🚨 HMRC to Shut Down Free Online Tax Filing Service…
HMRC has made a sudden announcement that it will be closing its free online service for filing corporation tax returns and company accounts. This decision could create extra costs and administrative headaches for small businesses.
💭 A Sign of the Times?
Remember when Facebook was just a fun way to stay in touch, and Twitter was a hub of useful information? Now, Facebook is an endless scroll of ads and clickbait videos, and Twitter is just... X.
This shift is a classic example of "enshittification" – Macquarie Dictionary’s Word of the Year 2024 – defined as:
📖 “The gradual deterioration of a service or product due to a decline in quality, often driven by profit-seeking.”
And now, it seems like the UK tax system is heading in the same direction.
💰 Pay to File
For a while now, HMRC has been restricting access to free tax filing services, forcing businesses to rely on commercial software.
Despite calls for a debate on who should be entitled to free tax compliance software, nothing has changed. Instead, HMRC continues to phase out its free services, leaving businesses with little choice but to pay for software—or face penalties.
⏳ End of Free Filing for Companies
📅 On 6 March 2025, HMRC announced that from 31 March 2026, its online filing service for company accounts and corporation tax returns will be shut down.
For many small businesses, this free service has been an efficient way to file their annual CT600 return alongside their accounts, which were automatically sent to Companies House in the correct format.
Currently, only simpler small businesses can use the free service, such as:
✅ Single trading companies (not part of a group)
✅ UK-registered companies
✅ Turnover below £632,000
✅ Rental income no more than £5,200
However, an ever-growing list of restrictions already bars many companies from using this service, including those with:
❌ Chargeable gains or losses
❌ Investment allowance
❌ Freeport allowances
❌ Special rate allowances
❌ Foreign currency transactions
❌ Foreign trade income
❌ Leased cars
❌ R&D costs
❌ Prior-year adjustments
❌ Share-based payments
💻 Extra Costs & More Hassle
From 1 April 2026, ALL companies will need to purchase commercial software to file their annual accounts and tax returns to HMRC.
In addition, Companies House will also require digital filing via third-party software, with the exact start date still to be confirmed.
HMRC has listed software suppliers, but businesses must make sure they choose software that can handle:
📌 CT600 tax return
📌 Corporation tax computation
📌 Company accounts in iXBRL format
🔍 Who Will Be Affected?
Any company with an accounting period ending after 31 March 2025 will need commercial software to file their accounts and tax return—unless they file early.
While Companies House has yet to confirm when digital filing will become mandatory, they have promised at least 21 months' notice before enforcing the change. However, it seems unlikely that paper filing will be allowed much beyond April 2026.
❓ Why Is HMRC Closing the Service?
The change appears to be driven by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which now requires small and micro-entity companies to submit more detailed financial information, including a profit and loss account.
Eventually, the government will use ECCTA powers to require iXBRL tagging of company accounts filed at Companies House, allowing HMRC to automate the comparison of tax returns with financial statements—helping to catch discrepancies and prevent fraud.
🎯 The Real Target?
While digital filing may improve security and trust, it feels like compliant micro-companies are being unfairly targeted, while HMRC attempts to crack down on fraudulent accounts.
💼 Need Help Navigating the Changes?
At Aequalis Accounting, we help businesses stay compliant while keeping costs as low as possible. 📊
📲 Call us on 01268 219 330 or email hello@aequalis.tax for expert guidance on corporation tax, digital filing, and the latest tax rules. 🚀