September 2026 SME Tax Update: MTD Auto-Signup, Doubled Corporation Tax Penalties & What Business Owners Must Do Now

From £300 inc VAT for Self Assessment support
Author: Sam
Published: Friday 11 September 2026

September has brought several important developments for limited companies, company directors and growing SMEs.

HMRC has started automatically signing up eligible sole traders and landlords for Making Tax Digital for Income Tax. Corporation Tax late-filing penalties have doubled for relevant returns, and automatic penalty notices have resumed. At the same time, the government has opened a consultation on simplifying corporate reporting, while major FRS 102 changes now affect lease accounting and revenue recognition.

There is also a faster Self Assessment registration service, with new users expected to receive a Unique Taxpayer Reference within 72 hours through their online account.

This guide explains what the changes mean in practice and what business owners should do now. If you have been searching for an accountant near me, the right support can help you manage company compliance and personal tax obligations together.

1. HMRC begins automatic MTD sign-up

From September 2026, HMRC has started automatically signing up some sole traders and landlords who should already be using Making Tax Digital for Income Tax but have not registered.

The first group generally includes individuals whose combined gross income from self-employment and property was more than £50,000 in the 2024/25 tax year. Their MTD obligations apply from 6 April 2026.

Making Tax Digital for Income Tax does not apply directly to limited companies. However, it can affect company directors and SME owners personally if they:

• Run a separate sole-trader business alongside their company.
• Receive rental income.
• Have a property business outside the company.
• Carry out consultancy or freelance work personally.
• Hold several sources of self-employed income.

Automatic sign-up does not create a new obligation. It means HMRC is enrolling people it believes should already be complying.

Once in scope, the taxpayer must generally:

• Keep digital records of income and expenses.
• Use compatible accounting software.
• Send quarterly updates.
• Complete the relevant end-of-period process.
• Submit the final declaration or annual tax information.

No quarterly penalty points in 2026/27 does not mean no penalties

HMRC has confirmed a transitional approach for the first MTD year.

For 2026/27, no penalty points will be issued for late quarterly updates. This gives affected taxpayers time to adjust to the new process.

However, this relaxation is limited. It does not remove penalties for:

• Late annual tax returns or final declarations.
• Late payment of tax.
• Incorrect information.
• Other Self Assessment failures.

Business owners should therefore avoid treating the first year as penalty-free. Digital records still need to be complete from the relevant start date, and annual filing and payment obligations continue.

If you operate through a limited company but have personal income outside it, ask your accountant to review both sets of records. Keeping company and personal transactions separate is particularly important when MTD and Self Assessment obligations overlap.

2. Corporation Tax late-filing penalties have doubled

HMRC has resumed automatic Corporation Tax late-filing penalty notices after a period in which some notices were paused during changes to the penalty process.

For Company Tax Returns with filing deadlines on or after 1 April 2026, the fixed penalties are now higher:

• One day late: £200 fixed penalty.
• More than three months late: an additional £200, making £400 in total.
• Repeated late filing: penalties can rise to £1,000 or £2,000 per return, depending on the delay and filing history.
• Six months late: a tax-related penalty may also apply, based on the Corporation Tax due.
• Twelve months late: a further tax-related penalty may be charged.

The higher fixed penalty applies according to the filing deadline, not simply the date on which the company submits the return.

A company’s Corporation Tax return is normally due 12 months after the end of its accounting period. Corporation Tax payment is usually due earlier, commonly nine months and one day after the period ends for companies outside the quarterly instalment regime.

This makes it essential to track payment and filing deadlines separately.

What should limited companies do?

Growing SMEs should now:

1. Confirm the company’s accounting period end.
2. Record the Corporation Tax payment deadline.
3. Record the CT600 filing deadline.
4. Check that the chosen software can submit the return correctly.
5. Keep evidence of successful filing.
6. Maintain a tax reserve based on current profit forecasts.
7. Investigate missed deadlines immediately rather than waiting for a penalty notice.

A specialist corporation tax accountant can also review associated companies, losses, capital allowances, director remuneration, pension contributions and dividend planning before the return is submitted.

The higher penalties make it risky to leave Corporation Tax work until the final few days.

3. Corporate reporting consultation could reduce some SME burdens

The government has launched a 12-week consultation on modernising corporate reporting. It opened on 7 September 2026 and is due to close on 30 November 2026.

The consultation is considering whether company reporting can be made simpler and more proportionate, particularly for small and medium-sized businesses.

