From 1 April 2026, the penalty for filing a Corporation Tax return late doubled. For the first time in over 25 years, HMRC has increased the fixed penalties that apply when a company misses its Corporation Tax filing deadline. The immediate flat rate fine rises from £100 to £200. Miss the deadline by more than three months and the penalty doubles again to £400. For persistent late filers, the charges reach £2,000 per return.
These are automated penalties. They do not require a compliance check, an HMRC investigation, or any assessment of whether the company was actually profitable or had tax to pay. A company with no taxable profit, a loss making startup, or a dormant company that simply failed to file its return on time will receive a penalty notice in the same way as a profitable company. The penalty is for the act of missing the deadline — not for owing tax.
At CoreAcc Accountants, today marks the start of a regime where the cost of administrative carelessness around Corporation Tax filing is materially higher than it was yesterday. This article explains the full penalty structure, how it interacts with late payment interest and surcharges, what dormant companies must do, how to appeal a penalty where there is a genuine excuse, and the steps every director should take today to ensure they are not caught by the new charges.
Disclaimer: This article is for general information only and does not constitute professional advice. Always seek specific advice for your individual circumstances.
1. The Full Penalty Schedule from 1 April 2026
The Corporation Tax filing penalty regime operates in tiers, with the charges escalating based on how late the return is and whether the company has a history of persistent late filing. All figures below apply to accounting periods ending on or after a date aligned with the new regime — effectively, all returns due from 1 April 2026 onwards.
For returns that are not persistently late
A company filing its return after the deadline but within three months of the filing due date faces a fixed penalty of £200.
A company filing more than three months after the deadline faces a fixed penalty of £400.
In addition, for returns filed more than 18 months after the end of the accounting period — meaning the company is also late in paying its Corporation Tax — tax geared penalties may apply based on the amount of tax unpaid, at rates of 10% or 20% depending on whether the behaviour is deemed careless or deliberate. These tax geared penalties are separate from the fixed penalties and can be significantly larger for companies with material CT liabilities.
For persistent late filers
A company is treated as a persistent late filer if it has failed to file its Corporation Tax return on time for three consecutive accounting periods. Once a company enters persistent late filer status, the penalty structure escalates substantially.
For a persistent late filer filing its return within three months of the deadline, the fixed penalty is £1,000 — five times the standard charge.
For a persistent late filer filing more than three months after the deadline, the fixed penalty rises to £2,000.
Persistent late filer status is not applied automatically for the first or second late return — the escalated penalties apply from the third consecutive period of lateness. But companies that have already missed their filing deadline for the 2024/25 and 2025/26 periods and miss it again for 2026/27 will find themselves subject to these significantly higher charges.
The persistent late filer classification is also not reversed simply by filing one return on time. HMRC's approach is to reset the persistent late filer status only once a company has demonstrated a sustained pattern of timely filing over subsequent periods.
2. The Filing Deadline: When Is Your Return Actually Due?
Understanding exactly when your Corporation Tax return is due is the starting point for avoiding these penalties. The deadline is twelve months after the end of the accounting period to which the return relates.
For a company with a 31 December year end, the Corporation Tax return for the year ending 31 December 2025 is due by 31 December 2026. For a company with a 31 March year end, the return for the year ending 31 March 2026 is due by 31 March 2027.
This twelve month filing deadline is different from the payment deadline. Corporation Tax must be paid to HMRC nine months and one day after the end of the accounting period — for a 31 December year end, that is 1 October 2026, three months before the return is due. A company can therefore owe Corporation Tax and be paying interest on it while the return has not yet been filed — and the penalties for late filing run separately from the interest on late payment.
It is also different from the Companies House accounts deadline, which for most private companies is nine months after the year end. A company with a 31 December 2025 year end must file its statutory accounts at Companies House by 30 September 2026 and its Corporation Tax return with HMRC by 31 December 2026. Missing either deadline creates separate consequences.
Why the distinction between filing and payment matters
Many directors operate under a vague sense that filing the return and paying the tax are the same event. They are not. You can file a return on time and pay the tax late — in which case interest accrues on the unpaid amount but no filing penalty applies. You can also file the return late and pay the tax on time — in which case the filing penalties apply but no payment interest accrues.
