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Government intends to restore original value and encourage greater compliance
The government has announced that fixed late filing penalties for corporation tax (CT) returns will be increased for the first time since 1998. The change, confirmed at Budget 2025, aims to strengthen filing compliance by restoring the penalties’ real-terms value, which has been significantly reduced by almost 30 years of inflation.
In real terms, the current penalties are now worth roughly half of their original value. Increasing the penalty amounts is intended to reinforce compliance and improve the overall effectiveness of the regime.
The increased penalties will apply to CT returns with a filing date on or after 1 April 2026.
The changes are being legislated through amendments to Schedule 18, Finance Act 1998. The updated penalty amounts are as follows:
Corporation tax late filing penalties
| Circumstance | Current penalty | New penalty |
| Return filed late | £100 | £200 |
| Return more than three months late | £200 | £400 |
| Three successive late filings | £500 | £1,000 |
| Three successive filings more than three months late | £1,000 | £2,000 |
By doubling the existing fixed penalties, the government intends to restore their original value and encourage greater compliance among companies.