Businesses faced some less than funny changes in April including reduced capital allowances, increased fines for late filing of corporation tax returns and the closure of HMRC’s free corporation tax return filing portal.
Capital allowances
Capital expenditure will normally qualify for a 100% first year allowance, but where expenditure does not qualify, a subsequent annual writing-down allowance (WDA) will be given. The main rate of WDA has been reduced from 18% to 14% for periods beginning on or after 1 April 2026 (6 April 2026 for sole traders and partnerships). That means this:
- Most expenditure on cars does not qualify for a 100% deduction, so the WDA reduction effectively results in more tax payable.
- Expenditure on new (not second-hand) zero-emission cars still qualifies for a 100% deduction, although this relief is set to end on 31 March 2027 (5 April 2027 for sole traders and partnerships).
A hybrid rate of WDA will apply for accounting periods spanning 1/6 April 2026.
Penalties
Fines for late submission of corporation tax returns have doubled. The first late filing penalty is now £200, up to £400 if more than three months late.
If the return was also late for the two accounting periods before that, the £200 and £400 penalties are respectively increased to £1,000 and £2,000.
Corporation tax returns
HMRC have closed their free online corporation tax filing service on 31 March 2026, which is no problem for those using an agent. That is:
From now on anyone filing company tax returns with HMRC will be required to use commercial software.
Any changes or amendments to previously filed tax returns will also have to be made using commercial software.
Everything that was once available online, including the HMRC’s tax return filing portal, is now off-limits. Hopefully the records have been downloaded and these should be stored safely.
Companies House was also set to require companies to file accounts using commercial software from 1 April 2027 but this will now be postponed.
The government’s guide to capital allowances can be found here.