Important Information

MAKING TAX DIGITAL FOR INCOME TAX FOR SOLE TRADERS AND LANDLORDS​

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software.

For individuals, MTD for ITSA will be introduced in two phases:

• from April 2026, for those with qualifying Turnover of £50,000 and over

• from April 2027, for those with qualifying Turnover of £30,000 and over

​

Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC.  

​

You, or your agent if you have one, will need to use software that works with Making Tax Digital for Income Tax to: 

• create, store and correct digital records of your self-employment and property income and expenses  

• send your quarterly updates to HMRC  

• submit your tax return by 31 January the following year

​

​

LIMITED COMPANY

The owners of a limited company draw their earnings in the form of a salary, which is taxed at standard PAYE rates. They can also draw their earnings in the form of bonuses and dividends, subject to overall performance. The tax-free allowance for 2026/2027 for dividends £500. Anything over is charged at 8.75% standard rate and 35.75% at higher rate.

​

Corporation Tax

Corporation Tax in the UK is a tax that limited companies need to pay on their profits. There is no personal allowance for Corporation Tax so as soon as the business starts making a profit, it needs to start paying Corporation tax.  A Limited Company pays tax on trading profits and chargeable gains (company assets such as land and property, equipment and machinery and company shares). 

From Financial year 2026/2027:

Small Profits Rate: 19% for profits up to £50,000

Main Rate: 25% for profits over £250,000

Marginal Relief: A gradual increase between £50,001 and £250,000, resulting in an effective rate of about 26.5%

​

​

​