Proposals include:

• Simplifying company size thresholds.
• Making reporting exemptions easier to understand.
• Reducing duplicated information in annual reports.
• Streamlining strategic and directors’ reporting.
• Considering whether some medium-sized companies should qualify for audit exemption.
• Moving towards more digital communication with shareholders.

This is potentially significant for growing companies that are moving from small to medium-sized status. However, these are proposals rather than current law.

Until any changes are finalised and implemented, companies must continue to follow existing accounts, audit and reporting requirements. A business should not assume that a future audit exemption will apply simply because it may qualify under a consultation proposal.

The best preparation is accurate bookkeeping, organised records and regular management accounts. These will remain important whether reporting rules become lighter or not.

4. FRS 102 changes affect leases and revenue

The FRS 102 periodic review is now in effect for accounting periods beginning on or after 1 January 2026.

The most significant changes for many SMEs relate to:

• Lease accounting.
• Revenue recognition.
• Contract analysis.
• Financial statement disclosures.

Lease accounting

Most leases for lessees will now be recognised on the balance sheet as:

• A right-of-use asset.
• A corresponding lease liability.

The previous distinction between operating and finance leases for lessees has largely been removed. This means leases for premises, vehicles, equipment and other assets may affect reported assets, liabilities and key performance measures.

Businesses should review:

• Property leases.
• Vehicle agreements.
• Equipment finance arrangements.
• IT and software contracts.
• Service agreements containing embedded leases.
• Lease renewal and break clauses.

Some short-term and low-value lease exemptions remain available, but they need to be assessed carefully.

Revenue recognition

The revised Section 23 introduces a five-step model broadly aligned with the principles of IFRS 15.

Businesses may need to:

1. Identify the customer contract.
2. Identify separate performance obligations.
3. Determine the transaction price.
4. Allocate the price between obligations.
5. Recognise revenue when each obligation is satisfied.

This could affect businesses with long-term contracts, staged projects, software subscriptions, maintenance arrangements, construction work or bundled products and services.

A company’s cash receipts and invoices may not always match the correct accounting period under the new rules. That can affect reported profit, tax calculations, bank covenants and business valuations.

5. Self Assessment registration is now faster

HMRC has improved its Self Assessment registration service for new users.

Under the new online process, a UTR is expected to appear in the taxpayer’s online account within approximately 72 hours. This is quicker than waiting for a letter by post.

The faster service is useful for company directors and business owners who need to report:

• Dividends.
• Property income.
• Self-employed income.
• Investment income.
• Benefits or other taxable income.

The faster UTR service does not change the statutory deadlines. If you needed to register for the 2025/26 tax year, the relevant registration deadline is generally 5 October 2026. You can check the wider timetable using the HMRC Self Assessment deadlines reference.

Self Assessment support starts at £300 inc VAT, depending on the complexity of your return and the records involved.

What SMEs should do this month

Limited companies and growing SMEs should consider the following September checklist:

• Check whether any director has personal income within the MTD rules.
• Confirm whether automatic MTD sign-up applies.
• Review digital records from 6 April 2026 where relevant.
• Check Corporation Tax payment and filing deadlines.
• Confirm that commercial filing software is working correctly.
• Review any late CT600 risk before a penalty notice arrives.
• Catalogue leases and identify agreements affected by FRS 102.
• Review revenue contracts with multiple services or delivery stages.
• Update profit forecasts and Corporation Tax reserves.
• Check whether the 5 October Self Assessment registration deadline applies.
• Prepare questions for an accountant before the next filing deadline.

If you are searching for accountants for small business, corporation tax accountants or a business accountant UK companies can work with, Accountant Search can help you compare suitable options.

Accountant Search is a curated directory and digital matchmaking and referral platform. We connect limited companies and growing SMEs with accountants who may be suitable for their accounting, tax and compliance needs. We are not an accountancy practice and do not provide accounting advice directly.

You can find an accountant, explore support from a limited company accountant, or read our SME tax update from earlier in September.

Self-Assessment tick-box

• Self-Assessment tick-box: Check whether you need to register by 5 October 2026.
• Check whether your personal self-employment or property income may bring you into MTD.
• Confirm whether you need to complete the SA registration form.
• Keep personal and company records separate.
• Gather dividend, property, employment and investment information.
• Retain evidence for income, expenses and tax submissions.
• Ask for professional support if your company obligations and personal tax position overlap.

If you need help, complete the SA registration form. Accountant Search can help match you with an accountant who understands Self Assessment alongside the needs of a limited company or growing SME.

This article is for general information only and reflects the position understood on 11 September 2026. Tax rules, reporting requirements and consultation proposals can change. Obtain professional advice based on your circumstances before making financial or tax decisions.