If you overpay Corporation Tax, or pay it earlier than you have to, HM Revenue & Customs (HMRC) may pay you interest.
This guide tells you when HMRC will pay you interest and how it's calculated.
On this page:
If you pay your company or organisation's Corporation Tax early (before your 'normal due date') HMRC may pay your company or organisation interest. This is because you've paid tax before you needed to. This interest is known to HMRC as 'credit interest'.
If your company or organisation pays too much Corporation Tax, then HMRC will give back (or repay) the amount overpaid. HMRC may also pay your company or organisation interest on the overpaid amount. This interest is known to HMRC as 'repayment interest'.
If your company or organisation has an overall credit balance, HMRC should pay the overpaid amount to you automatically. If they don't, you can ask them to do so.
All interest paid by HMRC in relation to your company or organisation’s Corporation Tax affairs is taxable income and must be included in your Company Tax Return.
The rate of interest HMRC pays usually follows commercial rates and can go up or down.
Find the current HMRC credit interest rates
Find the current HMRC repayment interest rates
If you pay your company or organisation's Corporation Tax before it's due HMRC may pay your company or organisation interest. This is known to HMRC as 'credit interest'. The interest rate used by HMRC is set by the government and usually follows commercial interest rates.
Credit interest is normally paid from the date you paid the tax up to your company or organisation's normal due date. But it will not run from a date earlier than six months and 13 days from the start of the accounting period (unless that period is shorter than three months).
Your company owes £1,500 Corporation Tax for the year ended 31 December 2007. This is due on 1 October 2008. If your company pays it on 28 September 2008, it's entitled to credit interest on £1,500 from 28 September 2008 to 1 October 2008.
This credit interest won't be calculated and credited to your company's Corporation Tax record until after the later of:
It's possible for your company to get credit interest and repayment interest for the same accounting period.
The company in Example 1 is now only due to pay £1,000 in Corporation Tax for the accounting period ended 31 December 2007 but has already paid £1,500 on 30 June 2008.
The £500 overpayment (£1,500 − £1,000 = £500) is repaid to your company by HMRC on 3 March 2009. Your company gets credit interest on £1,500 from 28 September 2008 until 1 October 2008 and also gets repayment interest on the overpaid amount of £500 from 1 October 2008 to 3 March 2009.
Find the current HMRC credit interest rates
Find the current HMRC repayment interest rates
If your company or organisation pays too much Corporation Tax, HMRC usually pays interest when making a repayment.
This repayment interest is calculated to the date the repayment is made, starting from the later of:
If your company has already paid interest on any part of the tax being repaid, HMRC will normally also repay that interest automatically.
Your company paid £2,000 Corporation Tax for the year ended 31 December 2007 on 5 October 2008. Your company's normal due date for payment would be 1 October 2008.
In January 2009 it's agreed that your Corporation Tax due for the year was only £1,700. On 30 January 2009, HMRC repaid the overpaid amount of £300 (£2,000 - £1700 = £300). HMRC will pay your company repayment interest from 5 October 2008 to 30 January 2009.
Because your company paid its Corporation Tax after its normal due date, HMRC will have charged your company late payment interest from 1 October 2008 to 5 October 2008.
When HMRC repays the £300 overpayment to your company, they should repay any late payment interest charged on that amount. You can claim this in writing if HMRC doesn't pay it automatically.
Find out more information about Corporation Tax repayments
Find the current HMRC repayment interest rates
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. If you make instalment payments that turn out to be unnecessary, you pay them early or your payment is too high, HMRC will pay your company interest.
HMRC calculates interest differently for companies who pay by instalments. Any interest paid will be calculated from the later of the first instalment date or the point where an overpayment arises. The interest paid by HMRC is itself taxable for Corporation Tax purposes. This interest is only calculated and charged retrospectively, once the liability for the period is established, normally when you file your Company Tax Return.
The rate for this interest is different from the rate of interest charged on late payments and underpayments. This interest is known by HMRC as 'credit interest'.
Find current and historical rates of interest paid by HMRC on overpaid instalment payments
More about credit interest in the Company Tax Manual
Instalment payments of Corporation Tax
Read about Corporation Tax payment deadlines
