Companies with profits up to £1.5 million have to pay their corporation tax nine months after the end of the accounting period. Large companies – those with profits over £1.5 million – have to make quarterly tax payments in the 7th, 10th, 13th and 16th month following the start of the accounting period. Each instalment is based on the company’s latest estimated tax liability. The £1.5 million limit is reduced where there are associated companies. Interest is charged on tax paid late. Special rules apply to accounting periods of less than 12 months.
When companies move from small to large as a result of their profits rising above £1.5m, there is generally a delay before switching from small company payment timings to the more accelerated schedule, but the cash flow impact can be significant.
From 1 April 2011, companies will have to pay corporation tax electronically (for example, by direct debit).
Interest is charged on late payment of tax.
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