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If your company鈥檚 profits for an accounting period are at an annual rate of more than 拢1.5 million, you must normally pay your Corporation Tax for that period electronically and in instalments.

There are different rules you must follow if you have a profit of over 拢20 million.

Large companies

A large company is one whose profits for the accounting period in question are at an annual rate of more than 拢1.5 million but less than 拢20 million.

Generally 鈥榣arge鈥� companies must pay their Corporation Tax electronically by instalments.

Exceptions

Your company does not need to pay by instalments for an accounting period (even though its profits exceed 拢1.5 million) if either:

• the amount of its total liability for the accounting period is less than 拢10,000 (or when the accounting period is less than 12 months, less than an annual rate of 拢10,000)
• its profits for the accounting period are no more than 拢10 million and either:
  • it did not exist or did not have an accounting period at any time during the previous 12 months
  • its annual rate of profit was no more than 拢1.5 million, or its annual rate of tax liability was no more than 拢10,000, for any accounting period which ended in the previous 12 months

If either of these conditions apply, the company must pay its tax in full by the normal payment due date.

Accounting periods beginning before 1 April 2015 and beginning on or after 1 April 2023

If your company has associated companies for accounting periods beginning before 1 April 2015 and beginning on or after 1 April 2023, the 拢1.5 million and 拢10 million thresholds are reduced by dividing these by the number of associated companies, plus your company.

This new figure is the relevant threshold for your company.

Example 鈥� accounting period from 1 December 2023 to 30 November 2024

A company has 5 associated companies. Its profits for the 12 month accounting period ending 30 November 2024 are 拢300,000 and its Corporation Tax liability is 拢75,000. The annual adjusted threshold is:

拢1.5 million divided by 6 (that is, 5 + the company itself) = 拢250,000.

The company is a large company for this accounting period. Even though its profits are less than 拢1.5 million, they exceed the adjusted annual threshold of 拢250,000 and its tax liability is greater than 拢10,000.

A company is associated with another company if:

• one is under the control of the other
• both are under the control of the same person or persons

Control is usually defined by reference to ownership of share capital or voting power.

A company may be an associated company no matter where it鈥檚 resident for tax purposes.

Accounting periods beginning on or after 1 April 2015 and before 1 April 2023

For accounting periods beginning on or after 1 April 2015 and before 1 April 2023, the associated companies rules were replaced by a 51% group test.

If the company has related 51% group companies, the 拢1.5 million and 拢10 million thresholds are reduced by dividing these by the number of related 51% group companies plus your company.

This new figure is the relevant threshold for your company.

Company A is a related 51% group company of company B if:

• A is a 51% subsidiary of B
• B is a 51% subsidiary of A
• A and B are 51% subsidiaries of the same company

鈥楢鈥� is a 51% subsidiary of 鈥楤鈥� if more than 50% of its ordinary share capital is beneficially owned (directly or indirectly) by 鈥楤鈥�.

Example 鈥� accounting period from 1 May 2019 to 30 April 2020

A company has 4 related 51% group companies. Its profits for the 12 month accounting period ending 30 April 2020 are 拢400,000 and its Corporation Tax liability is 拢76,000.

The annual adjusted threshold is: 拢1.5 million divided by 5 (that is, 4 + the company itself) = 拢300,000.

Although the profits for the accounting period are below 拢1.5 million, the profits exceed the adjusted annual threshold of 拢300,000.

As the tax liability also exceeds 拢10,000, the company is large for the accounting period.

When instalment payments need to be paid

For accounting periods of 12 months, you鈥檒l normally pay your Corporation Tax in 4 quarterly instalments, 2 of which are due before the end of your accounting period.

Accounting periods of 12 months

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

This applies to accounting periods ending after 30 June 2002.

Example 鈥� accounting period from 1 January 2026 to 31 December 2026

Payment	Payment due date
First payment	14 July 2026
Second payment	14 October 2026
Third payment (due after the end of the accounting period)	14 January 2027
Final payment	14 April 2027

Accounting periods less than 12 months

If your company has an accounting period less than 12 months, your last instalment will be due 3 months and 14 days after the last day of your accounting period.

If your accounting period is longer than 3 months, the first payment will be due 6 months and 13 days after the first day of the accounting period.

If your accounting period is long enough, other payments will also be due at 3 monthly intervals after then.

Example 鈥� accounting period from 1 January 2027 to 31 August 2027

Payment	Payment due date
First payment	14 July 2027
Second payment due after the end of the accounting period	14 October 2027
Final payment	14 December 2027

Example 鈥� accounting period from 1 January 2027 to 31 March 2027

All Corporation Tax is due in a single instalment on 14 July 2027.

