If you’ve ever been a few weeks late with a corporation tax return, HMRC has raised the price of that habit. From 1 April 2026, late filing penalties double across the board — and for companies with a track record of lateness, they quadruple. Here’s what the new numbers look like, who’s caught, and what to tighten before the change bites.
The new penalty schedule
CT return filing penalties sit in Schedule 18 of the Finance Act 1998, paragraph 17. The regime is automatic: miss the deadline by a day and the first penalty is issued; miss it by more than three months and a further penalty is added. From 1 April 2026, each of those amounts doubles.
| Trigger | Until 31 March 2026 | From 1 April 2026 |
| Initial penalty (filed late) | £100 | £200 |
| Further penalty (over 3 months late) | £200 | £400 |
| Third successive late filing — initial | £500 | £1,000 |
| Third successive late filing — over 3 months | £1,000 | £2,000 |
The increase applies to returns with a filing submission date on or after 1 April 2026. In practice, that means returns for accounting periods ending after 1 April 2025 (CT returns are due twelve months after the period end, per Sch 18 FA 1998 para 14). A company with a year ending 31 March 2025 has a filing deadline of 31 March 2026 — just inside the old regime. A company with a year ending 30 April 2025 files by 30 April 2026 and is in the new regime.
When does “successive failure” kick in?
The elevated £1,000 / £2,000 penalties apply where a company has been charged an initial late-filing penalty in each of the two preceding accounting periods. So if your last two returns were both filed late, a third late filing puts you straight into the enhanced regime without a warning. The clock is only reset by two consecutive years of on-time filing — a single compliant return doesn’t cure it.
What the doubling doesn’t touch
The increase only affects the flat-rate penalties in paragraph 17. Two other cost layers are unchanged but worth remembering, because they stack on top:
- Tax-related penalties (Sch 18 FA 1998 para 18). If a return is more than eighteen months late, HMRC can charge an additional 10% of the unpaid corporation tax, rising to 20% for returns more than twenty-four months late. On a typical owner-managed company this dwarfs the flat-rate penalty and has real teeth.
- Late payment interest (Finance Act 2009 s.102 and the annual HMRC interest rate orders). Set at Bank of England base rate plus 4 percentage points from 6 April 2025 under the Autumn Budget 2024 changes, it compounds on any unpaid tax regardless of the filing position. Interest isn’t a penalty in law but it behaves like one on the P&L.
Filing the return on time doesn’t help if the tax is unpaid — and vice versa. The two deadlines are separate (payment is due nine months and a day after the period end; the return is due twelve months after).
The direction of travel
This sits alongside the reinstatement of CIS nil-return penalties from the same date and wider HMRC rhetoric about raising the cost of non-compliance. Read as a package, the signal is clear: HMRC is no longer minded to issue reminder letters and absorb the appeals. Penalties are cheaper for the Treasury to collect than tax, so making them bigger is a predictable move. Expect more of the same over the next two Budgets.
Three things to tighten now
- Calendar the return deadline as a fixed point, not a target. Twelve months after the period end is the statutory deadline — add a ten-week-out milestone for “all source papers in” and the nine-month-and-a-day tax payment date. HMRC does not routinely extend.
- Check your recent filing history. If your last two returns were late, one more slip lands you on the £1,000 / £2,000 tier from the first day of the new regime. No warning, no ramp.
- Move the bookkeeping forward, not the return back. If last-minute records are the bottleneck, the fix is earlier discipline on source papers, not hoping for leniency. Real-time bookkeeping via Xero or QuickBooks, with Dext for receipts, closes the gap in most owner-manager cases.
How we can help
We handle CT return compliance for our business clients as part of the annual cycle — tracking deadlines, chasing source papers early, and flagging successive-failure risk before it hits the threshold. If you’d like your next return off your plate, get in touch. We’ll answer the phone.
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