Do limited companies do MTD ITSA?

No, MTD ITSA applies to sole traders and landlords, not limited companies. Companies file Corporation Tax returns separately.

Yes, you can be a sole trader and a director of a limited company at the same time, but you must report each income stream separately.

What is a confirmation statement?

A confirmation statement is an annual filing with Companies House that confirms your company's registered details, such as directors and registered office, are correct.

Sole trader vs limited company: how the tax and filing differ

Sole traders pay Income Tax and NI through Self Assessment (and MTD quarterly updates once mandated); limited companies pay Corporation Tax on profits, file accounts and a confirmation statement with Companies House, and directors pay personal tax on salary and dividends. Companies mean more filings but separate legal liability.

What each structure files

As a sole trader, your main filing is your Self Assessment tax return each year. You report your income and expenses, and HMRC works out your Income Tax and National Insurance. You don't need to file accounts with Companies House.

As a limited company, you have more statutory filings. You must file annual accounts and a confirmation statement with Companies House. The confirmation statement confirms your company's details are up to date. You also file a Company Tax Return (CT600) with HMRC, even if you make no profit.

Taxes each pays

Sole traders pay Income Tax and National Insurance on their profits. These are calculated through Self Assessment.

Limited companies pay Corporation Tax on their taxable profits. When you take money out of the company, you pay personal tax: salary is subject to Income Tax and NI, and dividends are taxed personally at your dividend tax rate. The company doesn't pay NI on dividends.

MTD position for each

Making Tax Digital for Income Tax (MTD ITSA) applies to sole traders and landlords with qualifying income. Once mandated, you'll need to keep digital records and send quarterly updates to HMRC, plus an end-of-period statement. Your annual Self Assessment return will still be required.

Limited companies are not in MTD ITSA. Instead, they already file Corporation Tax returns (CT600) electronically, but that's separate from MTD. Directors who are also sole traders in their own right would need to follow MTD for that separate income.

Admin and cost comparison

Sole trader admin is lighter: one tax return a year (plus MTD updates later). You don't need to register with Companies House, and your accounts are private.

Limited company admin is heavier: you have Companies House filings (accounts and confirmation statement), CT600, and payroll if you pay yourself a salary. You'll likely need an accountant, which adds cost. But you get limited liability, meaning your personal assets are protected if the company fails.

Switching later

You can switch from sole trader to limited company at any time. You'll need to register the company, notify HMRC, and close your Self Assessment for the sole trade. There may be tax implications, but that's a matter for your accountant.

Switching back is also possible, but you'd need to close the company and settle any Corporation Tax and personal tax due.

Summary

Sole trader: simpler, fewer filings, but unlimited liability. Limited company: more filings, more admin, but limited liability and potentially different tax treatment. Consider your turnover, risk, and how much admin you want.

For more on Self Assessment, see our [Self Assessment glossary]. For MTD details, see [Making Tax Digital]. And check our pricing for software that helps with both.