limited company is VAT-registered, you must already comply with Making Tax Digital by keeping digital records and submitting VAT returns through HMRC-recognised software.
  • MTD for Corporation Tax: HMRC has confirmed that plans to introduce MTD for Corporation Tax have been halted, with no rollout currently scheduled. While it was once expected to begin in 2026, there are no mandatory requirements for Corporation Tax under MTD at this time.

That said, the long-term direction of travel is still towards digital record-keeping and electronic interaction with HMRC. For limited companies, this means it remains good practice to:

  • Maintain accurate digital financial records.
  • Use HMRC-approved or recognised software for VAT and other filings.
  • Stay prepared for future reforms, as HMRC continues to explore new ways to modernise Corporation Tax administration.

What Will Be Required?

At present, there are no plans to make MTD for Corporation Tax mandatory. HMRC has halted its rollout, meaning companies do not need to prepare for quarterly updates or digital CT600 submissions under MTD.

That said, the direction of travel for UK tax is still firmly digital. Companies that adopt cloud accounting and maintain robust digital records will already be well-placed for any future reforms HMRC may introduce. Best practice for limited companies remains to:

  • Maintain digital records of income, expenses, and Corporation Tax calculations.
  • Use HMRC-recognised software to prepare VAT returns and manage day-to-day accounting.
  • Stay alert to policy changes as HMRC continues to modernise Corporation Tax administration.

While MTD for Corporation Tax isn’t happening now, preparing your systems and processes for digital compliance ensures your company remains efficient, accurate, and ready for whatever HMRC introduces next.

When Will MTD for Corporation Tax Start?

MTD for Corporation Tax will not be introduced.

HMRC has confirmed that it is no longer proceeding with plans to roll out Making Tax Digital for Corporation Tax. This means there is currently no timeline, pilot, or mandatory start date for companies.

Previously, the roadmap looked like this:

YearEvent
2021HMRC consultation completed
2024Pilot testing began with volunteer companies
2026+Rollout was expected, but has since been scrapped

While MTD for Corporation Tax is no longer going ahead, HMRC has indicated it will continue to explore other ways of modernising Corporation Tax administration.

Key takeaway: Limited companies should continue to comply with MTD for VAT (where applicable) and keep their records digital, as this remains best practice and positions them well for any future reforms.

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MTD Quick Links

What is Making Tax Digital
Do I Need to Register for Making Tax Digital?
Making Tax Digital Timeline and Rollout
How to Sign Up for Making Tax Digital
Making Tax Digital Deadlines and Dates
Making Tax Digital for VAT
MTD Income Tax (MTD for ITSA)
Making Tax Digital for Corporation Tax
Making Tax Digital Exemptions
Common MTD Mistakes and Avoiding Them
Making Tax Digital for Partnerships
Making Tax Digital for Limited Companies
Making Tax Digital for Sole Traders
Making Tax Digital for Landlords
Making Tax Digital Compliant Software
Making Tax Digital Bridging Software
How Accountants Can Help with MTD

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What Software Will Limited Companies Need?

For VAT, all limited companies that are VAT-registered must already use MTD-compatible software to keep digital records and file VAT returns with HMRC.

Since MTD for Corporation Tax has been halted, there is currently no requirement for companies to use specific software for CT600 submissions. However, moving your accounting systems fully digital remains best practice and ensures you’re ready for future HMRC reforms.

Recommended solutions for limited companies include:

  • Xero – widely used, scalable, and excellent for growing companies.
  • QuickBooks – popular with small to medium-sized companies for ease of use.
  • Sage – robust, especially for businesses needing more advanced reporting.
  • The Balance App – developed by Accounting Wise, designed specifically for UK compliance and MTD-ready features.

If you’re VAT-registered, your current software may already be compliant. For Corporation Tax, no mandatory upgrades are needed right now, but digital systems will future-proof your business.

Benefits of Digital Record-Keeping for Limited Companies

Even though MTD for Corporation Tax is not going ahead, adopting digital accounting still provides real advantages for limited companies:

  • Reduced errors in VAT and year-end accounts – automation means fewer manual mistakes.
  • Faster, more efficient filing – submissions are quicker and less stressful.
  • Real-time visibility of tax liabilities – know where your company stands financially at any point in the year.
  • Better financial reporting and forecasting – digital systems provide insights to help you plan strategically.
  • Increased readiness for HMRC audits or inquiries – well-organised digital records reduce risk and stress.

