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Last updated: 26 Jan 2022
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How to pay Corporation Tax

Limited companies must pay Corporation Tax every year and by a certain deadline to ensure they are compliant. Whether you’re paying your first tax bill or you’re a seasoned pro, it can be daunting as there’s a lots to consider. 

We’ve pulled together the latest information on how to pay your Corporation Tax and reviewed what business’s like yours need to do to ensure it all goes smoothly.

When does a business need to pay Corporation Tax? 

If your profits are less than £1.5 million* then your deadline to pay is nine months and one day after the end of your accounting period for your previous financial year. The deadline to pay is specific to your business. 

For example:

  • Your accounting year / financial period ends: 31 April.  
  • Your Corporation Tax deadline is 9 months and 1 day later: 1 February.

It is very important to adhere to these deadlines as you may incur late penalties if you miss it. If your business makes more that £1.5 million in profits then this deadline will not apply because you will be required to may your Corporate Tax in instalments.

*Note: this threshold is proportionately reduced by the number of 51% related companies in the group.

How do I pay corporate tax for my business? 

Luckily, there are a number of options for you to choose from (see below) – your main priority is ensuring that you pay on time and take your deadline into consideration when choosing your payment method.  If you pay late then HMRC will start charging interest but if you pay early HMRC will reward you with interest. As shown below, each method will have a different processing time – it is vital that your payment reaches HMRC before your deadline.  

Corporation tax reference number

No matter what method you choose you’ll need to quote your 17-digit Corporation Tax reference number. This will be on any correspondence that you’ve received from HMRC. Don’t worry if you can’t find one as you can also log in to your online HMRC services account.  

Methods of making electronic payments:

Time needed to process the payment Method of payment
Same day or next day
  • Online or telephone banking (Faster Payments)
  • CHAPS
  • through your online bank account
3 working days
  • Bacs
  • Direct Debit (if you've set one up before)
  • online by debit or corporate credit card
  • at your bank or building society
5 working days Direct Debit (if you have not set one up before)
Don't forget! If your deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC on the last working day before it. 

 

What if no tax is due to the HMRC? 

If your business makes a loss, and therefore no Corporation Tax is due, you will still need to declare this to HMRC to remain compliant. It is best practice to always keep HMRC up-to-date so that they can update your tax status accordingly. 

 

How will I know if my payment was received by the HMRC?

Once you’ve hit send there’s always a moment of panic when you think that something has gone wrong, we know. But don’t worry, the first thing to do is check that the money has left your bank account and log on to your online HMRC portal to check the status of your bill. It might take a few days to update so be patient. If you’re still worried, call HMRC and your bank to check the status of your payment. Chances are that there’s nothing to worry about!

 

Let us know if we can help 

If you need any further guidance on Corporation Tax, just let us know.

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