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 has transformed how UK businesses report VAT and income tax — but MTD for Corporation Tax will not happen. HMRC formally cancelled it in July 2025.

Here's the full story: what was proposed, why it was scrapped, and what changes actually do affect your company now.

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 is live for VAT since 2019. It launched for Income Tax in April 2026 for individuals with qualifying income above £50,000. For corporation tax, however, HMRC has taken a different path entirely.

MTD Timeline: Where Corporation Tax Fits

What HMRC decided

HMRC published a consultation on MTD for Corporation Tax in November 2020, which closed in March 2021. Key developments since then:

• Consultation responses raised significant concerns about the compliance burden on small companies
• After years without concrete follow-up plans, HMRC published its Transformation Roadmap on 21 July 2025
• The Roadmap stated explicitly: "HMRC do not intend to introduce MTD for CT"
• There are no quarterly reporting requirements coming for corporation tax

This is a permanent decision, not a delay. Companies will continue to file a single annual CT600, exactly as they do today.

What the Consultation Had Proposed

To understand the significance of the cancellation, here is what MTD for CT would have required under the 2020–21 consultation proposals:

1. Digital record-keeping

Companies would have needed to maintain their financial records using MTD-compatible software. This would have meant:

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

2. Quarterly updates

Companies would have needed to submit quarterly summary data to HMRC, including:

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

These updates would have been informational — they would not have generated a tax bill.

3. End-of-period statement

At year-end, companies would have submitted a final crystallisation, confirming their full-year figures and any adjustments.

4. Annual corporation tax return

The CT600 itself would have remained the primary annual submission, with quarterly updates supplementing it rather than replacing it.

None of these requirements will come into force. The annual CT600 remains the only corporation tax filing obligation.

Who Would Have Been Affected?

The consultation envisaged a phased rollout, likely starting with larger companies:

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

Dormant companies, companies in liquidation, and possibly very small companies might have been exempt. None of this will happen.

How Is This Different from Current CT600 Filing?

The table below shows what the proposals would have changed — and confirms that none of those changes are happening:

The left-hand column is all that applies. Corporation tax filing stays annual.

What This Means for Small Companies

For the estimated 200,000+ small limited companies currently filing their own CT600, the cancellation is straightforwardly good news:

• No quarterly reporting burden — you file once a year, as always
• No mandatory software switch — you can continue using whatever bookkeeping approach works for you
• No transition costs — no new MTD-compatible software needed for CT purposes
• No extra compliance risk — there are no MTD for CT penalties to worry about

The annual CT600 cycle — file within 12 months of your period end, pay within 9 months and 1 day — stays exactly as it is.

What Changes ARE Affecting Companies Now

Even though MTD for CT is off the table, two significant changes have already taken effect:

HMRC's free CT600 filing service has closed

HMRC closed its free online CT600 filing tool on 31 March 2026. The approximately 200,000–400,000 companies that relied on HMRC's free service now need commercial software to file their CT600.

This is not an MTD change — it is a separate decision to withdraw HMRC's direct filing tool. Every company still has to file a CT600; the free route to do so no longer exists.

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

MTD for Income Tax is live

If you are a director with personal rental income or self-employment income above £50,000, MTD for Income Tax is now mandatory from April 2026. This affects you as an individual, not your company — but it is a significant compliance change if you meet the threshold.

How to Prepare Now

With MTD for CT off the agenda, here is what actually matters for your company's tax compliance:

1. File your CT600 electronically

HMRC's free filing service closed 31 March 2026. If you have not already found a replacement, you need commercial software now. Taxpipe makes electronic CT600 filing straightforward at just £59 per return, with guided step-by-step entry.

2. Go digital with your bookkeeping

Even without MTD obligations, digital bookkeeping using cloud software (Xero, QuickBooks, FreeAgent, etc.) gives you better financial visibility and makes year-end filing faster.

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 will need your company's Unique Taxpayer Reference for all CT600 submissions. If you are unsure of your UTR, contact HMRC — it is on any Corporation Tax letter from HMRC, or you can request it online.

5. Stay informed

Follow HMRC's updates. The gov.uk MTD page is the authoritative source for what is and is not happening across the programme.

What About MTD for VAT and Income Tax?

If your company is VAT-registered, you are already using MTD for VAT. This remains mandatory and is entirely unaffected by the CT cancellation.

If you are a director with personal rental income or self-employment income above £50,000, you are now required to comply with MTD for Income Tax from April 2026 — this is a personal tax obligation, separate from your company's corporation tax filing.

Frequently Asked Questions

Will MTD for Corporation Tax ever be introduced?

HMRC's July 2025 Transformation Roadmap stated clearly that HMRC does not intend to introduce MTD for CT. There is no timetable and no consultation currently underway. For now, the annual CT600 is the only corporation tax filing requirement.

Will I still need to file a CT600?

Yes. The CT600 remains the annual corporation tax return. Nothing about how you calculate or pay corporation tax has changed — only the route to file has changed, now that HMRC's free filing tool has closed. You need commercial software to file electronically.

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 regardless of the filing mechanism.

What if my company is VAT-registered — does MTD for VAT affect my CT600?

No. MTD for VAT covers only your VAT returns. Your CT600 filing is entirely separate, and you can use different software for each.

What about MTD for Income Tax?

If you are a director receiving rental income or self-employment income above £50,000, MTD for Income Tax (which launched April 2026) may affect you personally — but not your company's Corporation Tax return.

What if I had been planning for quarterly reporting?

No action needed. The quarterly update requirement was part of the MTD for CT proposal, which has been cancelled. Your only CT submission obligation is the annual CT600.

Will quarterly reporting mean quarterly tax payments?

This question is now moot since quarterly reporting for CT was cancelled. Currently, only large companies (broadly those with profits over £1.5 million) pay corporation tax in quarterly instalments under the existing rules. HMRC has not indicated any plans to change this threshold.

HMRC's free CT600 filing service has closed. Try Taxpipe — just £59 per filing, no subscription, HMRC-approved.

Related Articles

• What Happens If You Don't File Corporation Tax? Penalties, Interest, and How to Fix It
• What Records Do I Need for My Company Tax Return?
• VAT Registration and Corporation Tax: How They Interact
• How to Pay Corporation Tax to HMRC — All Payment Methods Explained