The Future of MTD: What's Coming Next for Corporation Tax and Beyond

By Sam

If you feel like the rules around business taxes are constantly shifting, you aren’t alone. For several years, "Making Tax Digital" (MTD) has been the buzzword dominating conversations between business owners and their accountants. While many businesses have already adapted to MTD for VAT, the journey is far from over.

HM Revenue & Customs (HMRC) is on a mission to become one of the most digitally advanced tax administrations in the world. For UK SMEs, this means a fundamental shift in how financial records are kept and how tax is reported. We are moving away from annual "box-ticking" exercises toward a system of real-time, digital reporting.

But what does the future actually look like? When will these changes hit your business, and specifically, what is the status of Corporation Tax? In this guide, we’ll break down the confirmed timelines for Income Tax and the emerging horizon for Corporation Tax, helping you stay ahead of the curve.

The Immediate Future: MTD for Income Tax (2026–2028)

Before we look at Corporation Tax, we must understand the blueprint being set by MTD for Income Tax Self Assessment (ITSA). This is the next major hurdle for millions of sole traders and landlords across the UK.

HMRC has confirmed a phased rollout for ITSA, based on your "qualifying income": which is the combined gross income from your self-employment and any UK property businesses.

The MTD ITSA Timeline:

• April 2026: If your qualifying income is over £50,000, you must join MTD for Income Tax.

• April 2027: The threshold drops. If your income is over £30,000, you are mandated to join.

• April 2028: The threshold drops again to £20,000.

Under these rules, the traditional annual tax return is replaced by a series of quarterly updates and a final declaration. This requires Self Assessment accountants who are well-versed in digital software to ensure your filings are accurate and on time.

Looking Further Ahead: MTD for Corporation Tax

While sole traders are first in line, directors of limited companies are naturally asking: When is our turn?

Currently, MTD for Corporation Tax does not have a confirmed mandatory start date. HMRC previously suggested that it would not be mandated before 2026, and more recent indications suggest we are looking at 2028 or later for any full-scale rollout.

What do we know so far?

Unlike VAT or Income Tax, Corporation Tax is complex. It involves different accounting periods, capital allowances, and group structures. Because of this, HMRC is taking a more cautious approach. They have committed to a consultative process and a voluntary pilot scheme before making anything mandatory.

Even though a hard date hasn't been set for 2028, the direction of travel is clear. Limited companies should expect, as explored in our guide to Making Tax Digital for Corporation Tax:

1. Digital Record Keeping: The requirement to keep all income and expenditure records in a digital format.

2. Quarterly Summaries: Much like the Income Tax model, companies may be asked to provide a summary of their income and expenditure every three months.

3. MTD-Compatible Software: The end of manual spreadsheets or paper-based systems for filing the CT600.

For businesses currently working with a limited company accountant, now is the time to start discussing "future-proofing."

Why Limited Companies Should Prepare Now

It might be tempting to wait until a formal date is announced before changing your processes. However, waiting until the last minute is a risky strategy for several reasons.

1. Accuracy and Efficiency

Digital record-keeping isn't just about satisfying HMRC; it’s about better business management. When you use MTD-compatible software, you get a real-time view of your cash flow. This allows you to make informed decisions about reinvestment, hiring, or expansion without waiting for your year-end accounts.

2. Avoiding the "Digital Scramble"

When MTD for VAT was introduced, thousands of businesses scrambled to find software and accountants at the last minute. This led to stress, errors, and missed deadlines. By transitioning to digital bookkeeping now: perhaps through professional bookkeeping services: you ensure that the eventual switch to MTD for Corporation Tax is a non-event.

3. Better Tax Planning

Quarterly reporting (even if done voluntarily now) gives your accountant more opportunities to provide tax-saving advice throughout the year. Instead of looking back at what you could have done six months ago, you can take action today to minimize your Corporation Tax liability.

Practical Steps to Get Ready

If you want to ensure your SME is ready for the future of MTD, here are four steps you can take today:

Audit Your Current Systems

Are you still using manual ledgers or basic spreadsheets? While spreadsheets aren't banned, they often require "bridging software" to communicate with HMRC. The most efficient way forward is using cloud-based accounting software like Xero, QuickBooks, or FreeAgent.

Go Paperless

Start digitising your receipts and invoices. Tools like Dext or Hubdoc allow you to snap a photo of a receipt and automatically upload the data to your accounting software. This satisfies the "digital record" requirement and saves hours of data entry.

Review Your Accounting Partner

Does your current accountant embrace technology? The move to MTD requires a partner who understands the software as well as the tax code. If your accountant is still asking for a box of paper receipts once a year, they may not be the right fit for the MTD era. You can find an accountant who specialises in digital transitions through our platform.

Understand Your Thresholds

Keep a close eye on your turnover and qualifying income. If you are a director of a limited company but also receive significant rental income or have a side hustle as a sole trader, you may be pulled into MTD for Income Tax as early as 2026, regardless of when the Corporation Tax rules change.

How Choosing the Right Accountant Makes the Difference

The transition to MTD is more than just a software upgrade; it’s a change in the relationship between you and your accountant. In the old world, you might have spoken to your accountant once a year. In the MTD world, communication is more frequent and more strategic.

Choosing an accountant early in the transition phase allows them to:

• Set up your digital infrastructure correctly from day one.

• Train your staff on how to use new tools.

• Monitor your quarterly data to spot red flags before they become HMRC penalties.

At Accountant Search, we specialise in matching SMEs with the perfect accounting partners. Whether you need accountants in London, VAT specialists, or experts in SME growth, we help you find the right expertise to navigate the complexities of MTD.

Final Thoughts: A Forward-Looking Approach

The future of tax in the UK is digital. While the specific dates for MTD for Corporation Tax remain on the horizon (likely 2028 and beyond), the foundation is being laid right now.

By embracing digital records today, you aren't just complying with future laws: you are building a more transparent, efficient, and data-driven business. Don't wait for the mandate to arrive. Start your digital journey today and ensure your business is ready for whatever HMRC announces next.

Ready to find your perfect MTD-ready partner? Use our find an accountant form to get started. If you want a broader overview before choosing support, read Accounting Services UK: The Complete Guide.