The most common scenario where this distinction bites is where a company owes no Corporation Tax — perhaps because of trading losses, capital allowances, or research and development credits — but still fails to file the return. Many directors of loss making companies assume that if there is no tax to pay, there is no urgency about the return. This assumption is wrong. The filing penalty applies whether or not there is tax to pay. A company with a £500,000 loss that files its return late faces the same £200 penalty as a profitable company.
3. Late Payment Interest: The Separate Charge on Unpaid Tax
In addition to the fixed penalties for late filing, HMRC charges interest on Corporation Tax that is not paid by the payment deadline. This interest is calculated at the Bank of England base rate plus 2.5 percentage points, applied daily on the outstanding balance.
With the current Bank of England base rate at 3.75% as of 1 April 2026, the current rate of interest on late Corporation Tax payments is 6.25% per annum. On an unpaid CT liability of £50,000, interest at 6.25% accrues at approximately £8.56 per day.
Late payment interest is not a penalty in the same sense as the fixed filing charges. It is a compensatory payment to HMRC for the time value of money not received when it was due. There is no mechanism to appeal against interest accruing on a genuinely late payment — it is simply the cost of paying late.
Where a company is also subject to the 10% or 20% tax geared surcharge for being more than 18 months late with a return, the interest and the surcharge both apply simultaneously and independently. The total cost of being substantially overdue can therefore compound significantly.
4. Large Companies and Quarterly Instalment Payments
For large companies — those with annual taxable profits above £1.5 million — Corporation Tax is not collected in a single payment nine months after the year end. Large companies pay Corporation Tax in four quarterly instalment payments during and after the accounting period.
The instalment dates are the 14th day of months 7, 10, 13, and 16 of the accounting period. For a 31 December year end, the instalments fall in July and October of the current year and January and April of the following year. Failing to make these instalment payments on time attracts interest from the due date of each instalment on the amount underpaid, at the same base rate plus 2.5 percentage points.
For companies approaching the £1.5 million profits threshold, the switch from a single payment to quarterly instalments requires proactive cash flow management — the first instalment falls during the current accounting period, well before the year end accounts are finalised.
The threshold is reduced where the company has associated companies. A company with one associate has an effective threshold of £750,000; with two associates, £500,000. Directors of companies in groups or with close connected companies should confirm whether the instalment regime applies to them.
5. Dormant Companies: The Trap Directors Miss Most Often
Dormant companies generate a disproportionately large share of Corporation Tax penalty notices. The reason is straightforward: because the company is not trading and has no income, no Corporation Tax is owed, and the directors may see no urgency in completing the annual filing formalities. This assumption is wrong in two separate ways.
First, a company that is dormant for Corporation Tax purposes may still be required to file a Corporation Tax return. HMRC sends a notice requiring a company to file a return — a section 8 notice — and once such a notice has been issued, the company must file even if it has nothing to report. Ignoring the notice does not cancel the obligation; it starts the penalty clock.
Second, even where a company has not received a notice and is genuinely outside the obligation to file a CT600, the Companies House filing obligation continues. Statutory accounts must be filed at Companies House annually regardless of trading status, and a dormant company must file dormant accounts within nine months of its year end. The Companies House penalty regime for late accounts begins at £150 for accounts up to one month late and rises to £1,500 for accounts more than six months late, with doubled penalties for companies that have filed late in the previous year.
A director who is keeping a company dormant with the intention of reactivating it in future, or who has simply not got around to winding it up, faces both HMRC and Companies House filing obligations that continue regardless of the dormant status.
6. The iXBRL Requirement and Format Errors
Corporation Tax returns must be filed online, and the financial information in the return must be in iXBRL format — Inline eXtensible Business Reporting Language. iXBRL is a digital format that allows HMRC's systems to read and process the financial data automatically rather than relying on manual review.
Most accountancy software that produces financial statements compatible with HMRC's online filing system handles the iXBRL conversion automatically. However, companies using older software, manual spreadsheets, or attempting to file without professional help without professional assistance sometimes encounter format errors that prevent successful submission.
