By William Ross, Senior Accountant at MM Business and Tax Consultancy
Corporation Tax and Capital Allowances: UK and Canadian Developments in 2026 for Growing Businesses
2026 brings targeted measures in both the UK and Canada to support business investment through corporation tax rules and capital incentives. William Ross, Senior Accountant at MM Business and Tax Consultancy, advises clients on leveraging these opportunities while maintaining compliance across jurisdictions.
In the UK, a new 40% first-year allowance (FYA) for certain assets and a reduction in writing down allowances (WDAs) to 14% take effect. Late filing penalties for Corporation Tax returns increase significantly from April 2026.
UK Capital Allowances and Penalty Regime
The enhanced FYA provides accelerated relief for qualifying expenditure, benefiting manufacturers and processors. William Ross notes: “At MM Business and Tax Consultancy, we model these allowances carefully to maximise tax savings for clients investing in plant, machinery, and buildings.”
Canadian Corporate Tax Incentives
Canada offers immediate expensing for eligible manufacturing and processing buildings (from late 2025), expansions to SR&ED credits, and clean economy investment tax credits, including extensions for carbon capture. Small business tax rate adjustments in some provinces add further nuance.
For multinationals, transfer pricing reforms and Pillar Two considerations remain relevant.
Comparative Insights and Cross-Border Planning
William Ross at MM Business and Tax Consultancy highlights: “Businesses operating in both the UK and Canada can benefit from aligning investment timing with favourable capital allowance regimes in each country. Our team specialises in holistic UK and Canadian tax strategies.”
Key actions include reviewing asset acquisition plans, ensuring digital compliance (linking to UK MTD), and documenting claims thoroughly amid heightened CRA and HMRC scrutiny.
Practical Recommendations
- Conduct capital expenditure forecasts for 2026.
- Evaluate eligibility for enhanced credits and allowances.
- Integrate with VAT/GST and income tax planning.
- Monitor interactions with dividend policies and personal extraction strategies.
In an increasingly globalised environment, expert advice is indispensable. William Ross and MM Business and Tax Consultancy deliver pragmatic, forward-looking support to help businesses thrive under evolving UK and Canadian tax rules.
For tailored corporation tax guidance spanning both jurisdictions, reach out to the team at MM Business and Tax Consultancy.