Making Tax Digital & Companies House: Is Your UK Business Ready?

Two bookkeeping changes are heading your way in the UK over the next couple of years, and which one lands on your desk depends on how your business is set up. Sole traders and landlords get one change. Limited companies get the other. Neither is happening tomorrow, but both are the kind of thing you'll want to know about before they turn up.

Here's what's actually changing, when, and what it means for you in real terms.

1. Making Tax Digital: the threshold is dropping to £30,000

Making Tax Digital for Income Tax isn't new. It's already live for sole traders and landlords earning over £50,000, since April 2026. What's changing is who else gets pulled in.

From April 2027, that threshold drops to £30,000 of qualifying income (that's gross income from self-employment and/or property, before expenses, not profit). It's a meaningful drop, and it scoops up a lot of businesses that have happily sat outside MTD until now: part-time traders, smaller landlords, side hustles that have grown into something bigger, and anyone whose bookkeeping has so far been "a folder of receipts and a spreadsheet once a year."

The number that actually matters here is your income for the 2025-26 tax year. If that comes in above £30,000, you'll need to be signed up and using MTD-compatible software from 6 April 2027, whatever your income does after that.

What actually changes under MTD

Your tax bill doesn't change. What changes is how and when you tell HMRC about it:

• Digital record-keeping becomes mandatory, so no more waiting until the end of the year to start organising your expenses

• You send quarterly updates to HMRC instead of one annual return

• It all has to go through HMRC-recognised software; the old online portal and paper forms won't cut it anymore

• A final declaration is still due by 31 January each year for any other income

For anyone still doing things manually, the real adjustment isn't really the software, it's the habit. Records need to stay current all year round, not get tidied up in one big push before the deadline. Worth building that habit now, rather than scrambling for it in March 2027.

And a heads up: this isn't the final stop. A further drop to £20,000 is already confirmed for April 2028, so if you're anywhere near that lower band, don't file this as a one-off. It's part of a bigger shift.

2. Limited companies: profit and loss filing goes digital from 2028

Separately, and this one catches a lot of directors off guard, Companies House is shaking up how small limited companies and micro-entities file their annual accounts.

From April 2028, small companies and micro-entities will need to file a profit and loss account as part of their statutory accounts. Right now, plenty of small companies get away with filing "abridged" accounts that show little more than a balance sheet. That option's going away. Full P&L information will need to be filed with Companies House, just like larger companies already do.

This was originally meant to land in 2027, but after some pushback from small business owners and professional bodies, the government pushed it back a year and softened one of the more contentious parts of the plan.

Companies House: filing isn't the same as publishing

Here's the bit that matters most if you're a director: while your P&L account has to be filed, you'll be able to opt out of having it published on the public register. So your competitors, customers or anyone having a nosey on Companies House won't automatically see your numbers, but HMRC, Companies House and law enforcement still will, for compliance and fraud-prevention reasons. Exactly how that opt-out will work is still being worked out.

On top of that, all UK-registered companies (not just the small ones) will need to file their annual accounts digitally, through commercial software, tagged in a format called iXBRL.

The current Companies House web filing and paper routes are being shut down for accounts. So if you're one of the many small business owners currently filing your own accounts through the Companies House website, that option simply won't be there anymore after April 2028.

Why the digital filing change matters more than it looks

If you're already using proper cloud accounting software and keeping full management accounts throughout the year, this will probably feel like a formality, since the information already exists and you're just filing it differently. It's the businesses still relying on manual processes, basic spreadsheets or software that can't handle iXBRL who'll feel this one more.

It's also a good excuse to get properly familiar with your own P&L. If it's going to be filed formally every year, even if it's not published, it's worth being able to explain every line: what's driving your costs, where your margins are moving, and why. Less about ticking a compliance box, more about knowing your own numbers.

Making Tax Digital and Companies House: the bigger picture

Both reforms are pointing the same way: UK tax and company reporting is moving firmly toward continuous, software-based, digitally verified records, and away from the once-a-year paper shuffle. Neither deadline is around the corner, but both mean a change in habits and systems that's worth starting on early.

The businesses that sail through this won't be the ones scrambling in the final quarter before their deadline. They'll be the ones who used the run-up to get their software, processes and habits sorted well ahead of time.

If you're not sure where you stand with any of this, we're always happy to have a chat.