How to Pay Corporation Tax

How to Pay Corporation Tax?

If you’re a limited company, you need to pay corporation tax every year. In this short blog, we will discuss how to pay corporation tax and what is the best way to pay it.


As a registered limited company, you’re legally bound to pay corporation tax on the profit you make. First, you need to file accounts to HMRC and then you have to pay corporation tax on the profit for the tax year. Profit is the money your business earns after deducting allowable expenses. Additionally, you can also avail of other reliefs and allowances to decrease your corporation tax liability.


Struggling to reduce your corporation tax liability, reach out to Cheap Accountants in London!


When Should I pay Corporation Tax as a Small Business Owner?

The payment will depend upon the profit that your business is earning in a financial year and the deadline to pay it also varies as per your earnings. If the taxable profit of your business is below £1.5m, you are provided 9 months and 1 day to pay your due corporation tax before the end of the accounting period. On the other hand, if your taxable profit is above the threshold of £1.5m, you can pay the corporation tax in installments. Usually, the installment period is of 3 months.


Pay Corporation Tax


Find out corporation tax rates for a large company.


How to Pay Corporation Tax?

There are multiple ways to pay corporation tax to HMRC. While selecting the payment method, you should consider the deadline of the corporation tax. Upon missing the deadline, you’d be charged an interest payment on the extra amount. On the other side, if you pay it early, HMRC will pay that interest to you.


There are various ways to pay corporation tax. It can be paid electronically, via post and bank, it depends on you how timely you want to pay it. No matter whatever method you’re using to pay your corporation tax, you should use your 17 digit Corporation Tax reference number for the tax year, you are paying the tax for. Depending upon the payment method, it will take one day to various working days to pay your corporation tax.


Corporation Tax payment on the same day:

If you’re willing to pay your corporation tax liability within the short span of 24 hours, you can use CHAPS, online, or telephone (Faster Payments) to pay it. Most of the banks with an online business account will transfer the money to HMRC without any hassle. HMRC has two accounts: HMRC Cumbernauld or HMRC Shipley. If you’re unable to select between the two, go for Cumbernauld. You can also see your previous corporation tax payslip will indicate which account to go for.


Corporation Tax payment within Three days:

Direct Debit, BACS bank transfer, debit, or credit card to pay online approximately takes three working days. The same time is consumed if you’re paying through bank, post office, building society. While paying to the bank, post office, and building society you’ll need to take your corporation tax payslip that HMRC sent.


Corporation Tax payment within Five days:

While setting up Direct Debit to pay corporation tax and for future corporation tax payments, it’ll normally take five days to transfer the payments to HMRC.


If you’re facing issues while paying corporation tax, let us know!


How to know that HMRC has received your payment?

As per your payment method, your account will be updated after few days of paying tax to HMRC. You can visit the online HMRC account to find out the updates of your payment.


Quick Wrap Up:

We hope that you have got sufficient knowledge on how to pay corporation tax and what is the best way to pay it. Hopefully, you have got the idea that if you pay your corporation tax after the deadline, you’d be charged an extra fee. However, if you pay it early, you might face issues: loss of cash flow, loss of investment opportunity, or returns missing from some other source, etc. And this practice is not going to grow your business.


Therefore it is advisable to get the help of an accountant. Cheap Accountants in London are here to provide you advice on taxes as per your situation and we provide affordable accounting services for the financial stability of your business.


Get in touch with us now!


Disclaimer: This informative blog provides a general overview of paying corporation tax.


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