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Following the Autumn Budget, it is increasingly clear that the Government is toughening its approach to tax compliance.

This is a break with tradition, as penalties have remained unchanged for years, meaning that inflation has caused the impact to soften with time.

As such, we are facing an update to penalties aimed at tackling late filing, late payment and repeated non-compliance, all of which will soon result in larger fines.

Corporation Tax penalties are increasing

From 1 April 2026, Corporation Tax late filing penalties will double, as missing a deadline will result in a £200 fine, up from £100.

This penalty increases to £400 if the return is more than three months late.

Repeat offenders will face a fine of up to £2,000 for missing three consecutive filings.

HMRC expects to raise £60 million a year through the changes, though this could be higher if the penalties improve taxpayer behaviour.

Wider tightening of penalties

While the penalties for missing Corporation Tax filings are changing for the first time in 25 years, other penalties are increasing too.

Late payment interest will also increase as tax interest rates are aligned more closely with the Bank of England base rate movements.

Higher penalties are also being proposed where undeclared income or gains involve overseas assets, while failure-to-notify penalties are being strengthened too, particularly where businesses fail to register correctly for VAT or PAYE on time.

Making Tax Digital for Income Tax

As the first deadline is swiftly approaching, all eyes are on Making Tax Digital (MTD) for Income Tax.

To allow people time to prepare, the 2026 tax year will not have penalties for missing MTD deadlines, but 2027 will see the penalty system take effect.

Each late submission earns one penalty point.

A £200 penalty will be enforced after you get two points for annual filings and four points for quarterly filings.

Any further missed annual filings will also face a £200 fine.

Points reset when outstanding submissions are filed and after 12 months of compliance with quarterly filings and 24 months for annual ones.

It can be overwhelming to keep up with all the changes. We can help you avoid unnecessary fines.

Stay compliant with tax obligations by speaking to our team today.

Given how recently the Autumn Budget was, most people had assumed that all of the big tax measures for the year had been issued.

However, Rachel Reeves decided to wrap up 2025 with an eleventh-hour announcement of changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) that will increase the allowance available to estates.

As many will have already been thinking about estate planning, it is vital that the changes to these Inheritance Tax (IHT) reliefs are well understood.

What has changed with IHT?

One of the most contentious aspects of the Autumn Budget was the refusal to update thresholds that had been causing concern for many since they were announced in the 2024 Autumn Budget.

Chief among these were the thresholds for APR and BPR that were set to offer 100 per cent relief only up to £1 million, after which the relief would drop to 50 per cent.

In the 2025 Autumn Budget, it was confirmed that this allowance could also be passed to surviving spouses or civil partners.

However, in a surprising pre-Christmas U-turn, the Chancellor increased the threshold to £2.5 million, when the changes take effect on 6 April.

This means that a couple will be able to pass on up to £5 million of agricultural or business assets between them, on top of the existing allowances such as the nil-rate and residence nil-rate band.

What will the changes mean for estate planning?

The changes are set to be a light in the darkness for many dreading steep IHT bills.

A common criticism of existing plans was that they failed to account for fiscal drag and the asset-rich, cash-poor nature of family farms.

Where once the only option available to those staring down steep IHT bills was to gift generously and hope to survive long enough for the tax burden to pass, there is now more scope to dispose of assets through other means.

Regardless, effective estate planning remains imperative ahead of the other reforms to IHT that are still incoming, such as the inclusion of unspent pension pots.

For full help and support with managing your family’s financial future, speak to our team today.