HMRC has completely abandoned its plans to require companies to use digital systems for corporation tax record-keeping and returns filing.
What’s been dropped?
The entire Making Tax Digital (MTD) for Corporation Tax scheme has been scrapped. This means no requirements for electronic bookkeeping or specialist software compliance for any businesses, regardless of their size.
Why the U-turn?
HMRC’s own research showed the programme wouldn’t deliver the promised results. The original business case centred on cutting tax losses by preventing mistakes and oversights, but evidence suggests these benefits were overstated.
What this means now
Business can immediately stop any MTD for Corporation Tax preparations. Money earmarked for new technology, employee training or workflow changes can now go elsewhere in the organisation.
What stays the same
Only corporation tax is affected by this reversal. Everything else proceeds as planned:
- MTD VAT remain active for relevant businesses
- MTD IT will start in April 2026 for sole traders and landlords
- Payroll and other tax duties carry on unchanged
The bigger picture
Corporation tax will continue operating through traditional methods. This reversal shows HMRC is taking a more cautious, evidence-led approach to digitisation, only pursuing changes where genuine improvements can be proven.