Advance Corporation Tax Reform

HMRC Policy Papers & Consultations

Published April 1st, 2026

Detected March 6th, 2026

Summary

HM Revenue & Customs is reforming the Advance Corporation Tax (ACT) regime, repealing shadow ACT rules. This change allows unrelieved surplus ACT balances to be offset against Corporation Tax liabilities without restrictions, effective from April 1, 2026.

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What changed

HM Revenue & Customs has announced a reform to the Advance Corporation Tax (ACT) regime, specifically repealing the shadow ACT rules. This policy change, effective April 1, 2026, will permit companies to offset unrelieved surplus ACT balances against their Corporation Tax liabilities without the previous restrictions.

This reform will impact companies that have unrelieved surplus ACT. They will need to ensure their accounting and tax systems are updated to reflect the new offset rules. While no specific compliance deadline is mentioned beyond the effective date, companies should prepare for the change to avoid any potential miscalculations in their Corporation Tax liabilities from April 1, 2026.

What to do next

Update accounting and tax systems to reflect the new rules for offsetting unrelieved surplus ACT.
Review historical ACT balances to determine eligibility for offset against Corporation Tax liabilities.

Source document (simplified)

Policy paper

Advance Corporation Tax reform

This tax information and impact note is about the amendment to the treatment of unrelieved surplus Advance Corporation Tax.

From: HM Revenue & Customs Published 6 March 2026 Get emails about this page

Documents

Reform of the Advance Corporation Tax regime

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Details

This measure repeals the shadow Advance Corporation Tax (ACT) rules, so that unrelieved surplus ACT balances may be offset against Corporation Tax liabilities without restrictions with effect from 1 April 2026.