Work out instalment payments

Step 1: estimate your company鈥檚 total liability

To work out your instalment payments, first estimate your Corporation Tax liability for the accounting period, including any tax due on:

• loans to directors and other participators in 鈥榗lose鈥� companies
• controlled foreign companies

Then, deduct all reliefs and set-offs to arrive at your company鈥檚 total liability, as you would when working out your Corporation Tax due on your Company Tax Return.

Use this figure to work out your instalment payments.

Step 2: work out the amount of each instalment

For a 12 month accounting period, you pay your total liability in 4 equal instalments. Each instalment is a quarter of your company鈥檚 total liability.

For accounting periods of 3 months or less, make 1 single payment of your company鈥檚 total liability.

For accounting periods longer than 3 months but less than 12, all instalments except the last will be the company鈥檚 total liability divided by the number of months in the accounting period, multiplied by 3.

The last instalment will be your company鈥檚 total liability, less the payments made so far.

Example 鈥� accounting period from 1 January 2027 to 31 August 2027 and 拢900,000 in Corporation Tax to pay

Calculation step	Result
Company鈥檚 total liability	拢900,000
Months in the accounting period	8
Company鈥檚 total liability 梅 months in the accounting period x 3	拢900,000 梅 8 x 3 = 拢337,500
Smaller of company鈥檚 total liability and company鈥檚 total liability 梅 months in the accounting period x 3	拢337,500
First and second instalment payments	拢337,500
Third and final payment	拢900,000 - (2 脳 拢337,500) = 拢225,000

Step 3: revise your estimate and adjust your payments

Your estimate of your Corporation Tax liability may change as the accounting period progresses. This may even happen after your last instalment payment. You鈥檒l need to work out each instalment payment based on the revised figure.

If you think your liability is going to be greater than your earlier estimates, you鈥檒l need to make one or more 鈥榯op-up鈥� payments to cover the shortfall in your previous instalments.

You can make additional payments at any time. You may need to pay interest if you鈥檝e made instalment payments that turn out to be lower than your actual liability.

If you later find that you鈥檝e paid too much (or should not have made a payment at all), you鈥檒l normally be able to claim back your overpayment, or you can leave the overpayment with HMRC and deduct the overpayment from future instalment payments.

You might receive interest on overpayments of instalment payments and on payments made early.

Ring fence companies

If your company is liable to Corporation Tax and supplementary charge on profits from ring fence activities (UK Continental Shelf oil-related activities that under UK law constitute a separate trade), you鈥檒l pay any Corporation Tax due on non-ring fence profits in instalments using the normal rules.

For accounting periods beginning on or after 1 April 2019, if your profits exceed 拢20 million, you will pay any tax due on non-ring fence profits by instalments using the rules for very large companies. Find out more about the rules you must follow if you have a profit of over 拢20 million.

You鈥檒l also need to pay the Corporation Tax and supplementary charge on your ring fence profits in a maximum of 3 equal instalments due:

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

This applies to accounting periods ending after 30 June 2005.

For 12 month accounting periods ending after 30 June 2005 but before 1 July 2006, instalments are 25%, 25% and 50% of the ring fence liability.

Example 鈥� accounting period from 1 January 2027 to 31 December 2027

Payment	Payment due date
First payments of both ring fence tax and other Corporation Tax	14 July 2027
Second payments of both ring fence tax and other Corporation Tax	14 October 2027
Third (final) payment of ring fence tax, and third payment of other Corporation Tax	14 January 2028
Final payment of other Corporation Tax	14 April 2028

Example 鈥� accounting period from 1 January 2027 to 31 May 2027

Payment	Payment due date
All ring fence tax is due on this date	14 June 2027
First payment for other Corporation Tax	14 July 2027
Second (final) payment for other Corporation Tax	14 September 2027

The date the third instalment would be due (14 June 2027) falls before any of the other payment due dates, then all the ring fence tax is due is payable on 14 June 2027.

Work out instalment payments for ring fence companies

If your company is liable for Corporation Tax and supplementary charge on profits from ring fence activities, work out instalments for Corporation Tax due on non-ring fence profits using the normal rules.

You鈥檒l also need to work out your instalments for the Corporation Tax and supplementary charge on your ring fence profits.

Step 1: work out your ring fence amount

Estimate the ring fence Corporation Tax and supplementary charge payable for the accounting period.

Step 2: work out your instalment payments

For a 12 month accounting period, you pay your total liability in 3 equal instalments, each one a third of the ring fence amount.

For accounting periods of 4 months or less, you make 1 single payment of your total liability.

For accounting periods longer than 4 months but less than 12, your payments are the smaller of the balance of the ring fence amount unpaid, or the ring fence amount divided by the number of months in the accounting period, multiplied by 4.

These rules apply for accounting periods ending on or after 1 July 2006.

If you want to check calculations for accounting periods ending after 30 June 2005 but before 1 July 2006, use the following:

Ring fence amount 梅 the number of months in the accounting period for shorter periods x 3.

