Increases to Corporation Tax late filing penalties
Published 26 November 2025
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This publication is available at https://www.gov.uk/government/publications/corporation-tax-increases-to-late-filing-penalties/increases-to-corporation-tax-late-filing-penalties
Who is likely to be affected
Companies who do not file returns at the required time for Corporation Tax (CT) will incur higher penalty charges.
General description of the measure
The government will increase the level of fixed late filing penalties for CT.
Policy objective
The objective of the measure is to encourage companies to file their CT returns on time.
Filing penalties for CT returns were set in 1998. 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.
Background to the measure
The measure was announced at Budget 2025.
Detailed proposal
Operative date
This measure will have effect for returns for which the filing date is on or after 1 April 2026.
Current law and Proposed revisions
The tables below list the penalties, current amounts and the increase.
Company Tax Returns: Schedule 18 Finance Act 1998
| Legislation | Current rate | New Rate |
|---|---|---|
| Return late | £100 | £200 |
| Return is more than 3 months late | £200 | £400 |
| Three successive failures, return late | £500 | £1000 |
| Three successive failures, return is more than 3 months late | £1000 | £2000 |
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| 0 | +45 | +60 | +65 | +65 | +70 |
These figures are set out in Table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects incorporated businesses.
Equalities impacts
This measure only affects businesses, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.
Administrative impact on business including civil society organisations
This measure will have no impact on those compliant businesses and civil society organisations who file their returns on time.
Non-compliant businesses and civil society organisations will see an increase in the penalties for late filing.
Operational impact (£ million)
There is no significant IT change for this measure. As a result, any IT cost would be negligible.
Other impacts
Other impacts have been considered, but none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from tax returns and compliance activity alongside other measures in the government’s package for closing the tax gap.
Further advice
If you have any questions about this change, contact Paul Younger at email paul.younger2@hmrc.gov.uk.