Key takeaway: While MTD for Corporation Tax has been scrapped, investing in digital record-keeping and MTD-compatible software today will still save time, reduce errors, and strengthen your company’s financial management.

What If You’re Not Ready?

The good news is that MTD for Corporation Tax is no longer going ahead, so there are currently no new compliance deadlines or penalties for companies relating to Corporation Tax under MTD.

However, MTD for VAT is already mandatory for VAT-registered limited companies. Failing to comply with MTD for VAT can result in:

  • Missed deadlines and late filing penalties.
  • Rejected submissions if returns are not filed through approved software.
  • Points-based penalties from HMRC for repeated non-compliance.

Key takeaway: Even though Corporation Tax has been removed from the MTD roadmap, companies should still ensure their VAT reporting is fully digital — and consider moving all accounting processes online for efficiency and future-proofing.

Are Any Companies Exempt?

For VAT, exemptions from MTD are possible but only in limited circumstances, such as:

  • Lack of internet access due to remote location.
  • Disability or age-related barriers preventing the use of technology.
  • Religious beliefs that prohibit the use of computers or digital tools.

Exemptions are not granted automatically they must be applied for and approved by HMRC. See our MTD Exemptions and Deferrals guide for details on eligibility and the application process.

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How Accounting Wise Can Help

At Accounting Wise, we help limited companies across the UK stay compliant with Making Tax Digital for VAT and prepare for the wider shift toward digital accounting. Our services include:

  • Software recommendations and setup – ensuring you’re on HMRC-recognised, future-proof systems.
  • Digital record-keeping support – accurate, efficient, and tailored to your business.
  • VAT filing and compliance under MTD – on-time submissions, every time.
  • Ongoing advice and support – helping you adapt as HMRC modernises the Corporation Tax system in other ways.

Whether you want to streamline your processes now or gradually transition more of your accounting online, we’ll guide you step by step.

Get Your Limited Company MTD-Ready

While HMRC has scrapped MTD for Corporation Tax, the trend towards digital record-keeping and online submissions is only accelerating. Companies that prepare early not only avoid VAT penalties but also benefit from smoother reporting, real-time insights, and stronger financial control.

Contact Accounting Wise today to get your company fully MTD-ready and future-proof your accounting the easy way.

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Making Tax Digital for Limited Companies FAQs

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Yes but only in certain areas. Limited companies must comply with MTD for VAT if they are VAT-registered. However, the government has confirmed that MTD for Corporation Tax will not go ahead, so there are no new digital requirements for Corporation Tax filings.

No. HMRC had planned to introduce MTD for Corporation Tax, but in 2025 the government announced it will not move forward. Limited companies will continue to file Corporation Tax returns using the current CT600 process through HMRC’s online system.

The main rule is MTD for VAT, which is mandatory for all VAT-registered companies. This requires:

  • Keeping digital VAT records
  • Submitting VAT returns using HMRC-recognised software
  • Maintaining digital links between records and submissions

Limited companies should use HMRC-approved MTD software such as Xero, QuickBooks, Sage, FreeAgent, or The Balance App. These tools allow companies to keep compliant VAT records, integrate with banking, and streamline accounting processes.

Yes, but only with “bridging software” that connects spreadsheets to HMRC’s systems. While possible, this approach is less efficient and carries a higher risk of errors. Most companies benefit from using full MTD-compatible accounting software.

Failure to comply with MTD (for VAT) can result in:

  • Penalties for late or missed returns
  • Interest on underpaid VAT
  • Possible compliance reviews from HMRC

Using MTD-compliant software and/or working with an accountant ensures limited companies avoid penalties.

If you don’t comply, you may face penalties. HMRC has a points-based system for late submissions and payments, which can lead to fines if you repeatedly miss deadlines.

At present, there are no plans to reintroduce MTD for Corporation Tax. HMRC has decided not to proceed after consultations and pilot schemes. However, HMRC’s wider tax strategy is digital-first, so future changes may come in other forms. Limited companies that adopt cloud accounting now will be better prepared.

Accounting Wise helps limited companies by:

  • Setting up and managing MTD-compliant VAT software
  • Migrating records into secure digital systems
  • Filing VAT returns and ensuring ongoing compliance
  • Providing Corporation Tax support (even though MTD for CT won’t apply)

Our goal is to simplify compliance and make your accounting more efficient.

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Accounting Wise is a trading style of Accounting Wise Ltd, a limited company registered in England under company number 09365202. Our registered office is: The Carriages, Station Road, Ware, SG12 9PL UK.

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