For the first time in more than 25 years, the Government will make significant changes to the penalty regime for Corporation Tax late filings.
The changes, announced in the Autumn Budget, reflect the erosion of the original penalty levels after nearly three decades of inflation.
From 1 April 2026, returns that miss the filing deadline will attract a £200 penalty, double the current £100.
Where a return is more than three months late, the penalty will rise to £400. Repeated failures will attract higher charges, with the top penalty increasing to £2,000 for those with three successive late filings.
HMRC expects the updated regime to raise around £60 million a year. The announcement sits alongside wider measures in the Budget, including the extension of the freeze on Income Tax thresholds until 2031.
What other new penalty measures were announced in the Autumn Budget?
The doubling of Corporation Tax late filing penalties forms part of a broader tightening of compliance across several tax areas:
- Higher fines for late submission under Making Tax Digital (MTD): There will be an escalation of points-based penalties for repeated late filing under MTD for Income Tax once the system goes live from April next year.
- Increased late payment interest: Further alignment of tax interest rates with Bank of England base rate movements will be implemented meaning higher payments in future.
- Stronger enforcement for offshore non-compliance: HMRC is looking to introduce higher penalties where income or gains have links to overseas assets, reflecting HMRC’s continued focus on offshore transparency.
- Updated failure-to-notify penalties: There will be increased fines for businesses that do not register for the correct taxes on time, especially in areas linked to VAT and PAYE.
These changes underline a continued shift towards tougher enforcement and stronger behavioural incentives across the tax system.
If you would like to discuss how the updated penalties may affect your filing obligations or planning, our team can help.
