Corporation tax – payments on account

What is corporation tax?

Corporation tax is a direct tax on the profits of a company for each accounting period.  

When is corporation tax due?

It is typically due nine months and one day after the end of your company’s accounting period.

For example, if your company’s accounting period ends on 31 December, the tax would be due by 1 October of the following year.

Large companies

Large companies are required to pay corporation tax in quarterly instalments.

A company is considered large for a corporation tax accounting period if its taxable profits are more than £1.5m but not more than £20m.

Where a company first generates profits of more than £1.5m, its requirement to pay quarterly instalments will normally be deferred to the following accounting period.

If the company has associated companies, then the above thresholds are divided by the number of associated companies. These rules potentially catch a number of companies previously considered small for corporation tax purposes.

Very large companies

A company is considered very large for a corporation tax accounting period if its taxable profits are more than £20m.

When are corporation tax payments due for large and very large companies?

Large company:

If your company has a 12 month accounting period, you need to pay in 4 equal instalments due:

• 6 months and 13 days after the first day of the accounting period
• 3 months after the first instalment
• 3 months after the second instalment (14 days after the last day of the accounting period)
• 3 months and 14 days after the last day of the accounting period

Very large company:

If your company has a 12 month accounting period, you will need to pay in 4 equal instalments due:

• 2 months and 13 days after the first day of the accounting period
• 3 months after the first instalment
• 3 months after the second instalment
• 3 months after the third instalment

Calculating payments

HMRC corporation tax instalments are calculated based on your estimated liability for the accounting period.

If any assistance is required with corporation tax matters, please contact your local Perrys office, or you can find out more information from HMRC.