Autumn Budget 2025: News for Businesses Corporate Tax

Some of the headline news for businesses from the Autumn Budget 2025 involves…

Capital Allowances changes

The main rate of writing down allowances which applies to all qualifying expenditure will reduce from 18% to 14% with effect from 1 April 2026 for corporates and 6 April 2026 for businesses paying income tax.

In addition, a new first year allowance (FYA) is being introduced for expenditure incurred from 1 January 2026. It is expected that this will be available for unincorporated businesses as well as corporates and will also include assets used for leasing. However, there will be a specific exclusion for overseas leasing and second-hand assets and cars are also excluded.

Finally, the 100% first-year allowance for qualifying expenditure on zero-emission cars and on plant or machinery for electric vehicle charge points has been extended to 31 March 2027 for Corporation Tax and 6 April 2027 for income tax.

Corporation Tax late filing penalties

HM Revenue & Customs (HMRC) is looking to encourage companies to file their Corporation Tax returns on time by doubling the late filing penalties. The following will therefore apply for tax returns where the filing date is on or after 1 April 2026:

Return one or more days late	£200
Return is more than 3 months late	£400
Three successive failures, return one or more days late	£1,000
Three successive failures, return is more than 3 months late	£2,000

 

Corporate interest restriction

A welcome amendment to the corporate interest restrictions returns was announced where the time limit to appoint a reporting company is being removed and the group is no longer required to notify HMRC of the appointment.

Instead, businesses will be responsible for ensuring the reporting company has been appointed before including the details of the appointment within the interest restriction return.

Unfortunately, the reporting company will need to be appointed for each period as this will no longer roll forward.

A new £1,000 penalty will apply where a group has not made a valid appointment of a reporting company before submitting an interest restriction return.

To discuss any of these changes please get in touch with me or speak to your usual Mercer & Hole contact.

Find out more about how we can help you remain tax compliant.