Initially, Corporation Tax is often treated as a single annual bill. For many UK limited companies, that is still the standard position. However, some larger companies must pay Corporation Tax in instalments, while smaller companies may be able to request an arrangement with HMRC if they cannot pay the full amount on time.
The answer depends on your company’s taxable profits, accounting period, associated companies and relationship with HMRC.
This guide explains the main rules in straightforward terms. It is general information, not tax advice. If you are unsure about your company’s position, you should speak with your accountant or contact HMRC directly.
Can a limited company pay Corporation Tax in instalments?
Yes, but not every company can simply choose to pay monthly.
There are two main situations:
- Large and very large companies generally have to pay Corporation Tax through Quarterly Instalment Payments.
- Smaller companies normally pay in one amount, but may be able to agree a Time to Pay arrangement with HMRC.
The payment rules are based mainly on your annualised taxable profits. Your accounting period and any associated companies may also affect the thresholds.
When is Corporation Tax normally due?
If your company has taxable profits of £1.5 million or less, Corporation Tax is normally due:
- Nine months and one day after the end of your accounting period
- In one payment
- By an approved electronic payment method
For example, if your accounting period ends on 31 March 2026, the normal Corporation Tax payment deadline is 1 January 2027.
You can check the general rules on the GOV.UK Corporation Tax payment guide.
Your accounting period is usually your company’s financial year. However, a newly incorporated company may have more than one accounting period in its first year, so your deadlines may not always follow a simple annual pattern.
Do large companies have to pay Corporation Tax in instalments?
Generally, yes.
For Corporation Tax payment purposes, a large company usually has annual taxable profits of more than £1.5 million but less than £20 million.
For a 12-month accounting period, the company normally pays in four instalments:
- Six months and 13 days after the first day of the accounting period
- Three months after the first instalment
- Three months after the second instalment
- Three months and 14 days after the end of the accounting period
The payments are generally based on an estimate of the company’s total Corporation Tax liability. If your expected liability changes, your company may need to adjust later payments or make a top-up payment.
The HMRC guidance for large companies explains the detailed rules, including exceptions and shorter accounting periods.
What happens if taxable profits are more than £20 million?
Companies with annual taxable profits of more than £20 million are normally classed as very large companies.
For a 12-month accounting period, a very large company generally pays Corporation Tax in four instalments on the 14th day of months:
- Three
- Six
- Nine
- Twelve
For an accounting period beginning on 1 January, the dates would usually be 14 March, 14 June, 14 September and 14 December.
The threshold may be reduced where a company has associated companies. This means a company with profits below £20 million may still need to consider the very large company rules if it is part of a wider group.
You can read the HMRC guidance for very large companies for more information.
Do associated companies change the Corporation Tax instalment thresholds?
They may.
For accounting periods beginning on or after 1 April 2023, the £1.5 million and £20 million thresholds can be divided by the number of associated companies, including your own company.
For example, if a company has three associated companies, the relevant threshold may be divided between four companies. This can bring a company into the large or very large company rules even where its own profits appear to be below the usual threshold.
The definition of an associated company can depend on control and ownership. It is therefore important to ask your accountant to review the position if:
- You operate more than one company
- The same people control several companies
- Your company is part of a wider group
- You have recently acquired or sold a business
- Your ownership structure has changed
This is one reason why Corporation Tax payment dates should be checked rather than assumed.
Can smaller companies ask HMRC to spread Corporation Tax payments?
You may be able to ask HMRC for a Time to Pay arrangement.
A smaller company that cannot pay its full Corporation Tax bill by the normal deadline may contact HMRC to discuss whether the debt can be paid over an agreed period.
A Time to Pay arrangement is not an automatic right. It is an individual agreement with HMRC. HMRC will normally want to understand:
- The amount owed
- Why the company cannot pay in full
- What the company can afford to pay
- Whether the company is expected to remain viable
- How quickly the balance can be cleared
- Whether the company has kept up with previous tax obligations
You remain responsible for the Corporation Tax. Interest may also continue to apply, depending on the circumstances and the agreement reached.
