Budget 2025 – Late Corporation Tax filings – Penalties have doubled

Budget 2025 – Late Corporation Tax filings – Penalties have doubled

As part of the November 2025 budget, the government announced that the penalty regime needed to be updated to ‘counteract the effect of inflation since the penalties were introduced’ nearly 30 years ago back in 1998. This measure was one of many in the small print of the Budget.

The new penalties will come into effect for corporation tax returns due from 1 April 2026.

HMRC said the increase was necessary as ‘the relative value of these penalties, and therefore 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 penalties are therefore being increased to restore their original real terms value’.

Under the new penalty regime, the basic late filing fine will double to £200, while if there are three successive failures and the return is late the penalty will increase from £500 to £1,000. All fines will go up as detailed in the table below.

Corporation tax late filing penalties from 1 April 2026

Reason	New rate	Current rate
Return late	£200	£100
Return more than three months late	£400	£200
Three successive failures, return late	£1,000	£500
Three successive failures, return more than three months late	£2,000	£1,000

The government expects to raise an additional £60m a year in penalties.

Legislation will be included in the Finance Bill 2025-26 to amend schedule 18 of the Finance Act 1998. The new penalty regime will take effect for returns due on or after 1 April 2026.