Many New Year’s resolutions will have been made by now, and some will have already been broken, but tax compliance should always be at the top of the list.
HMRC routinely seeks to address tax compliance and regularly updates penalties and legislation to close the tax gap.
As such, you should know what is changing this year and how to stay prepared.
The tax gap is the difference between the amount of tax owed and the amount collected.
This can be small in some instances, but SMEs are responsible for a sizeable tax gap that has drawn HMRC’s focus.
It is believed that 40 per cent of SMEs failed to pay the corporation tax they owed in the 2023/2024 fiscal year.
Of the £36.7 billion that was owed in that time period, only £22 billion was collected.
Keen to no longer leave £14 billion unclaimed, HMRC is now increasing penalties to try to inspire SMEs to adhere more closely to the rules.
It has been 25 years since the penalty for failing to pay Corporation Tax (CT) was last changed, so it is set to receive a much-needed update in 2026.
From 1 April, missing a CT filing will incur a £200 penalty, double the current penalty of £100.
After three months, the penalty doubles to £400 if you continue not to complete your tax filing.
A top penalty of £2000 awaits repeat offenders who fail to submit three successive filings on time.
While the lower penalties are not overly severe, it is hoped that they will be challenging enough to dissuade careless or neglectful approaches to CT filings.
With operational costs rising, small businesses cannot afford to waste money paying fines for something they should be taking seriously in the first place.
For business owners who struggle to keep up with their CT filings, it is best to seek professional support before the deadline approaches to ensure that you do not run the risk of missing a filing and incurring a penalty.
It was believed that the introduction of MTD for Income Tax this year would see a new host of penalties that would need consideration.
However, the penalties for missing MTD filings are not set to take effect until 2027, so 2026 is a year where sole traders, landlords and self-employed individuals can get used to the new system.
This is not an excuse to be reckless with filings and those affected this year should still endeavour to submit their quarterly filings on time with full accuracy.
Our team are on hand to help make 2026 a good year for tax compliance.
We can help you understand your obligations and effective strategies for meeting deadlines so that you do not feel the sting of penalties.
For help and support with your tax obligations in 2026, speak to our team today.
