HMRC has declared that Making Tax Digital (MTD) will no longer apply to Corporation Tax (CT). This suggests that companies are no longer required to keep digital records, produce quarterly updates, or file annual Corporation Tax reports using MTD-compatible software. This will help businesses in the short term, but HMRC will continue to focus on digitally modernising the tax system.
Corporation Tax Exempt from Making Tax Digital
Plans for MTD will still continue for VAT and for Income Tax, with the latter due to begin in April 2026 for self-employed individuals and landlords with qualifying income over £50,000. As a result, it remains good practice for companies to maintain digital records where possible, as this helps with efficiency and may prepare businesses for future compliance requirements.
Here is what we will cover in this article:
- What is MTD for CT?
- What are the latest HMRC updates?
- Do I need to keep digital records?
- Does this affect MTD for Income Tax?
What is MTD for CT?
Making Tax Digital for Corporation Tax was a planned initiative by HMRC aimed at modernising the way companies report and manage their corporation tax obligations. Under the proposed system, businesses would have been required to:
- Keep Corporation Tax records digitally, ensuring all accounting information was stored in a format compatible with MTD software.
- Submit quarterly updates to HMRC, rather than reporting only once a year, allowing for more accurate and timely monitoring of tax obligations.
- File their annual Corporation Tax return using MTD-compatible software, linking accounting systems directly with HMRC.
The overall objective of MTD for CT was to increase efficiency, reduce errors, and simplify tax administration by leveraging digital technology. However, according to HMRC’s latest transformation roadmap, these plans have been officially abandoned, meaning businesses will not need to comply with MTD rules for Corporation Tax.
What are the latest HMRC updates?
In 2025–2026, HMRC has announced that it will launch a number of new digital services in place of MTD for Corporation Tax. The government acknowledges that a one-size-fits-all digital solution would not be suitable and is working on a modernised approach to Corporation Tax administration that better represents the varied needs of businesses.
Although MTD for CT has been dropped, HMRC’s commitment to digital transformation remains unchanged. The upcoming changes are expected to improve efficiency, enhance the user experience, and provide businesses with more flexible, digital tools. Companies can anticipate easier access to services, smoother interactions with HMRC, and support that is better tailored to different business sizes and types.
Do I need to keep digital records?
Even though digital record-keeping is no longer required for Corporation Tax, it is still highly recommended. Maintaining digital records can help businesses stay organised, reduce errors, and streamline future tax reporting. Examples of digital records include:
- Entries in accounting software such as Xero, QuickBooks, or Sage
- Electronic invoices and receipts
- Digital copies of bank statements
- Spreadsheets tracking income and expenses
- Online payroll records
Businesses that are registered for VAT under MTD must continue to keep digital records, and those affected by MTD for Income Tax from April 2026 should also ensure records are digital-ready. Keeping digital records now can help companies adapt more easily when future digital requirements are introduced.
Does this affect MTD for Income Tax?
No, the changes to Corporation Tax do not affect MTD for Income Tax. HMRC still plans to implement Making Tax Digital for Income Tax from April 2026. This will apply to self-employed individuals and landlords with qualifying income over £50,000. Those affected will need to keep digital records and submit updates using MTD-compatible software, independently of Corporation Tax changes.
Overall, while businesses get a break from MTD for Corporation Tax, HMRC’s broader digitalisation agenda remains in place, and maintaining digital records continues to be a practical and forward-looking approach.
Need Help Navigating Tax Compliance?
While Corporation Tax is no longer subject to MTD requirements, staying on top of your tax obligations can still be complex. Whether you need support with VAT under MTD, preparing for Income Tax changes in 2026, or simply want to modernise your accounting systems, our team is here to help.
Contact us today to discuss how we can streamline your tax processes and keep your business compliant and efficient.