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We’re sure most business owners will agree – paying your corporation tax bill is probably not the most exciting part of being a business owner. But it’s definitely one of the most important! Ready to learn how to pay your corporation tax bill?
We’re here to make the process as simple as possible. This way, you can focus on what matters most – running your business!
Corporation tax is simply a tax paid to HMRC based on your annual company profits. The rate of corporation tax varies depending on your profits, but we’ll go into more detail about this below.
So, who needs to pay it?
Alas, limited companies do not have a tax-free Personal Allowance like sole traders do. We feel your pain.
Your company will pay a rate of corporation tax depending on its profits🤑
The current rates of corporation tax in the UK are as follows:
| Profit margin | Corporation tax rate |
| Profits under £50,000 (small businesses) | 19% |
| Profits over £250,000 (main rate) | 25% |
| Profits between £50,000 and £250,000 | 25% – but eligible for marginal relief |
So, your business is generating profits between £50,000 and £250,000. That means you may be eligible for some tax relief. Phew!
But what exactly is it? Think of it as a tax buffer for medium-sized businesses. Instead of jumping straight to a higher tax rate once you reach £50,000, marginal relief eases you into it.
Essentially, you won’t pay the top rate of tax yet, helping your business manage its corporation tax bill more comfortably as you grow.
Now that you know how much you’ll need to pay, let’s dive into how you can pay your bill.
Your corporation tax bill will be due in full or in instalments, depending on how much you owe. You can pay it online or via phone banking using this link. You can also pay it in person at your bank or building society.
Whichever method you choose, you’ll need access to your HMRC tax account to be able to pay your corporation tax bill.
You cannot pay your corporation tax bill by post.
There are a few different methods of payment. Which way you choose depends on how quickly you need to send the payment to HMRC.
If your corporation tax deadline is looming, then one of the following payment methods might suit you:
If you have a little more time to pay your bill, you might prefer to pay using:
If you’ve never paid by direct debit before, the process will take a little longer than pre-approved direct debits (3 working days). It’s probably best to leave at least 5 working days for new direct debit payments to reach HMRC.
You can find more information on HMRC’s website.
Your corporation tax is usually due 9 months and 1 day after the end of your company’s accounting period. This varies for every business, so there isn’t a set ‘deadline’, per se.
We know it can be a bit confusing, especially if you’re new to this. To help you out, we’ve explained everything in detail in our ‘when is corporation tax due?’ guide.
If you pay your corporation tax bill late, HMRC will charge your company interest until they receive your payment, yikes😪. This will be charged at the base rate plus 2.5%, so always try your best to pay on time and avoid any unwanted fees.
If you’ve wrapped up your financial accounts for the year and found that you don’t owe corporation tax, you still need to let HMRC know.
To do this, you have to submit a nil-to-pay form. Or, you can mark the payslip reminder as ‘NIL due’ and send this back to HMRC. Either is fine, but the key is them know. Otherwise, they’ll assume you didn’t want to pay your tax bill and chase you with fines and penalties.
Don’t panic if you haven’t heard anything back. HMRC will update your online account within a few days, and you’ll be able to see your payment there.
We’ll tackle your year-end accounts and corporate tax return for less, taking the stress out of the equation.
Our limited company tax service will match you with an accredited accountant. And they’ll take care of everything for you for a one-off, affordable price.
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