MTD for VAT — already live
If your small business is VAT-registered, you must already be using MTD-compatible software to keep VAT records and submit VAT returns. This has been a legal requirement since April 2022 for all VAT-registered businesses, regardless of turnover. If you are still using the old HMRC VAT portal, you are non-compliant and risk penalties.
MTD for Income Tax — sole trader businesses
If you operate as a sole trader rather than a limited company, and your qualifying income exceeds the threshold, MTD for Income Tax applies to you from April 2026, 2027 or 2028 depending on your income level. Qualifying income is your gross self-employment turnover plus any gross rental income, before expenses.
Limited companies and MTD
MTD for Income Tax does not apply to limited companies — company profits are taxed through Corporation Tax, not Income Tax Self Assessment. If your company is VAT-registered, it is already within MTD for VAT. Directors who also have personal sole-trader or rental income may still fall within MTD for Income Tax on that income.
MTD for Corporation Tax — future plans
HMRC has announced its intention to extend Making Tax Digital to limited companies through an MTD for Corporation Tax programme. No mandatory start date has been confirmed, and HMRC has indicated it will not be introduced before the wider Income Tax rollout beds in. We update this page as HMRC publishes further detail.
Getting your small business ready for MTD
Call 0114 327 1480 or email shjenquiry@msc-g.com and we’ll confirm exactly what applies to your business and handle the setup.