Pay Corporation Tax

Pay Corporation Tax: A Complete Guide for UK Businesses

When it comes to paying corporation tax is a key responsibility for UK businesses. Yet, many business owners find the process confusing. From deadlines and payment methods to managing cash flow and avoiding penalties, there’s a lot to consider.

This guide breaks down everything you need to know about paying corporation tax—how it works, when it’s due, and how to make payments without disrupting your business finances.

What Is Corporation Tax?

Corporation tax is a tax on profits made by limited companies, foreign companies with UK branches, and some organisations like clubs and charities. Unlike personal income tax, there’s no tax-free allowance—you pay tax on every pound of profit.

The current corporation tax rate depends on your company’s profits:

• Small Profit Rate (19%) – For businesses with profits up to £50,000.
• Main Rate (25%) – For businesses with profits over £250,000.
• Marginal Rate Relief – Applies to businesses with profits between £50,000 and £250,000, giving a tapered rate between 19% and 25%.

Need more details on tax rates? Check out the official UK government page here.

When Is Corporation Tax Due?

Unlike VAT and PAYE, corporation tax deadlines don’t follow the tax year. Instead, it depends on your company’s financial year-end.

Here’s what you need to know:

• Tax must be paid within 9 months and 1 day after your company’s financial year-end.
• Your Company Tax Return (CT600) must be filed within 12 months after your financial year-end.

Example:
If your company’s year-end is 31st March, your corporation tax payment is due by 1st January the following year.

How to Pay Corporation Tax

You can pay corporation tax in several ways. Some are faster than others, so choose the right method to avoid late payments.

1️⃣ Same-Day or Next-Day Payments

For urgent payments, use:

• Faster Payments (Online or Mobile Banking)
• CHAPS (Bank Transfer)
• Corporate Credit/Debit Card (Fees Apply)

2️⃣ Three-Day Processing Payments

If you have a few extra days:

• BACS (Bank Transfer)
• Direct Debit (One-Off Payment)

3️⃣ Five-Day Processing Payments

For regular corporation tax payments, set up:

• Direct Debit (Recurring Payment)

Payment Details:

• Use your 17-digit corporation tax reference number.
• Find HMRC’s bank details here.

Tip: Avoid last-minute payments—weekends and bank holidays can delay processing times.

Can You Pay Corporation Tax in Instalments?

Yes! If your business is struggling with a large tax bill, there are ways to spread the cost.

1️⃣ Time to Pay (TTP) Arrangements

HMRC allows businesses to set up monthly payment plans under their Time to Pay (TTP) scheme. You need to:

• Contact HMRC before the deadline.
• Explain your financial situation and propose a reasonable payment plan.
• Stick to the agreed schedule—missing payments can lead to penalties.

2️⃣ Corporation Tax Loans

If HMRC rejects a payment plan or you need longer repayment terms, a corporation tax loan could help.

✔️ Spreads payments over 3-12 months
✔️ Avoids late penalties
✔️ Keeps cash flow stable

Want to explore tax loan options? Contact us today.

What Happens If You Pay Corporation Tax Late?

Missing a corporation tax payment can be costly. HMRC charges:

• Late Payment Interest – Currently 7.75% per year.
• Penalty Charges – HMRC can issue fines if your return is also late.

💡 Tip: Always plan ahead. If you can’t pay, contact HMRC before the deadline to arrange a plan.

How to Reduce Your Corporation Tax Bill

Want to pay less tax legally? Here are some strategies:

1️⃣ Claim Allowable Expenses

Only taxable profits are taxed. Deducting legitimate business expenses lowers your tax bill. These include:
✔ Staff wages
✔ Office rent
✔ Business travel
✔ Equipment costs

2️⃣ Take Advantage of Capital Allowances

Purchasing business assets? You might qualify for the Annual Investment Allowance (AIA), which lets you deduct the full cost of qualifying purchases (like machinery, vehicles, and IT equipment).

3️⃣ Use R&D Tax Credits

If your business innovates or develops new products, you could claim Research & Development (R&D) tax relief, reducing your tax bill significantly.

4️⃣ Pay into a Pension

Contributions to a director’s pension count as a business expense, reducing taxable profits.

💡 Talk to an accountant to ensure you’re maximizing deductions legally.

How First Oak Capital Can Help

If you pay your corporation tax in one lump sum can put pressure on your cash flow, making it harder to invest in growth, cover operational expenses, or seize new business opportunities. First Oak Capital provides tailored finance solutions to help businesses spread the cost and maintain financial flexibility.

Why Work With Us?

• Fast approvals – Secure funding in time to meet your tax deadline.
• Flexible repayment terms – Spread payments over three to twelve months to fit your budget.
• Competitive rates – Access cost-effective financing without tying up working capital.
• No disruption to business operations – Pay your tax bill on time while keeping cash available for essential expenses.

Who Can We Help?

If your UK-based limited company is facing a significant corporation tax bill, we can provide financing options that ease the burden. Whether you need a short-term solution or structured repayments, we’ll find the right fit for your business.

Looking to stay on top of your tax obligations without impacting cash flow? Contact us today to explore your options.