Is Your Company Corporation Tax Bill Coming Up?
Corporation tax bills can place significant pressure on a business’s cash flow, particularly when large payments fall due at the same time as other operational costs. For many UK businesses, the challenge isn’t a lack of profitability, but timing.
If your corporation tax bill is approaching and you’re concerned about making the payment on time, it’s important to understand the options available and the potential consequences of missing a deadline.
This guide explains how corporation tax payments work, what happens if you cannot pay on time, and the common routes businesses explore to manage their liabilities responsibly.
When Is Corporation Tax Due?
In the UK, most limited companies must pay their corporation tax 9 months and 1 day after the end of their accounting period.
For example:
If your accounting period ends on 31 March, your corporation tax is usually due by 1 January.
While companies often have a clear view of their profits, the actual tax bill can still feel unexpected if funds have already been reinvested into growth, staffing, stock, or equipment.
What Happens If You Don’t Pay Corporation Tax on Time?
Failing to pay corporation tax by the deadline can result in:
- Late payment interest charged by HMRC
- Penalties for persistent late payments
- Increased scrutiny of your business finances
- Potential enforcement action in serious cases
HMRC encourages businesses to engage early if payment is likely to be an issue. Ignoring the problem can make it more difficult to resolve later.
Your Main Options If You Can’t Pay in Full
| Options | Thoughts |
|---|---|
| Pay in Full | If sufficient cash reserves are available, paying the corporation tax bill in full avoids interest and penalties altogether. However, this can sometimes leave a business short on working capital, particularly during quieter trading periods. |
| HMRC Payment Plan | HMRC may allow eligible businesses to spread their corporation tax payments through a Time to Pay (TTP) arrangement. This option may be suitable for businesses that:
Approval is not guaranteed, and interest may still apply, but it can provide breathing space. |
| Business Loan for Corporation Tax | Some businesses explore business finance as a way to cover their corporation tax bill while preserving working capital. This approach is often used when:
Common types of finance businesses may consider include:
It’s important to understand the costs, repayment terms, and impact on cash flow before proceeding. |
Acting Early Is Key
If you are concerned about paying your corporation tax bill:
Review your cash flow early
Understand your HMRC options
Explore funding solutions before penalties apply
Taking action ahead of the deadline provides more flexibility and typically leads to better outcomes.
Speak to Percy Finance
If you’re considering a business loan to help manage a corporation tax or VAT bill, Percy Finance can help you explore the options available. As a regulated credit broker, Percy Finance works with a panel of UK lenders to help businesses understand potential funding solutions and repayment terms.
Contact Percy Finance today to discuss your situation and explore whether business loan options may be available, with no obligation to proceed.