As the deadline to pay Corporation Tax is before the deadline to file your Company Tax Return, you need to plan your cash flow so that you can pay the full amount by the time it's due.
If your company or organisation's taxable profits are £1.5 million or less, then your deadline for paying Corporation Tax is three months before your deadline for filing your Company Tax Return. Realistically you may want to file and pay at the same earlier time.
Paying early can be a good idea, as HM Revenue & Customs (HMRC) will pay your company or organisation interest. If you pay late, HMRC will charge your company or organisation interest on the amount unpaid.
This guide gives you advice on how to plan ahead to pay Corporation Tax on time.
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If your company or organisation has to pay Corporation Tax, you must make sure you pay it on time. If you do not pay on time, your company or organisation will have to pay interest on the unpaid tax.
The important thing to remember is that your Corporation Tax payment is due before your Company Tax Return is due. If your company or organisation's taxable profits are £1.5 million or less:
You may therefore want to plan accordingly. For example, you may file your Company Tax Return and pay your Corporation Tax at the same earlier time - by the payment deadline.
If your company's profits for an accounting period are at an annual rate of more than £1.5 million, you must normally pay your Corporation Tax for that period in instalments.
You must pay HMRC the right amount of Corporation Tax by the time it's due. This means you must make sure you have enough funds to cover the full amount. You can do this in a number of ways, including:
One way to avoid having to pay interest is to pay your Corporation Tax before it's due. You can do this either by paying early and/or by overpaying.
If you pay Corporation Tax before it's due, your company or organisation will receive interest from HMRC on any early payments and/or overpayments. HMRC calls this 'credit interest'.
If HMRC pays your company or organisation interest it is taxable income and must be included in your company accounts and Company Tax Return.
If you don't pay your Corporation Tax on time (late payment), or don't pay enough (underpayment or non-payment), HMRC will charge your company or organisation interest. This interest is known to HMRC as 'late payment interest'.
Late payment interest is charged from the day after the tax should have been paid (normally nine months and one day after the end of your accounting period) until the date you pay it.
Interest charges are automatic. However, interest is not charged on interest itself.
Any late payment interest you pay to HMRC is deductible for tax purposes.
Your company or organisation is legally responsible for paying HMRC the right amount of Corporation Tax at the right time. This is the case even if you've appointed an accountant or tax adviser to deal with HMRC on your behalf for Corporation Tax.
Your company or organisation is also responsible for paying HMRC the right amount of Corporation Tax on time even if you've not received any Company Tax Return forms, reminders or other communications from HMRC.
You can use the Corporation Tax online service to view how much Corporation Tax your company or organisation has paid, been repaid or still owes. You can also choose to set up a dashboard to keep track of your company's Corporation Tax, VAT and Pay as You Earn (PAYE).