Record-Keeping Requirements for Making Tax Digital (MTD) For Corporation Tax

The evolution of taxation is shifting towards digitalisation, enhancing efficiency and convenience. This comprehensive guide outlines the critical requirements for Making Tax Digital (MTD) for Corporation Tax, offering invaluable insights for businesses navigating this transition.

What is Making Tax Digital (MTD) for Corporation Tax?

Introduced by HMRC, MTD for Corporation Tax is the latest move in modernising UK taxation. From April 2026, companies must keep digital records of all taxable income and expenses, using MTD-compatible software to submit tax returns.

How does Digital record-keeping work?

Record keeping under MTD requires a company to store digital records of income, expenditures, and VAT-related transactions. From sales invoices to expense receipts, everything should be digitally recorded. HMRC provides detailed guidelines on the required record types.

Who needs to comply with MTD for Corporation Tax?

MTD for Corporation Tax applies to all VAT-registered businesses, including small businesses with a turnover above the VAT threshold. A business may be exempt in particular circumstances, such as a disability or a remote location without internet.

What does MTD mean for your Tax Returns?

Filing tax returns under MTD involves quarterly updates to HMRC. You need compatible software or a spreadsheet with bridging software that can digitally submit VAT, and Corporation Tax returns to HMRC. MTD for ITSA and MTD for CT are specific income tax and corporation tax programmes, respectively.

How can you prepare for MTD for Corporation Tax?

Preparation involves:

• Ensuring your digital bookkeeping is up to standard.
• Understanding the tax adjustments under MTD.
• Having the right compatible software in place.

Training your accountant or hiring an MTD-compliant accountant can streamline this transition.

Key Takeaways:

• Making Tax Digital (MTD) is an HMRC initiative to digitise UK taxation, affecting VAT returns, income tax, and corporation tax.
• MTD for Corporation Tax requires digital record-keeping and tax return filing through MTD-compatible software.
• Quarterly updates to HMRC are essential under MTD.
• Companies and VAT-registered businesses are required to comply by April 2026.
• Preparation involves training, digital tool upgrades, and understanding the new tax adjustments.

Prepare today for the future of digital taxation with Making Tax Digital (MTD) for Corporation Tax, ensuring a smooth transition towards this digital-first approach.