If a limited company pays Corporation Tax after its deadline, HMRC charges interest from the day after the tax should have been paid until it is paid. The company should confirm its actual payment date and amount, file the Company Tax Return by its separate deadline, and contact HMRC promptly if it cannot clear the balance. A realistic payment plan may be possible; a company tax loan is a separate option to compare on total cost and affordability. HMRC: Corporation Tax interest charges.
The issue here is late payment. VAT’s 3% and daily penalty timetable should not be applied to Corporation Tax, which has its own payment, filing and interest rules.
For companies outside the Corporation Tax instalment regime, payment is usually due nine months and one day after the end of the accounting period. Some companies must pay in quarterly instalments, with different dates. An accounting period may not match the financial year shown on the accounts, particularly when a company is first set up. Check the applicable period and the 17-character payment reference in the company’s HMRC records. HMRC: paying Corporation Tax.
Do not assume a weekend or bank holiday makes a late payment timely. HMRC’s payment guidance says to ensure the money reaches it by the last working day before such a deadline unless paying by a method it specifically accepts on the day, such as Faster Payments. Check the lead time for the company’s chosen method rather than scheduling a transfer on the due date without confirmation.
The Company Tax Return filing deadline is normally 12 months after the end of the accounting period. That is distinct from the earlier usual payment deadline. Filing late can cause a filing penalty even if no Corporation Tax is due; paying late causes interest even when the return is filed on time. HMRC: Company Tax Returns.
How late-payment interest is worked out
HMRC states that Corporation Tax interest runs from the day after payment was due until the date it is paid. The annual late-payment rate can change over time. HMRC’s published rate table shows 7.75% from 9 January 2026, as checked on 24 September 2026. Do not treat it as a permanent rate or assume it applies to earlier dates.
For a simple period with one unchanged balance and rate, the arithmetic is:
Interest is a cost of paying late, but the larger business issue may be the pressure created by the next VAT, payroll or Corporation Tax date. Avoid comparing one interest figure with a loan quote while leaving out the company’s other cash commitments.
What to do when the payment is already late
First, confirm the balance and accounting period. If the tax estimate is incomplete, ask the company’s accountant what return and computation are needed; do not use a stale figure simply because it is the last one available. If there is an error or a payment has been allocated to the wrong period, use the official HMRC account and contact route to reconcile it.
Second, pay an amount the company can safely pay now and record the payment reference and confirmation. The remaining interest will depend on what is still outstanding. Keep enough cash to meet essential trading obligations and forecast receipts carefully; an unplanned payment that causes another bill to fail next week may not be a useful solution.
Third, if the balance cannot be cleared, use HMRC’s payment-plan guidance and official payment-problems contact. HMRC will ask a company about income, spending, other taxes, what it can pay immediately and the monthly amount it can realistically maintain. An arrangement is assessed case by case; simply saying that the business expects a strong next quarter is not enough without a credible forecast.
| Information to prepare | Purpose |
|---|---|
| Accounting period and payment reference | Identifies the liability under discussion. |
| Amount due and payments already made | Establishes the current balance and date interest began. |
| Bank position and aged debtors | Separates cash available now from hoped-for receipts. |
| Three-month forecast | Tests whether proposed instalments fit alongside operating costs. |
| Other tax and loan repayments | Prevents one plan from conflicting with another obligation. |
Where a Corporation Tax loan might fit
A limited company expecting a short cash gap can compare an HMRC plan with a Corporation Tax loan. VAT Loans is a credit broker arranging such funding; the live product page shows loans from £8,000. Availability, repayment term, price, security and timing depend on the actual application. Borrowing can clear a tax bill but adds loan repayments, so compare the total amount repayable and each due date, not just a monthly figure.
If the company is repeatedly late with different taxes, a further borrowing commitment may make cash flow worse. Review when tax is accrued, whether cash is set aside as receipts arrive, whether customer invoices are collected on time and how the next bill will be funded. HMRC may discuss an arrangement where appropriate; neither it nor a lender is obliged to accept an unaffordable proposal.
Questions directors often ask
Is paying Corporation Tax late the same as filing the return late?
No. The usual payment deadline and the Company Tax Return deadline are different. Check both for the relevant accounting period. Late payment can cause interest; late filing can cause a separate penalty.
Does VAT’s late-payment penalty schedule apply to Corporation Tax?
No. The VAT schedule in the VAT penalty guide is specific to qualifying VAT periods. Use HMRC’s Corporation Tax guidance for this liability.
Can the company pay in instalments?
Some companies are required to pay Corporation Tax in instalments under separate rules. A company with difficulty paying may also ask HMRC about a Time to Pay plan. Those are not the same arrangement. The existing Corporation Tax instalments guide explains the distinction.
Will a part payment help?
It reduces the tax balance on which later interest is charged. Record the correct reference and check how HMRC allocates it. It does not replace a discussion about how and when the remaining balance will be paid.
Next step: check the company’s accounting period, amount and payment reference today. If you need to compare funding, contact VAT Loans with the tax bill and a realistic cash forecast so any proposed repayments can be assessed against the next commitments.