Corporation Tax instalment payments: when they apply
How instalments work - explained
Most companies pay their Corporation Tax as a single payment, nine months and one day after the year-end. Only ‘large’ companies pay in quarterly instalments instead. Understanding the threshold means you will know well in advance if it ever becomes relevant.
The instalment payment threshold
Quarterly instalments only apply when a company's profits exceed £1.5 million in a 12-month period. This is divided by the number of companies you control, so it is reached sooner if you have associated companies. Even above £1.5 million, a company is exempt if its total Corporation Tax bill for the period is under £10,000.
How instalments work
Where they do apply, instalments are due 6 months and 13 days, 9 months and 13 days, 12 months and 13 days, and 15 months and 13 days after the start of the accounting period, each being one quarter of the estimated annual liability. A company that becomes ‘large’ for the first time usually gets a one-year grace period, so it is not required to pay by instalments that year unless its profits exceed £10 million.
💡 Good to know: Instalment payments only affect companies with profits above £1.5 million, so the vast majority of our clients will never be in this regime. If your profits ever approach that level, we will calculate your position and advise you well in advance of any change.
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