On 1 April 2026, HMRC is officially pulling the plug on its free online filing service for Corporation Tax returns. If you have ever relied on the government portal to submit your CT600 and annual accounts, that option is disappearing entirely. From that date forward, every single company in the UK will be forced to use commercial software to stay compliant. If you still haven`t decided, now is the time to avoid penalties, check it out here to make a good decision on your software.
Running a business is already expensive enough without having to scramble for new software or worry about accidentally triggering a massive tax bill. As we approach the 2026/27 financial year, the landscape of business taxes, capital allowances, and filing rules is shifting dramatically. The government is tightening the net on compliance, freezing personal thresholds, and adjusting rates across the board.
If you are a startup founder, entrepreneur, or small business owner, missing these updates could mean severe penalties or unnecessarily losing a massive chunk of your hard-earned profits. You need to know exactly how these changes impact your bottom line, what software you will need to use, and how to structure your finances to survive the upcoming tax year.
What is the corporation tax rate in the UK in 2026?
The UK corporation tax system is no longer a simple flat rate. HMRC uses a tiered system based on exactly how much profit your company generates. For the 2026/27 financial year, the rates remain split between a lower rate for small businesses and a higher rate for highly profitable companies.
Here is exactly how the corporation tax rates break down for the 2026/27 tax year:
| Profit Bracket | Corporation Tax Rate | Relief Eligibility |
| Profits under £50,000 | 19% (Small profits rate) | N/A |
| Profits between £50,000 and £250,000 | 25% | Eligible for Marginal Relief |
| Profits over £250,000 | 25% (Main rate) | Not eligible for Marginal Relief |
If your company keeps its taxable profits below £50,000, you will stay in the safe zone and pay the 19% small profits rate. This is designed to protect smaller SMEs and startups from heavy tax burdens during their early growth stages.
Who will pay the 25% corporation tax?
You will pay the full 25% main rate of corporation tax if your company generates a taxable profit exceeding £250,000. For highly profitable enterprises, there is no way around this upper threshold.
However, things get slightly more complicated if your profits land somewhere between £50,000 and £250,000. If you fall into this middle bracket, your tax rate technically jumps to 25%, but you become eligible for something called Marginal Relief.
Marginal Relief provides a gradual increase in your effective tax rate. It bridges the gap between the 19% and 25% bands, meaning your tax bill scales up proportionally rather than hitting you with a sudden 25% charge on your entire profit. Working out Marginal Relief requires a specific calculation based on your exact profit figures, which is why having reliable accounting software or a dedicated tax expert is completely essential.
Are there any tax changes for 2026?
Yes, there are several major tax changes taking effect in 2026 that will directly impact UK business owners.
- First and foremost is the closure of the HMRC free online filing portal on 1 April 2026. You must now file your tax returns using recognised commercial software. HMRC is enforcing this to meet modern digital standards and align with the Economic Crime and Corporate Transparency Act (ECCTA).
- Second, Making Tax Digital (MTD) for Income Tax officially begins. From April 2026, sole traders and landlords with a combined gross income over £50,000 must keep digital accounting records and submit quarterly updates to HMRC using compatible software.
- Third, capital allowances are changing. The main rate of writing-down allowance (WDA) for plant and machinery will be reduced from 18% to 14% starting April 2026. To balance this out, the government is introducing a new 40% first-year allowance (FYA) for main rate expenditure incurred on or after 1 January 2026. This is particularly relevant for leasing companies and unincorporated businesses.
- Finally, dividend tax rates are climbing. From 6 April 2026, the tax payable on dividends will rise by 2%. This pushes the basic rate to 10.75% and the higher rate to 35.75%. If you extract cash from your limited company via dividends, your personal tax bill is going to be noticeably higher.
Will there be a tax increase in 2026?
While the headline corporation tax rates are staying at 19% and 25%, many business owners will absolutely feel a tax increase in 2026.
Because the government has frozen personal income tax thresholds until 2031, natural inflation and business growth will drag more business owners into higher tax bands. The personal allowance remains stuck at £12,570, and the higher-rate threshold sits firmly at £50,270.
Combine these frozen thresholds with the 2% increase in dividend tax, the reduction in capital allowance WDA, and incoming changes to capital gains, and the reality is clear: most UK entrepreneurs will be handing a larger percentage of their wealth over to HMRC in the 2026/27 financial year.
Is there a change in capital gains tax for 2026?
Yes, significant changes to Capital Gains Tax (CGT) are rolling out, particularly affecting business owners planning to sell their companies or assets.
The most crucial change for entrepreneurs involves Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs' Relief. If you are selling your business, the CGT rate applied under BADR will increase from 14% to 18% starting 6 April 2026.
If you have been holding off on selling business assets, this 4% jump means you will lose a larger portion of your final payout to HMRC.
What is the capital gains tax rate for FY 2026 27?
For the 2026/27 financial year, the standard Capital Gains Tax rates for individuals are locked in based on your income tax bracket:
- Basic rate taxpayers: 18% on gains
- Higher and additional rate taxpayers: 24% on gains
It is also important to note that the annual exempt amount (your tax-free allowance for capital gains) remains fixed at £3,000 for individuals and personal representatives. Any profit you make above this £3,000 threshold from selling assets, shares, or property (excluding your primary residence) will be heavily taxed at the 18% or 24% rates.
Key Takeaways and TL;DR
- HMRC Portal Closure: The free HMRC corporation tax filing portal closes forever on 1 April 2026. You must use commercial software moving forward.
- Corporation Tax Rates: You will pay 19% on profits under £50k, and 25% on profits over £250k. Profits in between get Marginal Relief.
- Dividend Tax Hike: Dividend tax rates increase by 2% (10.75% for basic rate, 35.75% for higher rate).
- Making Tax Digital: MTD for Income Tax becomes mandatory in April 2026 for sole traders and landlords earning over £50k.
- Capital Allowances: WDA drops to 14%, but a new 40% First-Year Allowance is introduced in January 2026.
- Capital Gains Tax: The BADR rate increases to 18%. Standard CGT rates sit at 18% (basic) and 24% (higher), with a strict £3,000 tax-free allowance.
Your Next Steps
The 2026 tax landscape is complicated, heavily digital, and incredibly unforgiving of mistakes. With HMRC closing its free filing service and introducing strict digital reporting rules, you can no longer afford to handle your business taxes with outdated spreadsheets and guesswork. Late filings now result in higher fixed penalties, and incorrect returns will trigger costly investigations.
At Debitam, we specialise in helping small business owners navigate these exact changes. We provide seamless online accounting and transparent, affordable tax filing services that keep you 100% compliant with the new digital laws. We guarantee to save you from unexpected tax bills by actively hunting down tax claims you might have missed.
Because we operate online, we save you weeks of stress prior to your tax filing deadlines. You get direct access to a dedicated accountant who understands your business, with absolutely no hidden fees.
Do not wait until the HMRC portal shuts down. Secure your business's financial future today. Contact Debitam and let our experts handle the heavy lifting.