A return that is rejected by HMRC's system due to a format error has not been successfully filed. The filing deadline continues to run until a valid return is accepted by the system. Directors who attempt to file at or near the deadline without professional assistance run the risk of a format error creating an inadvertent late filing.
HMRC does not routinely notify companies in advance that their filed return has failed validation. The first indication may be a penalty notice. By the time the penalty is issued, the filing is late and the penalty is due.
7. The Right to Appeal: Reasonable Excuse
A penalty for late filing is not necessarily final. HMRC's penalty regime allows a company to appeal against a penalty where it can demonstrate a reasonable excuse for the failure to file on time.
A reasonable excuse is generally understood to mean something that prevented the company from filing on time and that is not within the company's control and could not have been mitigated by reasonable foresight or preparation. Examples that HMRC has accepted as reasonable excuse include the death or serious illness of a director who was personally responsible for the filing, the sudden and unexpected theft of business records, and certain serious technical failures of HMRC's own filing systems.
Examples that HMRC does not accept as reasonable excuse include pressure of work, ignorance of the filing deadline, reliance on an accountant who failed to file in time (the responsibility for ensuring the return is filed rests with the company, not the adviser), insufficient funds to pay the associated tax, or forgetting that the deadline existed.
Where an appeal is based on genuine exceptional circumstances that are clearly outside the company's control, CoreAcc Accountants manages the appeal process on our clients' behalf. Where the circumstances are less straightforward, we advise honestly on the likely prospects before committing to an appeal.
8. Worked Examples
Worked Example 1: A Single Late Return — The Actual Cost
Meridian Consulting Ltd has a 31 March year end. Its Corporation Tax return for the year ending 31 March 2026 is due by 31 March 2027. The company files on 15 May 2027 — 45 days late.
Under the old regime (applicable before 1 April 2026): penalty of £100.
Under the new regime (applicable from 1 April 2026): the return is filed within three months of the deadline, so the penalty is £200. This is the first late return for Meridian, so persistent late filer penalties do not apply.
The additional cost to Meridian of missing the deadline by 45 days: £200.
If Meridian's Corporation Tax liability for the year was £42,000 and it paid on time (by 1 January 2027, nine months and one day after the March 2026 year end), no payment interest accrues. The only charge is the £200 filing penalty.
If Meridian also paid its tax late — say it paid on 15 May 2027 at the same time as filing — interest at 6.25% per annum would accrue from 1 January 2027 to 15 May 2027, a period of 134 days. Interest on £42,000 at 6.25% for 134 days is approximately £963. Total additional cost: £200 filing penalty plus £963 interest = £1,163.
Worked Example 2: Three Consecutive Late Returns — The Persistent Late Filer Trap
Ridge Holdings Ltd has a 31 December year end. It filed its 2023 return three months late in March 2025 (£100 penalty under old regime). It filed its 2024 return two months late in February 2026 (£100 penalty under old regime). It files its 2025 return in April 2027 — four months late.
Under the new regime, Ridge is a persistent late filer from its third consecutive late return. The 2025 return is filed more than three months late, so the persistent late filer penalty at the £2,000 tier applies.
Ridge's filing history:
2023 return (filed late, before the new regime): £100 penalty paid.2024 return (filed late, before the new regime): £100 penalty paid.2025 return (filed late, new regime, persistent late filer, more than three months late): £2,000 penalty.
The cumulative penalty cost across three years: £2,200. Of that, £2,000 arises from a single return under the new persistent late filer regime. Had Ridge filed the 2025 return on time, the persistent late filer penalty would not have applied and the cumulative penalty would have remained at £200.
The escalation from £100 to £2,000 on the third consecutive late return is the most significant change in the new regime and the one that will catch directors who have historically been casual about the timing of their annual filing.
Worked Example 3: A Dormant Company That Did Not Know It Had to File
Clearspring Investments Ltd was set up as a holding company but has been dormant since its incorporation two years ago. The director has never traded through it and assumed no filing was required. HMRC issued a notice requiring a return in November 2025. The director missed this notice in the post.
