Budget 2025: penalties for late corporation tax filing double
03/12/2025
After remaining unchanged since 1998, the government has announced that penalties for late corporation tax returns will double from 1 April 2026. The increase, quietly included in the recent Budget, aims to restore the real-terms value of the fines, which HMRC says have been eroded by nearly three decades of inflation.
HMRC explained: “The relative value of these penalties, and therefore their behavioural impact, has been eroded by nearly 30 years of inflation and in real terms they are worth around half the amount they were when introduced.”
The new rates will apply to any corporation tax return due on or after 1 April 2026.
| Reason | New Rate (1st April 2026) | Current Rate |
| Return Late | £200 | £100 |
| Return more than 3 months late | £400 | £200 |
| Three Successive failures - return late | £1,000 | £500 |
| Three Sucessive failures - more than 3 months late | £2,000 | £1,000 |
The government expects the tougher regime to raise an extra £60 million a year in penalty revenue.
When does this change take effect?
The new penalties will apply only to corporation tax returns due on or after 1 April 2026. Returns due before that date will still fall under the current (£100/£200) regime.
Legislation to implement the changes will be included in the Finance Bill 2025-26, amending Schedule 18 of the Finance Act 1998.
Why now?
While the Chancellor froze personal tax thresholds for another three years until 2031, the government decided the 27-year-old corporation tax penalty structure could no longer be ignored. Doubling the fines simply brings them back in line with 1998 purchasing power.
Key takeaway for companies and accountants
Mark 1 April 2026 in your diary. With basic late-filing fines jumping from £100 to £200 and repeat-offender penalties reaching £2,000, the cost of missing deadlines is about to get significantly more painful. Robust reminder systems and early preparation for year-ends will be more important than ever.
