From 1 April 2026, a number of corporation tax changes are taking effect that businesses should be aware of. Some of the changes are technical, but they can still have a real financial impact, particularly around director loan accounts and late filing penalties.
Director’s Loan Accounts – Why this matters in practice
Recent updates affecting overdrawn director’s loan accounts (s455) mean it’s especially important to keep these balances under control.
If a director withdraws more money from the company than they’ve put in, and the balance isn’t cleared within the required timeframe, the company can face additional tax charges.
The rules themselves aren’t new, but HMRC’s updated systems mean these balances are now more visible and more closely reviewed.
What this could mean for your business:
- Unexpected corporation tax charges where loan balances are left uncleared
- Short‑term cash flow pressure if s455 tax becomes payable
- Increased Compliance checks if director loan accounts are regularly overdrawn
Late Filing Penalties Have Increased
Another change worth flagging is the increase in penalties for late corporation tax returns.
Under the updated penalty structure:
- £200 initial penalty (previously £100)
- A further £200 if the return is still outstanding after three months
- If returns are late three times in succession, penalties rise to £1,000 per return
On top of this:
- Six months late: 10% surcharge on any unpaid tax
- Twelve months late: 20% surcharge on any unpaid tax
Why this matters:
Missing deadlines is now materially more expensive than it was previously. For businesses already under cash flow pressure, the cost can escalate quickly.
Practical next steps:
- Make sure your accounting records are complete and up to date
- Review director loan balances regularly
- Plan ahead for corporation tax filing and payment deadlines
- Speak to your adviser early if you’re unsure about your position
Need Advice?
If you’re unsure how these changes affect your business – particularly around director loan accounts or upcoming filing deadlines – we’re here to help.