If you run a limited company in the UK, understanding how to pay corporation tax is essential for staying compliant with HMRC and avoiding penalties. Every company that makes a profit is usually required to file a Corporation Tax return and make payments on time.
In this guide, we explain:
- How Corporation Tax works
- How to make a corporation tax payment to HMRC
- What the CT600 form is and,
- How to pay company tax online
Whether you are a new company director or managing a growing business, this guide can help you understand the process clearly.
Stop worrying about deadlines and penalties. Our expert accountants file accurately and on time — every time.
What Is Corporation Tax?
Before going in depth about how to pay corporation tax, you must know that Corporation Tax is the tax limited companies pay on their profits. So, your company may need to pay Corporation Tax on:
- Trading profits
- Investment income
- Capital gains from selling assets
Unlike sole traders, limited companies pay tax separately from the business owner.
If you want to learn more about it, check our guide: What is Corporation Tax for a Limited Company (UK Guide)
Who Needs to Pay Corporation Tax?
Most UK limited companies must pay Corporation Tax if they trade or do business activities, make taxable profits or receive income from investments.
Yes, this applies to:
- Small limited companies
- Agencies
- E-commerce businesses
- Influencer companies
- Contractors and consultants
How Much Is Corporation Tax in 2026/27?
Corporation Tax rates depend on company profits.
Current Rates:
| Company Profits | Corporation Tax Rate |
| Up to £50,000 | 19% |
| £50,001 – £250,000 | Marginal Relief Applies |
| Over £250,000 | 25% |
Some businesses may qualify for reduced effective rates through Marginal Relief.
How to Pay Corporation Tax
Now, we have the main topic here. Understanding how to pay corporation tax involves several key steps.
Step 1: Register for Corporation Tax
After forming a company with Companies House, you usually must register for Corporation Tax with HMRC. You typically need to register within 3 months of starting business activity. This includes trading, advertising, buying stock and earning income.
Step 2: Keep Accurate Financial Records
You must maintain proper accounting records, including:
- Sales invoices
- Expense receipts
- Payroll records
- Bank statements
- Business transactions
Good bookkeeping makes tax filing easier and more accurate.
Step 3: Prepare Company Accounts
At the end of your financial year, you obviously have to prepare annual accounts. This is not all, you must also prepare profit and loss statements and have an accurate balance sheet. All in all, these figures determine the taxable profits of your company in the UK.
Step 4: Complete the CT600 Form
While learning how to pay corporation tax, you must know that the CT600 is the official Corporation Tax return submitted to HMRC. It includes company income, expenses, tax calculations and Corporation Tax owed. Thus, every company that receives a notice from HMRC usually must submit a CT600.
So, What Is CT600?
The CT600 is the Corporation Tax return form filed with HMRC. It tells HMRC how much profit your company made, how much Corporation Tax is owed and how the tax was calculated. The form is normally submitted online.
Step 5: Pay Company Tax Online
Here comes the step of how to pay corporation tax where you actually pay. Once your Corporation Tax is calculated, you must make a payment to HMRC.
What Are the Common Ways to Pay Company Tax Online?
- Online bank transfer
- Faster Payments
- Clearing House Automated Payment System (CHAPS)
- Direct Debit
- Debit or corporate credit card
When making a corporation tax payment HMRC, you must use your 17-character Corporation Tax payment reference. This ensures the payment is allocated correctly.
What Are the Corporation Tax Payment HMRC Deadlines
Like other HMRC deadlines, the Corporation Tax payment deadlines are also extremely important. Because penalties will be applied.
Payment Deadline
Corporation Tax is usually due 9 months and 1 day after the accounting period ends.
Example:
- Accounting period ends: 31 March 2027
- Payment deadline: 1 January 2028
CT600 Filing Deadline
Your CT600 return must usually be submitted within 12 months after the accounting period ends.
What Happens If You Pay Late to HMRC?
Late Corporation Tax payments can lead to interest charges, the most obvious HMRC penalties, as well as compliance issues. Additionally, while understanding how to pay corporation tax, you should know that repeated late filing can significantly increase penalties.
Can You Pay Corporation Tax in Instalments in the UK?
This is quite a common question. And, yes, you can pay corporation tax in instalments. Usually, large companies may need to pay Corporation Tax in instalments. However, most small businesses make a single payment before the deadline. If you cannot afford to pay, you may be able to contact HMRC about a Time to Pay arrangement.
What Are the Common Expenses That Reduce Corporation Tax in the UK?
Companies only pay Corporation Tax on profits after allowable expenses. Here, a professional accountant’s help can be very fruitful in claiming all allowable expense deductions.
What Are the Common Deductible Expenses?
- Salaries and wages
- Office costs
- Marketing expenses
- Software subscriptions
- Accountant fees
- Business travel
- Equipment purchases
Accurate expense tracking can reduce your tax bill legally.
How to Calculate Corporation Tax
Similar to understanding the importance of how to pay corporation tax, knowing how to calculate is also important. Basic formula is:
Profit – Allowable Expenses = Taxable Profit
Then, apply the relevant Corporation Tax rate.
Example:
| Item | Amount |
| Company income | £80,000 |
| Expenses | £20,000 |
| Taxable profit | £60,000 |
Note: Corporation Tax is calculated on the £60,000 taxable profit.
What Are the Common Mistakes Businesses Make
When learning how to pay corporation tax, avoid these common errors.
Missing Filing Deadlines
As discussed above, late filing or missing these deadlines do not go unnoticed. Late CT600 submissions trigger penalties. So, you will have to spend more money in interest or penalties later.
Poor Record-Keeping
Incomplete records create inaccurate tax returns. And most probably, you may be overpaying. If there are major issues, HMRC can raise an issue with it.
Forgetting Corporation Tax Registration
Many new companies forget to register with HMRC. But you must know that it’s not an option or a given choice, but a must-do kind of thing as a UK-based company.
Mixing Personal and Business Spending
This complicates tax calculations. Your accountant will also have to spend extra time and will charge you more for a maze-like mixed accounting record. So, it’s always the best thing to separate your personal and business expenses or accounts.
Incorrect Expense Claims
Only allowable business expenses can be deducted. This clearly means you cannot claim the expenses which are not allowable by HMRC.
Why Professional Accounting Support Matters for Corporation Tax in the UK?
Corporation Tax rules can become complex as businesses grow. And you should not have to worry about the accounting stuff when you can simply hire an expert with years of experience to ease up your burden. Whether you want to know how to pay corporation tax or want help in managing your finances, we are here for you.
At CAIL, our accountants can help with:
- CT600 preparation
- Corporation Tax calculations
- Tax planning
- Filing deadlines
- HMRC compliance
- Expense management
Once you get our services, you will understand how professional support not only helps reduce errors but also improves tax efficiency. So, book a free consultation right away!
From bookkeeping to VAT returns, we manage it all so you can focus on growing your business.
Final Thoughts
Understanding how to pay corporation tax is a key responsibility for every UK limited company director. Limited companies must usually pay Corporation Tax on profits, and the CT600 form reports profits and tax owed to HMRC. Moreover, Corporation Tax is usually due 9 months and 1 day after the year-end.
Most businesses can pay company tax online through HMRC-approved methods. Good bookkeeping and tax planning reduce compliance risks.
Thus, managing your corporation tax payment HMRC correctly helps your business stay compliant, organised, and financially healthy.
Disclaimer: This article intends to provide general information on how to Pay Corporation Tax in the UK.