Corporation tax instalment payments for large companies

If your company’s taxable profits for a 12 month accounting period exceed £1.5m it is deemed to be large and so it will be required to make its corporation tax payments in quarterly instalments. This means rather than paying the tax 9 months and 1 day after the company’s year end corporation tax instalment payments will be due in 4 equal instalments on the following dates (in the case of a 12 month accounting period):

• 6 months and 14 days from the start of the accounting period
• 9 months and 14 days from the start of the accounting period
• 14 days after the last day of the accounting period
• 3 months and 14 days after the last day of the accounting period

The easiest way to demonstrate this is through an example. Suppose a company had taxable profits of £2m for the period ending 31 December 2025, its tax bill would be £500,000 (£2m x 25%) and the tax payable and payment due dates would be as follows:

• £125,000 due 14 July 2025
• £125,000 due 14 October 2025
• £125,000 due 14 January 2026
• £125,000 due 14 April 2026

HMRC will charge late payment interest on any underpayments of tax,

Associated companies

The £1.5m large company threshold described above used in determining if corporation tax instalment payments are due is divisible by the number of associated companies plus 1. So, if a company has 1 other associated company the threshold is £750,000 and if it has 2 other associated companies the threshold is £500,000.

First period exemption

A company will not be required to pay tax in quarterly instalments for the first period it goes over the large company threshold of £1.5m (or lower if there are associated companies or a shorter accounting period). This exemption does not apply if its profits are over £10m.

Very large companies

Please be aware that if a company is deemed to be very large corporation tax instalment payments are each brought forward by 4 months.

A company is deemed to be very large if its taxable profits in a 12-month accounting period are over £20m. This threshold limit is divided by the number of associated companies the company has.

Please note, there is no first period exemption for making quarterly instalment payments under the very large company regime.

The above is only an introduction to what is a complex topic. Should you wish to know more on this, please get in touch with Joe Wilson or a member of our Tax Accountant team on 023 8046 1237 or email Joe Wilson.