Step 3: revise your estimate and adjust your payments

Your estimate of your Corporation Tax liability may change as the accounting period progresses. This may even happen after your last instalment payment. You鈥檒l need to work out your instalment payments based on the revised figure.

If you think your liability is going to be greater than your earlier estimates, you鈥檒l need to make one or more 鈥榯op-up鈥� payments to cover the shortfall in your previous instalments.

You can make additional payments at any time. You may need to pay interest if you鈥檝e made instalment payments that turn out to be lower than your actual liability.

If you later find that you鈥檝e paid too much (or should not have made a payment at all), you鈥檒l normally be able to claim back your overpayment, or you can leave the overpayment with HMRC and deduct the overpayment from future instalment payments. You might receive interest on overpayments of instalment payments and on payments made early.

Groups of companies

Group companies can choose to offset an amount overpaid by one company against an amount unpaid by another company in the group.

HMRC also offers Group Payment Arrangements, which allow groups to make instalment payments on a group-wide basis. You can nominate one company in the group to pay the instalments on behalf of the group, rather than company by company.

Make an instalment payment

You must make all Corporation Tax and related payments electronically.

Related payments include interest charged on overdue Corporation Tax and penalties for not filing your Company Tax Return on time.

Pay your instalment payments electronically online using:

• a payment through your online bank account
• Direct Debit
• debit card
• company credit card
• your own bank or building society鈥檚 internet banking service

Pay electronically (but not online) using:

• Bacs Direct Credit
• your own bank or building society鈥檚 telephone banking service
• CHAPS
• Bank Giro

Interest and instalment payments

Interest charged by HMRC

HMRC charges interest on late or underpaid instalments. If you need to pay this interest, it鈥檚 tax deductible for Corporation Tax purposes.

To distinguish this from interest on normal late payments, HMRC calls this 鈥樷��.

This interest is only worked out and charged when you submit your Company Tax Return.

Interest paid to you

HMRC will pay your company interest if:

• you make instalment payments that turn out to be unnecessary
• you pay them early
• your payment is too high

Any interest paid will be worked out from the later of the first instalment date or when an overpayment occurs.

The interest paid by HMRC is taxable for Corporation Tax purposes. This interest is only worked out and charged retrospectively, once the liability for the period is established, normally when you submit your Company Tax Return.

The rate for this interest is different from the rate of interest charged on late payments and underpayments. HMRC calls this interest 鈥樷��.

Example 鈥� no ring fence liability and an accounting period from 1 January to 31 December

The company reviews the estimate of its final liability at regular intervals and, when appropriate, adjusts its instalment payments (or, if necessary, makes top-up payments) to minimise any interest charge. It sends a Company Tax Return showing a final tax liability of 拢120 million.

Company鈥檚 estimate of its liability	Payments made based on estimated figures (with date payment made)	Actual liability based on final liability	Date due
拢80 million	拢20 million (14 July)	拢30 million (instalment payment 1)	14 July
拢110 million	拢35 million (14 October)	拢30 million (instalment payment 2)	14 October
拢130 million	拢10 million (top-up payment) (1 November)	鈥�	鈥�
拢140 million	拢40 million (14 January)	拢30 million (instalment payment 3)	14 January
拢120 million	拢15 million (14 April)	拢30 million (instalment payment 4)	14 April

In this example, interest is due as follows:

Dates	Total paid to date	Actual liability to date	Details of interest due
14 July to 13 October	拢20 million	拢30 million	Debit interest due on 拢10 million from 14 July to 13 October
14 October to 31 October	拢55 million	拢60 million	Debit interest due on 拢5 million from 14 October to 31 October
1 November to 13 January	拢65 million	拢60 million	Credit interest due on 拢5 million from 1 November to 31 January
14 January to 13 April	拢105 million	拢90 million	Credit interest due on 拢15 million from 14 January to 13 April
14 April	拢120 million	拢120 million	No further interest will be charged or credited

Penalties on instalment payments

A penalty may be charged if you deliberately:

• fail to make instalment payments
• make instalment payments that are too small

Find out more about Corporation Tax penalties.

Repayment claims

If, following a review at the next instalment date of the latest management accounts and forecasts, you find that your Corporation Tax liability will be less than expected, you can make a claim for repayment of some or all of your instalment payments.

Claims must be made to an officer of HMRC and must state both:

• the amount that you consider should be repaid
• your grounds for believing that, because of a change in circumstances since the payment or payments were made, the:
  • amount of your total liability for the period is likely to be less than previously worked out
  • cumulative payments are more than the revised liability

In some circumstances, you may make a repayment claim when your revised liability includes anticipated losses from your current accounting period that has not yet ended.

This may occur if you have sustained significant losses. You will need to provide supporting evidence to verify the losses and support your claim for repayment. Find out more about repayment claims in the HMRC company taxation manual.