Corporation Tax late filing penalties from April 2026 – update

For more than 25 years, the financial cost of filing your Company Tax Return a day late was a fixed £100. From 1st April 2026, that doubled. HMRC has increased its Corporation Tax late filing penalties – and for companies that repeatedly miss their deadlines, the new regime can quickly become much more expensive.

Here is what directors of limited companies need to know.

What has changed with Corporation Tax late filing penalties?

The new flat-rate penalty structure applies to all Company Tax Returns with a filing date on or after 1st April 2026.

These penalties apply if HMRC is expecting a Company Tax Return, even where there is no Corporation Tax to pay. That can include companies that have not told HMRC they are dormant.

The three-strike rule for repeat offenders

The doubling of the base penalty is significant. However, the escalation of penalties for repeat offenders is the element that should give directors the most cause for concern.

If a company files late for three successive accounting periods, the penalties for the third period escalate sharply. The higher rates then continue for successive late periods until the company files a return on time. One on-time return resets the sequence – but getting back to that position requires actually hitting the deadline. This is a strong argument for treating compliance as a priority now rather than later.

Interest and tax-geared penalties

The flat-rate penalties are only the beginning. Corporation Tax also carries a separate set of charges that accumulate the longer a liability remains unpaid.

Most directors are aware that their company has twelve months from the end of its accounting period to file its Company Tax Return. Fewer appreciate that the payment deadline arrives three months earlier. For many companies, Corporation Tax is due nine months and one day after the end of the accounting period. Larger companies, however, may need to pay by instalments on an earlier timetable. Either way, the payment deadline is the date that deserves the most attention in your financial calendar – once it passes, HMRC begins charging interest on any unpaid tax. You can find the current late payment interest rate here. This interest is generally deductible for Corporation Tax purposes, but it is a real cash cost, and at current rates it accumulates quickly.

If the return itself is more than six months late, HMRC will estimate the bill and add a penalty of 10% of the unpaid Corporation Tax. At twelve months, a further 10% penalty is applied – meaning the total tax-geared penalty can reach 20% of the outstanding liability. For a company with a meaningful tax bill, these amounts can significantly exceed the flat-rate filing penalties.

One further practical point: HMRC requires a company to have filed its Company Tax Return before it can appeal against a late-filing penalty. Consequently, getting the return in – even after the deadline – is your necessary first step.

What the late filing changes mean for your business

HMRC’s decision to double its fixed penalties means that late filing is worth taking more seriously than before. The twelve-month filing window remains generous in theory – but the payment deadline, which falls earlier, is where the real financial exposure begins.

If you would like help reviewing your year-end processes, THP can help you put the right systems in place to avoid late filing penalties and keep your Corporation Tax obligations on track ahead of your next deadline.