1. Introduction
If you run a limited company in the UK, you’re legally required to pay corporation tax on your taxable profits. Understanding when do I need to pay corporation tax is essential to avoid penalties and manage your cash flow effectively.
2. What Is Corporation Tax?
Corporation tax is a business tax charged on company profits, including:
- Trading income.
- Investments.
- Chargeable gains (profits from selling assets).
3. When Do I Need to Pay Corporation Tax?
The deadline depends on your company’s accounting period:
- For most companies: You must pay corporation tax within 9 months and 1 day after the end of your accounting period.
- For large companies (profits over £1.5 million): Payments are usually made in quarterly instalments.
4. Examples of Corporation Tax Deadlines
- If your accounting period ends on 31 March 2025, you must pay corporation tax by 1 January 2026.
- If your accounting period ends on 30 September 2025, you must pay by 1 July 2026.
5. Filing Your Company Tax Return
- You must file a Company Tax Return (CT600) with HMRC.
- The filing deadline is 12 months after the end of your accounting period.
- You must file even if you have no corporation tax to pay.
6. How to Pay Corporation Tax
Payments can be made via:
- Online banking (Faster Payments, CHAPS, or Bacs).
- Direct Debit.
- Debit or corporate credit card.
- At a bank or building society (with a payslip from HMRC).
7. Penalties for Late Payment
- Interest charged on late payments.
- Possible penalties if returns are also late.
- HMRC can take enforcement action for unpaid tax.
8. Tips to Stay Compliant
- Keep accurate financial records throughout the year.
- Work with an accountant to calculate tax correctly.
- Plan for corporation tax payments in your cash flow forecast.
- Register for HMRC online services to manage payments easily.
Frequently Asked Questions
1. When do I need to pay corporation tax in the UK?
Within 9 months and 1 day after the end of your accounting period (unless paying in instalments as a large company).
2. Do I pay corporation tax annually?
Yes, usually once a year unless you’re a large company with quarterly payments.
3. What happens if I miss the deadline?
HMRC charges interest on late payments, and penalties may apply if your tax return is late.
4. Do startups need to pay corporation tax?
Yes, all limited companies must pay corporation tax if they make profits.
5. Can I pay corporation tax early?
Yes, you can pay early, and HMRC will refund any overpayment if your liability is lower.
6. Do sole traders pay corporation tax?
No, sole traders pay income tax and National Insurance instead. Corporation tax applies only to limited companies.
Conclusion
To answer the question when do I need to pay corporation tax: most companies must pay within 9 months and 1 day after their accounting period ends. Filing deadlines differ, so staying organized and seeking professional advice can help you avoid penalties and stay compliant with HMRC.