On 7th August 2026, sole traders and landlords earning over £50,000 faced their first ever Making Tax Digital (MTD) quarterly deadline. It was described as chaotic by many, with business owners and accountancy firms alike feeling the effects of HMRC’s issues.
As the first deadline has passed, it’s worth understanding why this happened, what it means for your next steps, and where the upsides of the new system lie.
For example, if you’re a limited company, there’s some reassuring news around MTD and Corporation Tax.
This guide picks up where our other MTD articles left off. If you haven’t already, look at our guides on MTD deadlines and next steps for businesses and how MTD has changed Self Assessment.
Why was the first Making Tax Digital deadline so chaotic?
Once the filing window opened in July, accountants across the country began finding HMRC-related problems with logins, authorisations and submission software almost immediately.
It was expected that a brand-new system would have some operational challenges, but it allowed for a lot of confusion and ultimately made the first deadline a stressful time for accountants and business owners handling their own filings.
Confusion emerged over standard versus calendar quarters, and over how cash and accruals basis figures should ultimately feed into the year-end return, with some in the profession arguing there’s no single, consistent specification for software providers to follow.
The good news is that none of this reflects poorly on you or your business. It reflects an unsteady national roll-out of a new system, and it’s exactly the sort of thing a soft-landing period is designed to absorb.
What to do next for Making Tax Digital 2026?
If your first quarterly update didn’t go entirely to plan, here’s how to move forward:
- Don’t panic about penalties. HMRC isn’t issuing penalty points for late quarterly updates during 2026/27, and there’s a 30-day grace period on late tax payments in your first year.
- Check your submission actually filed. Given the reporting gap between software and HMRC’s own systems, don’t take a “success” message at face value. Check your personal tax account or agent services account to confirm the update was received and keep evidence either way.
- Get ahead of the next deadline. Your next quarterly update is due on 7th November 2026. Use the time now to sort out any outstanding registration issues and make sure your records are up to date, rather than leaving it until the window opens again. If you’d like some help with this, feel free to get in touch with our tax accountants.
The benefits of the new MTD system
It’s easy to focus on the disruption, but HMRC’s own guidance on the benefits of Making Tax Digital does point to some advantages once your digital records and software are properly set up.
Better record-keeping for business owners
Compatible software can link directly to your bank account, scan receipts and invoices, and store everything securely, reducing the risk of lost paperwork and helping you spot and fix errors before you submit your return.
In-year tax estimates
Every time you send a quarterly update, you get an updated estimate of your tax bill. That means fewer surprises in January, better cash flow planning, and the chance to review your payments on account earlier.
A fairer HMRC penalty system
Late submission penalties are now points-based, so a single late update won’t trigger a fine on its own. Instead, it’s based on repeated lateness, which leads to financial penalties. Late payment penalties are also more proportionate, so paying sooner reduces what you owe.
Extra support for early adopters of Making Tax Digital
Businesses that sign up voluntarily ahead of their mandatory date get access to a dedicated MTD support team and don’t face penalties for late updates while volunteering.
To prepare for your next Making Tax Digital submission, get in touch with us today and explore our trusted accountancy services.
Do limited companies need to worry about MTD?
If you run a limited company, the good news is that Making Tax Digital for Corporation Tax has been scrapped.
HMRC confirmed in July 2025 that it is no longer proceeding with plans to bring Corporation Tax into MTD, so there’s no requirement to keep digital Corporation Tax records or file your CT600 through MTD-compatible software.
You’ll continue filing Corporation Tax returns exactly as you do now, and existing Corporation Tax filing requirements remain unchanged.
That said, MTD isn’t entirely irrelevant to limited companies.
If you’re VAT-registered, you already need to keep digital VAT records and file through MTD-compatible software. This has applied to all VAT-registered businesses since 2022 and hasn’t changed.
If you’re a director paid only through salary and dividends, MTD for Income Tax doesn’t apply to you at all, and you’ll continue filing Self Assessment as normal.
If you also have personal sole trader or rental income above the relevant threshold, that income (not your company salary or dividends) may fall under MTD for Income Tax, reported separately from your company’s accounts. Get in touch with our team if you’re unsure about this.
In short, unless HMRC changes course again, your limited company itself is one part of this roll-out you can safely take off your worry list. However, it’s still good practice to keep digital records for VAT and beyond, since it appears to be the direction all UK tax administration is heading.
Choosing the right software for Making Tax Digital
Picking software based on price alone, without checking it actually fits your income types, is one of the most common mistakes we see (and switching part-way through the year causes real headaches).
HMRC’s guidance on choosing MTD software sets out two broad options:
- Software that creates digital records: this links to your bank account, lets you scan receipts, or allows manual entry, and will usually handle both your quarterly updates and your final tax return in one place.
- Bridging software: this connects to records you already keep in spreadsheets or other tools, and submits them to HMRC on your behalf, without requiring you to change how you keep your books day to day.
When comparing options, check that any software:
- Supports every income source you need to report (self-employment, property, or both)
- Can submit both your quarterly updates and your final return, or works alongside a second product that can
- Fits the accounting period you’ve chosen (standard tax year or calendar quarters)
- Offers features like HMRC Assist, which flags potential errors before you submit
- Suits your budget (free options exist for simpler tax affairs but often come with limits on transaction volumes).
HMRC also has a software finder tool that generates a personalised shortlist based on your circumstances, which is a good starting point if you haven’t settled on a product yet.
MTD doesn’t have to be confusing or stressful
Don’t want to spend your weekends dealing with tax rules and software setups?
You don’t have to manage all of this yourself. At Tax Driven Accountants, we handle MTD registration, software set-up and every quarterly submission on our clients’ behalf, so you can get back to running your business rather than wrestling with HMRC’s systems.
Contact us on 0800 999 1800 or send us an enquiry.
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