The return for the accounting period ending 31 October 2025 was due on 31 October 2026. By 1 April 2027, no return has been filed — five months late. The director receives a penalty notice for £400 (more than three months late, not yet a persistent late filer).
The company has no tax liability. The penalty applies regardless. The £400 is purely a consequence of missing the administrative deadline.
If the director now files a nil return promptly, no further penalties accrue. The director can appeal the penalty on the basis that the notice requiring the return was not received. HMRC will consider this as part of the appeals process, but reasonable excuse appeals based on not receiving of correspondence are not automatically accepted — the company must demonstrate that it took reasonable care to keep its registered office address current and monitor its correspondence.
9. How to Ensure You Never Pay These Penalties
The practical steps that prevent Corporation Tax filing penalties are straightforward and consistent. The difficulty is not knowing what to do — it is building the discipline to do it consistently, for every accounting period, without exception.
Know your filing deadline. The Corporation Tax return is due twelve months after the end of the accounting period. For a company with a 31 December year end, the 2025 return is due on 31 December 2026. Note this date in your calendar, your accounting software, and any project management system your business uses.
Start the accounts preparation process promptly after the year end. Accounts that are not started until eleven months into the filing year leave no room for unexpected delays — a missing bank statement, a disputed invoice, a question from HMRC, or a change in accounting treatment can all push a return that was almost on time to one that is just over the deadline. Starting the accounts preparation within two to three months of the year end provides a meaningful buffer.
Respond promptly to correspondence from HMRC. A notice requiring a return, a penalty notice, or an acknowledgment of submission all represent HMRC telling you something that requires action. Missing these communications — whether because the registered office address is out of date, because correspondence is not opened, or because it is passed to the director without being acted upon — is the most common cause of administrative penalties.
Keep the company's registered office address current at Companies House. HMRC corresponds with companies at the registered office address on record at Companies House. A company whose registered office is an address that the director no longer monitors — an old business address, a former solicitor's office, a premises the company no longer occupies — will miss HMRC correspondence and face penalties for obligations it did not know existed.
For dormant companies, consider whether the company is still needed. A company that serves no current purpose but generates ongoing filing obligations at both HMRC and Companies House — and now carries higher penalty risk — may be better wound up through a formal dissolution process than kept open indefinitely. CoreAcc Accountants can advise on the dissolution process and ensure that final returns are filed before the company is struck off.
Frequently Asked Questions
What is the new Corporation Tax late filing penalty from 1 April 2026?
From 1 April 2026, the fixed penalty for filing a Corporation Tax return late is £200 for returns filed within three months of the deadline, and £400 for returns filed more than three months late. These figures represent a doubling of the previous penalties, which had been £100 and £200 respectively for over 25 years. For persistent late filers — companies that have missed the filing deadline for three consecutive accounting periods — the penalties escalate to £1,000 for returns filed within three months of the deadline and £2,000 for those filed more than three months late.
When is the Corporation Tax return due?
The Corporation Tax return is due twelve months after the end of the accounting period to which it relates. For a company with a 31 December year end, the return for the year ending 31 December 2025 is due by 31 December 2026. This is different from the payment deadline, which is nine months and one day after the year end — 1 October 2026 for a December year end company.
Do penalties apply even if the company has no tax to pay?
Yes. The filing penalties are charged for the act of missing the filing deadline, not for failing to pay tax. A company with no taxable income, a loss making company, or a dormant company that has received a notice requiring a return will face exactly the same fixed penalties as a profitable company if it misses the filing deadline. This is one of the most widely misunderstood aspects of the Corporation Tax penalty regime.
What is a persistent late filer and when do the higher penalties apply?
A company is treated as a persistent late filer if it has failed to file its Corporation Tax return on time for three consecutive accounting periods. From the third consecutive late return, the fixed penalty increases to £1,000 (if filed within three months of the deadline) or £2,000 (if filed more than three months late). These penalties are significantly higher than the standard rates and represent a genuine financial risk for companies that have developed a pattern of missing their deadlines by a few weeks each year.
