Companies House always gives good notice of changes, giving you plenty of time to prepare. For instance, we recently reported on the forthcoming need for ALL company directors to verify their ID by Autumn of 2026, and encouraged you to advise all your directors about it.

Another looming deadline is the closure of the free online web filing service and after 1 April 2027 you will need to use accounting software to file. You should have been notified by 1 July of this year at the latest, giving you plenty of time to prepare, giving you one full accounting year, plus 9 months, to make the switch. But emails are easy to miss, especially among all the other day to day business of running a management company.

If you aren’t already receiving Companies House updates you can sign up for general email alerts here and emails specific to your company Here You should also email reminders specific to your company here.

What’s changing with filing?

From 1 April 2027 all UK registered companies will have to file annual accounts with Companies House using commercial accounting software. Whether you file accounts yourself or through an accountant or agent, it will be necessary to use software from that point forward.

The free service that allowed small businesses to file both accounts and Company Tax Returns online is ending on 31 March 2026. Paper filing options will also be discontinued. This change is designed to be more efficient and secure by creating a single, cost-effective, sustainable, and traceable way to file. It should also reduce the risk of deliberate misuse of minimal disclosure options to hide money laundering and other fraudulent activity.

This change is not optional for you. Legislation has been passed to allow Companies House to require companies to file accounts in a digital format. All companies must have found a suitable software product before web-based and paper filing options are switched off.

You will still be able to use free online services to file other documents like confirmation statements and director updates – these are not affected by this change.

Who is affected?

The change applies to all companies, including micro entities, which include most flat management companies.

Micro-entities are very small companies which meet any two of the following requirements for the accounting period beginning on or after 6 April 2025: turnover under £1 million (up from £632,000), a balance sheet of less than £500,000 (up from £316,000), and having fewer than 10 employees.

Micro entities will now have to file a copy of their balance sheet and profit and loss account, and these will become publicly available information, just like any company.

Other changes are planned, including updates to audit exemptions and accounting reference periods. It is expected that any company claiming an audit exemption, as most small flat management companies can, will need to give an enhanced statement from their directors on the balance sheet. Directors will need to specify which exemption is being claimed and confirm that the company qualifies for the exemption.

You must of course continue to send statutory accounts to your members and, if appropriate, to HM Revenue and Customs (HMRC). Every company must in any case keep accounting records – whether they are trading, or not. Accounting records must include:

  • entries showing all money received and expended by the company.
  • a record of the assets and liabilities of the company

Finding and using commercial software

You will need to have a presenter ID and code so you will need to  apply to file with Companies House using software. This link will direct you to the GOV.UK One service, which you may already have signed up to when verifying yourself as a director.

There are links to commercial software packages here, and you can filter to find ones that best suit your company before choosing.

You can find more on making the switch to software filing on GOV.UK HERE.

Digital tax too?

You may also be aware of HMRC’s move to Making Tax Digital. Is this another concern for you?

While flat management companies, including those set up under The Right to Manage (RTM), are in principle subject to Corporation Tax, they are often exempt are exempt if the following conditions are met:

  • The only income received by the company is the service charges paid by the property owners
  • Income is spent on the day-to-day maintenance and management of the complex
  • Surplus income is transferred to deferred income for future maintenance expenses
  • No deposit interest is earned in the year

Flat management companies must still send a Company Tax Return to HM Revenue & Customs (HMRC) no later than 12 months after the end of their first financial year. HMRC might then confirm that the company is dormant, which means that you would not need to submit returns from this company in future years.

HMRC will in all probability may consider your company as dormant if the company does not:

  • Allow directors who are not residents or leaseholders to be appointed in its articles of association
  • Do more than manage the property in the interests of shareholders
  • Make a profit
  • Need to pay more than £100 in Corporation Tax in a year
  • Receive any income from land
  • Pay dividends or other payments from profits to shareholders
  • Own any assets it is likely to dispose of which would give rise to a chargeable gain

It is your responsibility to submit a return if the situation changes.

 

Don’t risk it

Failing to file has consequences that can go beyond a simple late filing fee. If the registrar believes that a company is no longer carrying on business or in operation, it could be struck off the register and dissolved. If this happens, all the assets of the company (including its bank account and property) could become the property of the Crown.

Directors of flat freehold and management companies are also subject to company law on liability, meaning they can be personally liable for errors and omissions in building management – even though they are probably acting as volunteers. While the company may have few assets other than its bank balance, the individual directors’ own long-lease flats are assets and make them ‘worth’ suing personally. That is why it is increasingly the norm for management companies to take out directors’ and officers’ liability insurance that covers both the company itself and individual directors.

Our Directors’ and Officers’ Liability policy is written specifically for blocks of flats so that the cover, and premiums – are in proportion.  It can be arranged alongside our buildings cover or as a stand-alone policy. Do get in touch and we would be happy to explain the cover.

Disclaimer:

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

FP1819-2025