Penalties for late filing of CT returns double, end of free HMRC software, cut in capital allowance rates, road tax increases, and more
Capital allowances
Capital allowances are being reduced, effectively raising tax payable, with the main rate of writing-down allowance for plant or machinery cut from 18% to 14% for chargeable periods starting on or after 1 April 2026 for corporation tax, and from 6 April for income tax purposes.
The government tried to soften the blow when the chancellor first announced this measure with a new 40% first-year allowance for main rate assets effective from 1 January 2026, for businesses unable to claim full expensing such as unincorporated businesses or leasing and hire businesses. The 100% first-year allowance for zero-emission cars and EV charge points is also extended until March/April 2027.
