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How to pay your corporation tax bill

  • 4 min read
  • Last updated 18 Jun 2024

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!

What is corporation tax?

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?

  • All limited companies based in the UK
  • Foreign companies with a UK branch or office
  • Clubs, societies and associations

Alas, limited companies do not have a tax-free Personal Allowance like sole traders do. We feel your pain. 

What is the corporation tax rate in the UK?

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 marginCorporation tax rate
Profits under £50,000 (small businesses)19%
Profits over £250,000 (main rate)25%
Profits between £50,000 and £250,00025% – but eligible for marginal relief (see below)

Am I 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 Marginal Relief? 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.

This means the tax rate gradually increases on profits between £50,000 and £250,000, helping your business manage its corporation tax bill more comfortably as you grow.

If this sounds confusing…

It might be easier to just hand it over to an expert, accredited accountant. They’ll sort your year-end accounts and company tax return and you can just sit back, relax and take in the view (whatever vuew that might be).

Learn more about the service.

How to pay your corporation tax bill

Now that you know how much you’ll need to pay, let’s dive into how you can pay your bill. 

There are a few different ways you can pay, and it really depends on how quickly you need to send the payment to HMRC.

Same day (or next working day)

If your corporation tax deadline is looming, then one of the following payment methods might suit you:

  • Approve a payment via your online bank account
  • Online or telephone banking using Faster Payments or CHAPS
  • Debit or corporate credit card (online)

3 working days

If you have a little more time to pay your bill, you might prefer to pay using:

  • Existing Direct Debit (if you’ve paid this way before)
  • Online or telephone banking via BACs
  • At your bank or building society

5 working days

  • New Direct Debit

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.

What’s the deadline for paying corporation tax bill?

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. 

What happens if I pay my corporation tax bill late?

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.

I don’t need to pay corporation tax bill, should I tell HMRC?

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. 

How do I know if HMRC got my corporation tax bill payment?

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.

Get your company tax return sorted, for less

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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