1. Introduction
If you run a limited company in the UK, paying corporation tax is a legal obligation. Many business owners ask, “when do I pay corporation tax?” Understanding deadlines and rules is crucial to avoid penalties and maintain good financial standing with HMRC.
2. What is Corporation Tax?
Corporation tax is a tax paid on the profits of limited companies and certain other organisations in the UK. This includes:
- Trading profits
- Investments
- Chargeable gains (e.g., selling assets at a profit)
3. When Do I Pay Corporation Tax?
The due date depends on your company’s accounting period:
- General Rule: Corporation tax must be paid within 9 months and 1 day after the end of your company’s accounting period.
- Example: If your accounting period ends on 31 March 2025, you must pay corporation tax by 1 January 2026.
4. Filing vs. Payment Deadlines
It’s important to understand that:
- Corporation Tax Payment – Due 9 months and 1 day after the accounting period ends.
- Company Tax Return (CT600) – Must be filed 12 months after the accounting period ends.
This means you may need to pay before filing the tax return.
5. Special Rules for Large Companies
If your company’s annual profits exceed £1.5 million, you may need to pay corporation tax in quarterly instalments rather than one lump sum.
6. How to Pay Corporation Tax
You can pay HMRC using:
- Online banking (Faster Payments, CHAPS, Bacs)
- Debit/Corporate credit card online
- Direct debit
- At a bank or building society (using a payslip)
Payments must clear by the deadline, so allow extra time depending on the method.
7. What Happens If I Miss the Deadline?
Late payment can result in:
- Interest charged on overdue tax
- Penalties for late filing of your Company Tax Return
- Risk of HMRC enforcement action if unpaid for too long
8. Tips for Managing Corporation Tax
- Keep accurate financial records throughout the year
- Set aside money regularly to cover expected tax
- Use accounting software to track tax liability
- Consult an accountant for tax planning and advice
- File and pay early to avoid last-minute stress
Frequently Asked Questions
Q1: When do I pay corporation tax in the UK?
You must pay it 9 months and 1 day after the end of your company’s accounting period.
Q2: Do I pay corporation tax if my company makes no profit?
No, but you must still file a Company Tax Return with HMRC.
Q3: Can I change my accounting period?
Yes, but you must notify HMRC, and it may affect tax deadlines.
Q4: What if my profits are over £1.5 million?
You’ll usually need to pay in quarterly instalments.
Q5: Can I pay corporation tax in instalments?
Only large companies (over £1.5 million in profits) are required to do so. Smaller companies pay in one payment.
Q6: How do I know how much corporation tax to pay?
You must calculate profits, apply reliefs and allowances, and use the current corporation tax rate. An accountant can help ensure accuracy.
Conclusion
So, when do I pay corporation tax? For most UK companies, it’s 9 months and 1 day after the end of the accounting period. Filing deadlines are separate, and missing them can result in penalties and interest. By keeping records, planning ahead, and paying early, you can stay compliant and avoid unnecessary stress.