When Is Corporation Tax Due?

Corporation Tax is a big part of a limited company’s financial responsibilities in the UK. Know when and how to pay it to ensure that you always stay within the guidelines and avoid unnecessary penalties. In this guide, we’ll look into the specifics of Corporation Tax, its deadlines and the rates you should be aware of. To begin, let’s get to grips with what Corporation Tax is and how it is vital to your business.

What is Corporation Tax?

Corporation Tax is a tax on the profits of limited companies and other organisations, such as clubs, societies, and associations resident in the UK. Your tax is also based on your business’s taxable profits, which are your profits from income, capital gains and other sources of income (if any) generated within a financial year. 

Corporation Tax is based on the profit your business makes from trading, selling assets, and other similar activities. Your company needs to pay the tax every year, and the tax rate is determined by the profit the company makes.

Corporation Tax Deadlines

The deadline for Corporation Tax is based on your company’s accounting period: this is generally the period covered by your company’s annual accounts.

What happens if I miss the deadline?

If you miss the Corporation Tax payment deadline, there are penalties and interest charges for late payment. HMRC (Her Majesty’s Revenue and Customs) enforces a £100 fine automatically if the return is overdue. If this delay persists, you will continue to be penalised, and the longer it is overdue, the more you will pay in fines. And the amount you owe is subject to interest, which is assessed daily until tax is paid.

Consistent failure to make timely filings or payments may result in harsher penalties, as well as a higher interest rate or possibly a lawsuit. To side-step these pitfalls, it’s imperative that you keep on top of Corporation Tax deadlines and make sure payment is submitted in good time.

When is my corporation tax due?

The deadline for payment of Corporation Tax is usually nine months and one day after your company’s accounting period ends. A financial year (FY) does not usually correspond to the calendar year, so a specific deadline exists for calculating a corporation tax bill. 

For instance, if your accounting period ends on 31 December, you will need to have paid your Corporation Tax by 1 October next year. That gives businesses a nine-month and one-day window to pay up. 

Businesses with profits of more than £1.5 million would have different payment terms imposed, where they would be required to pay quarterly instalments instead of annually. Be sure to note the deadlines for companies with little profit or small businesses that are new to the table to avoid missing your payments. 

Remember that your Corporation Tax contribution will be based on the profit your business generated last year. So you need to calculate how much you have made in profits that are subject to tax before you can work out how much tax you have to pay.

What rate of Corporation Tax do I need to pay?

A company’s Corporation Tax rate is determined by how much profit it makes. The Corporation Tax standard rate is 25%, applicable for companies with profits in excess of £250,000 in the 2025 tax year. Businesses with profits below this level are charged a reduced rate:

• Small profits rate: Businesses with profits of up to £50,000 will be charged 19% Corporation Tax.

• Marginal relief: Companies with profits of between £50,000 and £250,000 pay a rate of between 19% and 25%, the exact percentage being calculated by a formula that is based on how much profit the company made.

The full 25% rate applies to businesses making profits in excess of £250,000. But businesses should pay attention to the ratings and the math, because if they surpass certain profit tiers, they can face a sizable tax hit. Because tax rules are updated frequently, it’s important to keep current on the latest rates and relief measures.

How do I pay Corporation Tax?

Paying Corporation Tax is simple once you know what you owe. You’ll need to pay the tax to HMRC directly, and use one of these options:

• Bank transfer: Payment can be made via bank transfer, and companies can use HMRC’s payment reference number to make sure their payment gets to the right place.

• Direct Debit: You can set up a Direct Debit to pay your Corporation Tax in instalments if you prefer to spread the payment over several months.

• Online payment services: HMRC offers online payment options through a range of third-party payment providers. This can be done securely via the HMRC website.

• Cheque: You can also pay by cheque, but this method is decreasing in popularity and can take longer for the payment to be accepted.

You’ll want to be certain the payment is made long enough before the deadline to avoid penalties. Payments need to reach HMRC on or before the payment deadline to be classed as paid on time, so leave at least a few days for processing. 

To ensure that your business remains compliant and that you don’t overlook any important deadlines, many businesses opt to work with accountants or tax professionals who can help you navigate the process and file and pay your taxes. This can be especially valuable if your business is growing.

Conclusion

If you know when and how to pay your Corporation Tax, it is definitely going to help you stay on top of your business without receiving any unnecessary penalties or interest. Remember, there are usually nine months and a day between the end of your accounting period and the final date for payment, although this may differ according to the profit that your company is making.

Keeping up-to-date with your taxes and using experts where necessary is a good way to affirm that your business is lawful and functioning as it should, and to avoid hefty fines! For any help you may require regarding Corporation Tax or other financial services, why not get in touch with Braant Accountants? With their knowledge and assistance, you can invest time and energy into growing your business while they cover the heavy-lifting tax work for you.