Are there separate penalties for paying Corporation Tax late?
Late payment of Corporation Tax does not attract a fixed penalty in the same way as late filing. Instead, HMRC charges interest on the amount outstanding from the day after the payment deadline. The interest rate is the Bank of England base rate plus 2.5 percentage points — currently 6.25% per annum. On a liability of £30,000, this equates to approximately £5.14 per day. Where a return is filed more than 18 months after the end of the accounting period and tax remains unpaid, a tax geared surcharge of 10% or 20% of the unpaid tax may also apply.
Do dormant companies have to file a Corporation Tax return?
A dormant company must file a Corporation Tax return if HMRC has issued a notice requiring it to do so. If HMRC has not issued such a notice, the company may not be required to file a CT600. However, the company must still file dormant accounts at Companies House within nine months of the year end, and it must notify HMRC if it begins trading. A company that has received a notice from HMRC and ignores it on the basis that the company is dormant faces the same penalties as any other company that fails to file on time.
Can I appeal a Corporation Tax filing penalty?
Yes. A company can appeal against a Corporation Tax filing penalty if it has a reasonable excuse for the failure to file on time. A reasonable excuse is something outside the company's control that prevented filing and that could not have been mitigated by reasonable preparation. Examples that have been accepted include serious illness of the person responsible for filing and certain technical failures of HMRC's own filing system. Examples that are not accepted include pressure of other work, ignorance of the deadline, relying on an accountant who failed to file, or insufficient funds. An appeal must be submitted within 30 days of the penalty notice.
What is iXBRL and why does it matter for filing?
iXBRL is the digital format in which the financial information in a Corporation Tax return must be submitted. It allows HMRC's systems to read and process the data automatically. Most accountancy software produces iXBRL output automatically. However, if a return is submitted in the wrong format or if the iXBRL file contains validation errors, the return will be rejected by HMRC's system and will not be treated as filed. The penalty clock continues to run until a valid return is accepted. This is one reason why filing close to the deadline without professional assistance carries a heightened risk of an inadvertent late filing.
What should I do if I receive a Corporation Tax penalty notice?
Do not ignore it. A penalty notice from HMRC requires a response — either payment of the penalty or submission of an appeal within 30 days. If you believe there is a reasonable excuse for the late filing, gather the evidence and contact your accountant promptly. If the penalty is correct and no appeal is available, pay it by the due date to avoid interest on the outstanding penalty amount. Contact CoreAcc Accountants as soon as you receive any HMRC correspondence about late filing — we can review the position, advise on whether an appeal is warranted, and manage the process on your behalf.
What CoreAcc Accountants Can Help You With
The new penalty regime makes the cost of administrative carelessness around Corporation Tax filing materially higher than it has been for over 25 years. At CoreAcc Accountants, our goal is simple: no client of ours should ever receive a Corporation Tax filing penalty.
We achieve this by starting your year end accounts process within two to three months of your accounting period end — not at the last minute. We track every filing deadline for every client we work with, automatically, and we contact you in advance if we need information to complete a return. We file returns digitally through software integrated directly with HMRC's system, eliminating manual errors. And we monitor receipt confirmation from HMRC for every submission we make, so we know that your return has been accepted and not just submitted.
For dormant companies and holding companies that generate no activity, we provide a specific annual review to confirm that all Companies House and HMRC obligations have been met and that no penalty risk has accumulated without the director's knowledge.
If you have already received a penalty notice, or if you are concerned that a return may be outstanding for a company you are connected with, contact us today. We will review the position promptly and advise on the most efficient route to resolving it.
Get in Touch
The new penalties are live from today, 1 April 2026. If you are not certain when your next Corporation Tax return is due, or if you have any concern that a return may have been missed, contact CoreAcc Accountants now.
CoreAcc Accountants is an ACCA accredited firm of Chartered Certified Accountants based in Borehamwood, Hertfordshire. This article was published on 1 April 2026 and reflects the Corporation Tax penalty regime taking effect on that date. It does not constitute professional advice. Always seek specific advice for your individual circumstances.
