HMRC has announced that it will be closing its free online service for filing corporation tax returns and company accounts. From next year businesses will now have to pay to file these statutory items. So why the change to these important tax compliance services?
Earlier this month, HMRC announced that its online service for filing company accounts and corporation tax returns will close on 31 March 2026. Although a surprise move, the decision to close the service comes after the UK tax authority has gradually restricted or withdrawn its free filing services, forcing businesses to rely on commercial software. Despite calls for a debate on whether free compliance tools should be available, HMRC is continuing to phase out these services, leaving companies having to purchase software or face penalties.
Currently, the online tax service enables small businesses to file a CT600 return, along with company accounts, in a single submission. It also automatically converts accounts into the required format, streamlining the process. However, the service is only available to relatively simple small businesses which meant the following criteria:
- Single UK-based trading companies (not in a group)
- Companies with turnover below £632,000 and/or rental income under £5,200
Companies can’t use the service if they need to report extra items such as chargeable gains or losses, foreign currency transactions, leased cars or share-based payments.
Increased costs and admin
From 1 April 2026, all companies will have to use commercial software to submit their annual accounts and tax returns to HMRC.
Additionally, companies will soon need commercial software to file accounts with Companies House, as future regulations will make digital submissions compulsory. While the exact start date is unknown, Companies House has promised adequate notice before enforcing the requirement. However, it is unlikely that paper filing will remain an option beyond 2026.
HMRC has published a list of software providers, but businesses must ensure the software they chose supports digital submission of:
- CT600 form
- Corporation Tax computation
- Company accounts in iXBRL format
Who is affected?
Companies with an accounting period ending after 31 March 2025 will have to use commercial software, unless submitting accounts early.
Why is the service closing?
The move appears to be driven by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which introduces stricter reporting requirements. Under the new law, small and micro-entity companies must file additional financial details with Companies House, including a profit and loss account.
In the future, the government will likely require all financial data submitted to Companies House to be iXBRL-tagged, allowing HMRC to compare tax filings with Companies House records to ensure consistency and reduce discrepancies.
A burden on small businesses
While digitising tax filing may enhance security, it will impact small, compliant businesses. If you would like to discuss your business accounts, and ensuring correct filing to HMRC, please get in touch.