Guide · Company directors

MTD for company directors: what applies

If you run your own limited company and pay yourself salary plus dividends, you can stop worrying about MTD for Income Tax, at least for that income. But the rules change the moment you have any personal sole-trader or rental income on the side.

By Mehmet Demir · Last reviewed: 2 May 2026 · Source: HMRC · Methodology

Bottom line

You personally: not in MTD ITSA on director salary plus dividends alone. You are in MTD ITSA if you also have qualifying sole-trader or property income above the threshold.

Your company: in MTD for VAT if VAT-registered. There is no mandatory MTD for Corporation Tax.

Check my MTD start date

Two different MTD regimes

MTD for VAT. Applies to your company if it is VAT-registered. Quarterly digital VAT returns through compatible software. No income threshold; VAT registration is the trigger.
MTD for Income Tax (ITSA). Applies to you personally only if you have sole-trader or property income above the threshold for the assessment year. Director salary and dividends do not count.

When directors do fall into MTD ITSA

Director with rental property. £52,000 rental income on top of your salary and dividends? You are in MTD ITSA from April 2026 (assuming the same income in 2024-25).

Director with consulting on the side. If you also do freelance or consulting work invoiced personally (not through the Ltd), that turnover is qualifying income.

Two-shareholder couple with rental property. Each spouse's share of the gross rent is assessed individually. A 50/50 split on £60,000 of rent gives each spouse £30,000, so both are in the April 2027 group.

What about MTD for Corporation Tax?

There is no mandatory MTD for Corporation Tax. HMRC's latest roadmap does not include a Corporation Tax mandate. Companies file their CT600 return as today, while VAT-registered companies still remain in MTD for VAT.

FAQs

Do limited company directors have to do MTD for Income Tax?

Not on the basis of director salary and dividends alone. MTD for Income Tax only applies to sole-trader self-employment and property income. If your only income is PAYE plus dividends from your own Ltd, MTD ITSA does not apply to you personally.

Does the company itself have to do MTD?

For VAT, yes. Every VAT-registered company is in MTD for VAT and has been since April 2022. For Corporation Tax, there is no mandatory MTD regime. HMRC's latest roadmap does not include a Corporation Tax mandate.

I run a Ltd and also rent out a flat. Now what?

Your personal rental income counts. If gross rent is over the threshold for the assessment year, you are in the corresponding MTD ITSA group, regardless of how the Ltd is structured.

What about my company filing quarterly VAT returns under MTD?

That continues unchanged. MTD for VAT and MTD for Income Tax are separate regimes with separate software requirements (though most major tools cover both).

I am a director with a side sole-trader gig. Does that count?

Yes. Sole-trader turnover from your side gig is qualifying income for MTD ITSA, even if your main income comes from the Ltd.

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This guide is general information, not professional tax advice. Always verify against HMRC's official guidance or speak to a qualified accountant.