This article explores some of the changes announced recently that will impact on the completion of company tax returns, and the giving of tax advice to companies, in the year ahead. Other articles in the series Prepare for 2026/27 may also be of interest, including the articles aimed at businesses more widely (ie, including sole traders and partnerships) and employers.  

Late filing penalties 

Penalties apply where a corporation tax return is submitted late, ie, after the date on which it is due to be submitted to HMRC (the filing date). The amount charged depends on how late the return is and whether there has been repeated failure to file returns on time. For returns that have a filing date of 1 April 2026 or later, the penalties are doubled, as shown in the table below. 

HMRC says that, as the filing penalties were set in 1998, their relative value and behavioural impact has been eroded over time. The penalties are being increased to “restore their original real terms value”. 

Attracting investment 

The enterprise investment scheme (EIS) and the venture capital trust (VCT) scheme help small and medium-sized companies to attract investment by offering tax reliefs to investors. The government hopes to increase investment through the EIS and VCT scheme by increasing the following limits from 6 April 2026: 

• The annual investment limit on the amount that companies can raise, from £5m (£10m for a knowledge intensive company (KIC)) to £10m (£20m for KIC).
• The overall investment limit, from £12m (£20m for KIC) to £24m (£40m for KIC).
• The gross asset test that applies to determine if a company is a qualifying company, from £15m immediately before and £16m immediately after the share issue, to £30m and £35m respectively.  

For changes to tax reliefs for investors, see the article for individuals.  

Tax relief for interest costs 

In broad terms, the corporate interest restriction (CIR) limits the amount of tax relief available to a UK group on its net interest and financing costs where those amounts exceed £2m in a 12-month period. CIR compliance is usually managed by a reporting company. The reporting company may be appointed by the group or nominated by HMRC.  

In recent years, and as explained in an article in 2024, it became clear that aspects of the reporting company rules were causing issues for groups and for HMRC. At the Autumn Budget 2025, it was announced that a number of changes will be made to simplify the administration of the rules. These include: 

• Removing both the time limit to appoint a reporting company and the requirement for the appointment to be made ‘by notice’ to HMRC. Instead, businesses will be responsible for ensuring the reporting company has been appointed for a period, with details of the appointment disclosed in the interest restriction return.   
• Requiring reporting company appointments to be authorised by over 50% (rather than exactly 50%) of the group for each period (reporting company appointments will no longer automatically rollover to later periods). 
• Amending the statutory obligation on reporting companies to file an interest restriction return except in the limited circumstances where HMRC appoints a reporting company or a replacement reporting company. 

The changes apply for accounting periods ending on or after 31 March 2026.  

Provision is also made for a group to retrospectively appoint a reporting company where it is “purported” that an interest restriction return was submitted for a period ended on or after 31 March 2024 and it is later found that a reporting company had not been appointed.  

The government has also announced further technical amendments intended “to ensure that the regime works as intended”. 

International tax rules 

Finance Bill 2024-25 includes a package of measures “to simplify the UK’s international tax rules, bring them up to date, and align them more closely with the UK’s obligations under double taxation treaties”.  

The changes, which will apply for accounting periods beginning on or after 1 January 2026, include: 

• amending the participation condition for transfer pricing;
• making UK-to-UK transactions exempt from transfer pricing where there is no risk of tax loss; 
• aligning the definition of “permanent establishment” with that set out in article 5 of the 2017 OECD model tax convention; and
• repealing the diverted profits tax and replacing it with a new charging provision for unassessed transfer pricing profits. 

Further information 

• Reform of UK law in relation to transfer pricing, permanent establishment and Diverted Profits Tax - GOV.UK

Advance clearance facilities 

Delivering on a commitment made in its corporation tax roadmap, the government will provide a “dedicated service for major investment projects” that will give “a clear position on how HMRC will apply tax legislation to a project”. The threshold for entry into the service is £1 billion of qualifying project expenditure in the UK over the lifetime of the project.  

HMRC has published draft guidance ahead of the formal launch of the service in July 2026. The draft guidance explains how the service will work and what is and is not within scope.  We will look at the new service in more detail in future articles.  

As explained in an earlier article, HMRC hopes to pilot a targeted research and development (R&D) advance assurance for small and medium-sized companies in spring 2026. 

Rates of tax 

Although the main and small profits rates of corporation tax will remain at 25% and 19% respectively, there is one change to rates of tax for companies to be aware of. With effect for loans made to participators by close companies on or after 6 April 2026, the rate of tax will increase from 33.75% to 35.75%. This reflects the increase in the income tax dividend upper rate.