You should not simply pay less than the amount due without speaking to HMRC first. If you are concerned about a Corporation Tax payment, contact HMRC as early as possible and discuss your options.
What if you do nothing?
If Corporation Tax is not paid by the deadline and no arrangement has been agreed, HMRC may charge interest and take further recovery action.
The potential consequences may include:
- Interest on overdue tax
- Additional pressure on business cash flow
- Contact from HMRC
- Restrictions on other financial decisions
- Possible enforcement action if the debt remains unpaid
Early communication does not remove the liability, but it allows the position to be discussed openly. You may also have more options before the payment becomes overdue.
Should you pay Corporation Tax early?
You can generally pay Corporation Tax early if you have the funds available.
Early payment may help you:
- Reduce the amount held for future tax liabilities
- Avoid the risk of missing a payment date
- Simplify your cash-flow planning
- Keep tax obligations separate from day-to-day working capital
However, paying early may also reduce the cash available for stock, payroll, suppliers, equipment or other operational needs.
The right choice depends on your wider cash-flow position. Your accountant can help you compare the benefit of paying early with the cost of tying up business funds.
What are the alternatives if Corporation Tax affects working capital?
If paying Corporation Tax would leave your business short of working capital, you may wish to review several options with your professional advisers.
These may include:
- Reviewing payment terms with customers and suppliers
- Collecting outstanding invoices sooner
- Reducing non-essential expenditure
- Using an existing overdraft or bank facility
- Discussing a Time to Pay arrangement with HMRC
- Considering a suitable business finance product
- Planning future tax payments earlier in the accounting cycle
A VAT loan is specifically designed to help eligible UK businesses manage their VAT bills. It is not the same as a Corporation Tax instalment arrangement, and it does not replace discussions with HMRC about Corporation Tax.
However, if VAT payments are also putting pressure on your cash flow, a VAT loan may provide an additional funding option. VAT Loans pays the VAT bill directly to HMRC, with repayment through three fixed monthly instalments starting 30 days later.
You can use the VAT loan calculator to obtain an indication of the cost. There is no obligation to proceed.
How can you plan for Corporation Tax instalments?
A practical planning process can help you avoid unexpected payment pressure.
Consider taking these steps:
- Confirm your accounting period end date
- Estimate taxable profits regularly
- Check whether your company has associated companies
- Ask your accountant which Corporation Tax payment rules apply
- Record each expected payment date
- Keep a separate reserve for Corporation Tax
- Review forecasts when profits change
- Contact HMRC promptly if payment may be difficult
- Avoid relying on an unconfirmed instalment arrangement
It is also sensible to review VAT, payroll, business rates and other liabilities at the same time. A company may be able to afford one tax bill but struggle when several obligations fall close together.
Corporation Tax instalments: key points to remember
The main points are:
- Companies with taxable profits of up to £1.5 million normally pay Corporation Tax once.
- The normal deadline is nine months and one day after the end of the accounting period.
- Large companies generally pay Corporation Tax in four instalments.
- Very large companies generally pay earlier instalments during the accounting period.
- Associated companies may reduce the relevant profit thresholds.
- Smaller companies may ask HMRC about a Time to Pay arrangement.
- You should not assume that monthly payment is available without agreement.
- Interest may apply if tax is paid late or underpaid.
- Your accountant can help confirm the correct dates and amounts.
Do you need further information?
If you are unsure whether your company can pay Corporation Tax in instalments, speak with your accountant first. You are also welcome to check the official HMRC Corporation Tax guidance.
If VAT is contributing to the same cash-flow pressure, you can review the HMRC Time to Pay alternative information or contact VAT Loans to discuss whether a VAT loan may be relevant.
A VAT loan is an additional business finance option. It is not a replacement for tax advice, and there is no obligation to apply. If the service is not suitable for your company, simply let us know.
