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Corporation Tax Penalties Have Doubled, But HMRC Paused The Letters

ended 18. July 2026

A penalty nobody has told you about is still a penalty. For Company Tax Returns with a filing date on or after 1 April 2026, the flat-rate late-filing penalties have doubled: £100 becomes £200 for a return up to 3 months late, £200 becomes £400 in total beyond that, and a third consecutive late filing now costs £1,000 or £2,000 instead of £500 or £1,000. Announced at Budget 2025, this is confirmed policy, in force.

The catch arrived quietly on 16 July, in HMRC's Agent Update issue 145. The system update needed to apply the new amounts has been delayed from 30 June to the end of July, so automatic penalty notices are paused. The penalties themselves are still being charged, and the notices will start landing automatically from late July. That means every company whose return fell due on or after 1 April and has filed late (or not filed) has been silently running up penalties at the doubled rate, and the backdated letter may be its first news that the amounts went up at all. The penalty runs from the statutory deadline, not from the date of HMRC's letter.

The companies caught are rarely large corporates with tax teams. They are the one-person company, the dormant-looking company that still has to file, the small firm whose bookkeeper left.

  1. Is it defensible for HMRC to double a penalty and then pause the letters that would tell companies it is building up, or should the charge have been paused along with the notices?
  2. Who is hit hardest when the first news of a doubled penalty arrives weeks or months after it started running, and is that fair on small companies with no finance team?
  3. What should directors with an overdue or borderline return do before the letters land from late July? Do you have a client whose plans this would change? If so, please give as much colour and detail as possible.


 

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Editor
Harvey Dhillon
Founder & CEO at Zmartly
For any Company Tax Return due on or after 1 April this year, the price of filing late has doubled: £200 instead of £100, £400 in total once it is more than 3 months late, and up to £2,000 for a third late year in a row. Yet hardly anyone has been told. HMRC's system update is running late, so the automatic penalty letters are paused until late July while the doubled charges quietly carry on. HMRC's silence is not forgiveness. A company that missed a May deadline has already run up the new penalty, and the backdated letter may be its first news that the amounts went up. This will not catch big firms with tax teams. It catches the one-person company, the company that looks dormant but still has to file, the small firm whose bookkeeper left. So if your return is overdue, do not wait for the post to tell you what you owe. The penalty runs from the deadline you missed, not from the date of HMRC's letter. File now. The letter is late. The penalty is not.