The digital transformation programme that would have required companies to maintain digital records and submit returns through MTD-compatible software has been cancelled entirely.
What's been cancelled?
All planned MTD for Corporation Tax requirements have been withdrawn, including digital record-keeping mandates and MTD software compliance. This affects companies of all sizes that would have been brought into the regime.
Reason for the decision
HMRC’s latest tax gap analysis questioned whether MTD for Corporation Tax would deliver the anticipated benefits. The programme’s key justification – reducing tax gaps through fewer errors and careless mistakes – appears less compelling than originally projected.
Immediate impact for business
Companies can cease MTD for Corporation Tax preparation immediately. Planned investments in new software, staff training and process changes specifically for MTD for Corporation Tax can be redirected to other business priorities.
What continues unchanged
This decision affects only corporation tax. Other tax obligations remain unaltered:
- MTD VAT continues for eligible businesses
- MTD IT launches April 2026 for qualifying sole traders and landlords
- PAYE and other tax responsibilities continue as normal
Looking forward
Corporation tax administration continues under current systems. This decision reflects HMRC’s more evidence-based approach to digital transformation, focusing resources where clear benefits can be demonstrated.
