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This subject is presented as follows.

Introduction
Large/Very Large companies
Companies becoming Large/Very Large
Company not treated as LargeÌý

Introduction

The Corporation Tax (Instalment Payments) Regulations 1998 (SI 1998 No 3175) as amended by the Corporation Tax (Instalment Payments) (Amendment) Regulations (S.I. 1999/1929), contain the requirement for large companies to pay tax in instalments. This requirement was introduced at the same time as CTSA.

Quarterly instalment payments were phased in over 4 years, and apply only to the following.

• Large/Very Large companies
• CTSA APs
• tax required to be self assessed, that isÌýCT chargeable on the company’s profits,Ìýtax chargeable under S455 Corporation Tax Act (CTA) 2010 on close company loans to participators andÌýtax chargeable under Section 747 Income and Corporation Taxes Act (ICTA) 1988 (controlled foreign companies)

For more information about the working arrangements for payers of instalments see COM95000 onwards.

Large/Very Large companies

A company is large for the purpose of instalment payments if its profits for an Accounting Period (AP) exceed the S13 Income and Corporation Taxes Act (ICTA) 1998 upper limit which is in force at the end of that period.

‘Profits’ means profits chargeable to CT plus franked investment incomeÌý(for APs ending on or before 31 March 2023)/exempt ABGH distributions (for APs ending on or after 1 April 2023) that was not received from the company’s group.

The upper limit is proportionately reduced where the AP is less than 12 months. Where the company has 51 percent companies (for APs ending on or before 31 March 2023)/exempt ABGH distributions (for APs ending on or after 1 April 2023), the upper limit is reduced by dividing it by one plus the number of those companies.

A company is not large if its total tax liability does not exceed £10,000, proportionately reduced if the AP is less than 12 months.

Companies becoming Large/Very Large

Regulation 3 contains provisions to protect growing companies from having to make quarterly instalment payments for the first period in which they are large unless the growth is very substantial. Under these provisions, a company will not have to make instalment payments for an Accounting Period (AP) if:

• its profits for the AP do not exceed £10 million
• it was not large in the 12 months preceding the AP

‘Profits’ means the same as it does above, and the £10 million limit is proportionately reduced for:

• APs of less than 12 months
• 51 percent companiesÌý(for APs ending on or before 31 March 2023)/associated companies (for APs ending on or after 1 April 2023)

51 percent companies (for APs ending on or before 31 March 2023)/associated companies (for APs ending on or after 1 April 2023)Ìýare counted for this purpose as at the day before the start of the AP, or on the first day of the AP if the previous day did not fall within an AP.

For APs beginning on or after 1 April 2019, if the company’s profits (proportionate, as above) are £20 million or greater, then it is considered to be Very Large for quarterly instalment purposes.

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Company not treated as Large

A company is not treated as large in the 12 months preceding the Accounting Period (AP) if there is any part of that 12 months in which it did not exist, or did not have an AP, or an AP in which it was not a large company (other than by virtue of it not being treated as large because of the companies becoming large provisions above), or falls or ends within that 12-month period.

See COM30021 for legislation applying to this subject.