How to Pay Corporation Tax

Paying Corporation Tax is a legal responsibility for all UK limited companies. However, many business owners are surprised to learn that HMRC does not send a bill or reminder. It is entirely up to the company to work out how much Corporation Tax is due, submit the relevant return, and make payment on time.

Getting Corporation Tax right goes beyond just making a payment on time. It’s about understanding how your profits are calculated, what reliefs you might be entitled to, and how to structure your finances for long-term efficiency. That’s where working with experienced limited company accountants can make a meaningful difference. We provide full support with Company Tax Returns, profit extraction strategies, allowable expenses, and ongoing advice to help directors minimise tax while staying compliant. Whether you're managing growing profits or need help planning dividend withdrawals, our team ensures nothing is left to chance.

In this article, we explain the full process for paying Corporation Tax, including deadlines, payment methods, common mistakes, and what happens if you pay late. Whether you're just starting out or have been trading for a while, understanding how and when to pay Corporation Tax is essential for staying compliant and avoiding penalties.

When is Corporation Tax Due?

The payment deadline for Corporation Tax depends on your company's accounting period. Most limited companies must pay their Corporation Tax within nine months and one day after the end of their financial year.

For example:

• If your accounting year ends on 31 March 2024, your Corporation Tax must be paid by 1 January 2025.

Larger companies with profits over £1.5 million may need to pay in instalments, but most small and medium-sized companies will fall under the single payment rule.

If you're unsure of your deadlines, check out when is corporation tax due.

Do I Get a Bill from HMRC?

No. HMRC does not issue Corporation Tax bills. It is your company’s responsibility to:

1. Calculate your taxable profits.

2. Submit your Company Tax Return (form CT600) online.

3. Pay the tax owed by the deadline.

This means accurate bookkeeping, regular profit monitoring, and forward planning are vital.

How to Pay Corporation Tax

Once you have calculated your tax bill and submitted your return, you can pay Corporation Tax in several ways. Always make sure you leave enough time for payment to clear before the deadline. HMRC recommends paying electronically.

Payment methods include:

• Online bank transfer (Faster Payments, CHAPS, or Bacs)

• Debit or corporate credit card (personal credit cards are not accepted)

• Direct Debit (single or recurring)

• At your bank or building society (using a paying-in slip from HMRC, although this method is being phased out)

You will need your Corporation Tax payment reference number, sometimes called your 17-character payslip reference, which HMRC assigns when you register for Corporation Tax. It usually starts with your 10-digit Unique Taxpayer Reference (UTR) followed by a letter and numbers.

To pay online or find your reference, visit www.gov.uk/pay-corporation-tax

If you're considering spreading your payments, here’s what to know about paying corporation tax in instalments.

What Happens if You Miss the Deadline?

Missing the Corporation Tax payment deadline triggers interest charges from HMRC. These are calculated daily until the full amount is paid. Even if your Company Tax Return is submitted on time, a late payment still results in additional cost.

You will not usually face a financial penalty just for late payment, but HMRC will charge:

• Interest on late payment (currently 7.75 percent per annum, subject to change)

• Penalties if your Company Tax Return is also late

If you cannot pay on time, contact HMRC as early as possible to discuss a Time to Pay arrangement, which allows you to pay in instalments.

Common Mistakes to Avoid

Some of the most frequent issues we see include:

• Confusing the return deadline (12 months) with the payment deadline (9 months and 1 day)

• Using the wrong payment reference, which delays allocation

• Leaving payment too late for bank processing to clear in time

• Failing to register for Corporation Tax within three months of starting trading

A good accountant can help ensure none of these mistakes affect your company.

What if I Have No Tax to Pay?

Even if your company made no profit, or made a loss, you must still submit a Corporation Tax return if you receive a notice to deliver one. You will simply report that no Corporation Tax is due. If your company is dormant or no longer trading, you may be exempt, but this must be agreed with HMRC in writing.

Final Thoughts

Paying Corporation Tax correctly is a vital part of running a limited company. While the process is straightforward once you understand it, getting the timing or paperwork wrong can lead to interest charges or complications with HMRC. Planning ahead, using accounting software, and working with a qualified accountant will make the process smooth, accurate and stress-free.

If you run a smaller company or operate as a single director, the process of paying Corporation Tax can feel overwhelming, especially when juggling day-to-day business pressures. Our small company accountant service is designed specifically for businesses like yours, offering affordable, practical support to help you meet deadlines, avoid costly errors, and get the most from your company profits. We’ll guide you through payment steps, help you stay on top of deadlines, and make sure you never miss a reporting requirement again.

If you’d like to explore related tax content, check out our Corporation Tax Help hub.