When does MTD for Corporation Tax start? It won’t!

This may be a bit of a long shot, but I’d guess most readers of this blog haven’t read HMRC’s Transformation Roadmap. Released on 21st July 2025, it’s a document that sets out government’s priorities for ‘the transformation of the tax and customs system’. Buried rather deep among these priorities, HMRC finally gives businesses clarity about what is happening with MTD for Corporation Tax. In case you haven’t guessed, it has now been scrapped. But do we know what will happen instead?

What was MTD for Corporation Tax?

As you’ll know, MTD is shorthand for Making Tax Digital. It’s basically an HMRC initiative to move everyone to a system of digital tax records and returns. MTD for VAT began as early as 2019, while all VAT-registered businesses have needed to comply since April 2022. MTD for Income Tax Self-Assessment is being phased in from April 2026. For the last few years, we’ve also been led to believe that MTD for Corporation Tax would follow suit.

That said, updates about MTD for Corporation Tax have been scarce to non-existent in recent years. At one point there were plans to introduce it from April 2026 at the earliest. Those seem to have fallen by the wayside quite a long time ago.

The problem has been that, without knowing when MTD for Corporation Tax would happen – or what it would require – businesses have faced uncertainty. Fortunately, HMRC has now clarified what will (or rather will not) happen.

What has happened to MTD for CT?

In its ‘Transformation Roadmap’ document, HRMC says:

HMRC will modernise services for Corporation Tax (CT), beginning with a renewal of internal systems for CT to provide the foundation for future improvements. HMRC do not intend to introduce MTD for CT but are developing an approach to the future administration of CT that is suited to the varying needs of the diverse CT population.

So, in short, MTD for Corporation Tax has been scrapped. But what is this ‘new approach’ to administering Corporation Tax that HMRC mentions? Unfortunately, the next paragraph doesn’t really clear up the matter:

HMRC recognises that this population [of Corporation Tax payers] includes a very wide range of entities and situations, from small businesses to multinationals, from charities and property management companies to unincorporated associations. HMRC will work with stakeholders to identify changes that will provide the best outcomes for taxpayers and government and is committed to consulting and providing early clarity and assurance on both the design and timing of changes.

Our best guess is that this is HMRC’s way of saying ‘wait and see’!

What could happen next?

One of the key aims of Making Tax Digital is to help increase the tax take. By shifting from paper systems to digital records, it’s harder to commit fraud and it’s easier to spot errors.

Indeed, MTD for VAT helped to shrink the tax gap for Value Added Tax. In 2019-20, VAT accounted for 31% of the tax gap. By 2023-24 that figure had shrunk to 19%.

One of HMRC’s current problems is that small businesses and Corporation Tax are now disproportionately responsible for the tax gap. HMRC will want to increase its Corporation Tax take, but has clearly decided that MTD for CT is not the way to go.

For now, we can just wait to learn what plans HMRC devises for Corporation Tax. We’ll be keeping an eye out for future proposals and, as soon as we hear anything we’ll be sure to let you know.