Making Tax Digital for Corporation Tax: What Your Company Needs to Know

Making Tax Digital for Corporation Tax: What Your Company Needs to Know

HMRC's Making Tax Digital (MTD) programme is transforming how UK businesses report taxes. MTD for VAT is already mandatory. MTD for Income Tax launches in April 2026. Corporation tax is next.

Here's what company directors need to know about MTD for Corporation Tax — and what you should do now to prepare.

What Is Making Tax Digital?

Making Tax Digital is HMRC's programme to move the UK tax system fully digital. The core requirements are:

1. Digital record-keeping — maintaining your accounting records using compatible software (not spreadsheets alone)
2. Quarterly updates — submitting summary financial data to HMRC every quarter
3. Digital filing — submitting your final tax return through MTD-compatible software

The goal is to reduce errors, close the "tax gap" (the difference between tax owed and tax collected), and give businesses a more real-time view of their tax position.

MTD Timeline: Where Corporation Tax Fits

What HMRC has said

HMRC published a consultation on MTD for Corporation Tax in 2022. Key takeaways:

• No firm date has been set for MTD for CT
• HMRC has confirmed it will not be mandated before 2028 at the earliest
• The consultation explored quarterly reporting requirements
• Small companies may get simplified reporting requirements
• HMRC wants to align CT requirements with the existing MTD framework

What Will MTD for Corporation Tax Require?

Based on the consultation and existing MTD requirements for VAT and ITSA, here's what's expected:

1. Digital record-keeping

Companies will need to maintain their financial records using MTD-compatible software. This means:

• Bookkeeping in approved digital tools (Xero, QuickBooks, FreeAgent, etc.)
• No more paper-only records
• Spreadsheets may be allowed if they connect to HMRC via bridging software

2. Quarterly updates

Companies will likely need to submit quarterly summary data to HMRC, including:

• Total income for the quarter
• Total expenditure for the quarter
• Running profit/loss position

This is similar to what's required under MTD for Income Tax. The updates won't generate a tax bill — they're informational.

3. End-of-period statement

At the year-end, you'll submit a final crystallisation (the CT600 equivalent), confirming your full-year figures and any adjustments.

4. Corporation tax return

The CT600 itself may evolve, but HMRC has indicated it will remain the primary annual submission. The quarterly updates supplement it rather than replace it.

Who Will Be Affected?

Initially: Large companies

HMRC typically rolls out MTD to larger businesses first. For corporation tax, the likely phasing is:

1. Phase 1: Companies with annual turnover above £10 million
2. Phase 2: Companies with turnover above a lower threshold (perhaps £1 million)
3. Phase 3: All companies required to file a CT600

Exemptions

Some companies may be exempt:

• Dormant companies with no income or expenditure
• Companies in liquidation (potentially)
• Very small companies below a minimum turnover threshold

HMRC hasn't confirmed the exact thresholds yet.

How Is This Different from Current CT600 Filing?

The biggest change is quarterly reporting. Currently, you only interact with HMRC once a year (when filing your CT600). Under MTD, you'll submit data four times a year plus the annual return.

What This Means for Small Companies

For the estimated 200,000+ small limited companies currently filing their own CT600:

The good news

• You likely won't be in the first wave of MTD for CT
• You probably already use some form of digital bookkeeping
• Filing software like Taxpipe will add MTD compatibility as the requirements become clear

The concern

• Quarterly reporting adds administrative burden
• You'll need MTD-compatible software (potentially at extra cost)
• The transition period may be confusing

The opportunity

• Real-time tax position awareness — no surprises at year-end
• Better cash flow planning (you'll know your estimated tax bill quarterly)
• Simpler year-end process (most data already submitted)

How to Prepare Now

Even though MTD for Corporation Tax isn't imminent, here's what you can do today:

1. Go digital with your bookkeeping

If you're still using spreadsheets or paper records, switch to cloud accounting software. Xero, QuickBooks, and FreeAgent all support MTD for VAT already and will add CT support.

2. File your CT600 electronically

Paper filing is being phased out. If you're not already filing electronically, start now. Services like Taxpipe make electronic CT600 filing straightforward at just £59.

3. Keep clean quarterly records

Get into the habit of closing your books quarterly. Even without MTD, this gives you better financial visibility and makes year-end filing faster.

4. Ensure your UTR is active

You'll need your company's Unique Taxpayer Reference for all MTD submissions. If you're unsure of your UTR, contact HMRC now rather than scrambling later.

5. Stay informed

Follow HMRC's consultation updates. The gov.uk MTD page is the authoritative source.

HMRC's Free CT600 Filing Is Ending

An important change happening much sooner than MTD: HMRC is removing its free CT600 filing service on 31 March 2026. After that date, all companies will need to use commercial software to file their CT600.

This affects approximately 200,000-400,000 companies that currently use HMRC's free online filing tool.

Taxpipe is ready now. File your CT600 for just £59 — electronic filing, HMRC-approved, with guided step-by-step entry.

What About MTD for VAT and Income Tax?

If your company is also VAT-registered, you're already using MTD for VAT. The experience is similar to what MTD for CT will eventually require.

If you're a director with personal rental income or self-employment income above £50,000, you'll need to comply with MTD for Income Tax from April 2026 — that's much more imminent.

Frequently Asked Questions

When will MTD for Corporation Tax become mandatory?

HMRC has said not before 2028. Most industry experts expect 2029 or later for small companies.

Will I need to file a CT600 under MTD?

Yes. The CT600 (or its successor) will remain the annual corporation tax return. MTD adds quarterly updates on top of it.

Will MTD change how much corporation tax I pay?

No. MTD changes how you report, not what you owe. Your tax liability is calculated the same way.

Can I still use Taxpipe when MTD arrives?

Yes. We'll add MTD for CT compatibility as soon as HMRC publishes the technical specifications. Your filing experience will evolve seamlessly.

What if I miss a quarterly update?

Under MTD for VAT, penalties for missed quarterly updates are relatively mild (points-based system). MTD for CT is expected to follow a similar approach.

Will quarterly reporting mean quarterly tax payments?

Not necessarily. Currently, only large companies (profits over £1.5 million) pay corporation tax quarterly. HMRC hasn't indicated plans to change this threshold alongside MTD.

Don't wait for MTD — start filing your CT600 digitally today. Try Taxpipe — just £59 per filing, no subscription, HMRC-approved.

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