How do I pay my Corporation Tax?
When is my Corporation Tax payment due?
For small Limited Companies, Corporation tax is due nine months and one day after the end of your accounting period.
For example, if your financial year end is 31st March, your corporation tax will be payable before 1st January the following year.
What information do I need to pay?
You will corporation tax reference number as issued by HMRC, the tax amount to pay, the payment link and your payment details.
How can I pay?
You can pay your Corporation Tax by Bacs, CHAPS, Telephone Banking or with your debit card. Different payment methods clear in within different time periods, therefore it is best to allow up to five days for payment to clear before the payment deadline. To pay, follow this link. Please note from December 15th 2017, companies are no longer able to pay Corporation Tax bills at the Post Office.
What happens if I pay late?
HMRC may charge interest and penalties if you don’t pay on time, however, if you pay too early, HMRC will pay you a small amount of interest.
What if I can’t pay it all right now?
It’s important to contact HMRC if you feel you are unable to meet the payment deadline. HMRC operate the ‘Business Support Helpline’, to help people who are struggling to pay their tax liability.
HMRC will want to know why you cannot pay the tax and what is affordable. They will consider your circumstances and may allow you to spread payments over a number of months until the liability is paid in full.
Ensure you have the tax liability amount and your company UTR number to hand. This is a ten-digit number which can be found on your Corporation Tax CT600 return. The helpline number is 0300 456 3565.
What about the first year in business?
It is possible to have two payment deadlines in the first year you set up your company.
If your company was incorporated on any day of the month other than the last day of the month, your first set of accounts will be for 12 months, plus the odd number of days between when you set up the company and the end of the first month.
As a Corporation Tax return is not allowed to span over a twelve-month period, two returns will go in; one for a full year and one for a few days, giving two payment deadlines, with two reference numbers which relate to the specific periods and must be paid as separate transactions.
In the following years, you will normally only have one payment deadline, which will fall nine months and one day after your financial year end.
What if I want to change my year end?
It is possible to change your year end at Companies House to switch to a more convenient date, such as the end of the fiscal year, or at a time each year when your business is less busy. To do this please contact us and we will make the necessary arrangements on your behalf.
What’s the bottom line?
Plan ahead for your Corporation Tax by transferring the recommended amount from your monthly financial report each month. You can move the money into a Business Savings account to earn interest whilst waiting to pay HMRC. The savings account will need to be opened in the limited company name, otherwise the amounts taken out of the company will be classed as dividends.