Pay corporation tax: when it is due, and what late payment actually costs

Corporation tax is due nine months and one day after the end of your accounting period. Paying it is a separate obligation from filing your Company Tax Return, on a separate and earlier deadline. No late-payment penalty regime is in force for this duty — late payment carries interest.

What does "pay corporation tax" mean as a legal duty?

It is the duty in section 59D of the Taxes Management Act 1970 to have the tax in HMRC's hands by a fixed date. That duty is entirely distinct from the duty to file a Company Tax Return, which lives in Schedule 18 to the Finance Act 1998 and falls due later.

A company can be perfectly on time for one and late for the other. They are two obligations, two deadlines, two consequences.

When is corporation tax due?

Nine months and one day after the end of your accounting period. Section 59D(1) puts it precisely: corporation tax for an accounting period "is due and payable on the day following the expiry of nine months from the end of that period".

So for an accounting period ending 31 March, the tax is due on 1 January. For one ending 30 September, it is due on 1 July.

What is the corporation tax payment deadline exactly?

The "and one day" is not a rounding convention — it is in the statute. The nine months expire, and the tax becomes due and payable on the day following that expiry. Reading it as a flat nine months puts the deadline a day early, which is harmless; reading the expiry day itself as the deadline is the error that matters, because it is a day late.

Does the deadline move if it falls on a weekend or bank holiday?

No. This is unusual and worth stating plainly, because most payment deadlines people deal with do shift.

Section 87A(2) provides that interest runs from the section 59D date "even if" that date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882. The statutory due date therefore does not move forward when it lands on a Saturday, a Sunday or a bank holiday — and interest starts running on the unshifted date regardless. In practice that means the money has to clear earlier, not later, when the due date falls on a weekend.

Who does this deadline apply to?

Companies within the charge to corporation tax that pay under the general section 59D rule — which is every company except one required to pay by quarterly instalments.

Section 59D(5) makes the general rule subject to section 59E, under which the Corporation Tax (Instalment Payments) Regulations 1998 displace it for large and very large companies. A large company, for this purpose, is one whose profits in an accounting period exceed £1,500,000, divided by the number of associated companies. That figure was put into regulation 3(1) by a 2014 amending instrument in force from 1 October 2014.

Two further boundaries are named rather than glossed over. Section 59D(5) is also subject to section 357YQ of the Corporation Tax Act 2010, a narrow displacement for restitution interest. And the instalment schedule itself is a multi-date payment plan within a single accounting period — a different shape entirely from the single date this page describes.

What is the penalty for paying corporation tax late?

There is none. No late-payment penalty regime is in force for corporation tax. That is a positive finding from reading the instruments, not an absence of information.

The candidate penalty does exist on the statute book. Schedule 56 to the Finance Act 2009 provides that a penalty is payable where a person fails to pay a specified amount of tax by a specified date, and its Table does carry corporation tax rows — item 5 (the amount shown in the company tax return), item 6 (amounts payable under the instalment regime) and item 6ZZA (restitution interest).

None of them has ever been commenced. All seven commencement notes attached to paragraph 1 were traced to their appointing instruments, and each appoints a day for something else: PAYE income tax, the construction industry scheme and pension scheme charges (2010); income tax self assessment (2011); inheritance tax and the annual tax on enveloped dwellings (2013); stamp duty reserve tax (2015); the soft drinks industry levy (2018); capital gains tax (2019); plastic packaging tax (2022). Corporation tax appears in none of them.

The corporation tax penalty regime that is in force attaches to the late return, not the late payment.

If there is no penalty, what does late payment cost?

Interest, running day by day. Section 87A(1) of the Taxes Management Act 1970: "Corporation tax shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the date when the tax becomes due and payable (in accordance with section 59D of this Act) until payment."

Because it accrues daily on the outstanding balance, the cost scales with both how much is unpaid and how long it stays unpaid. It does not land as a fixed sanction on day one and then stop.

How is the corporation tax interest rate set?

By Treasury regulations, not by the Act. Section 178(1) of the Finance Act 1989 provides that the rate is the one "provided for by regulations made by the Treasury", and section 178(3)(b) lets the Treasury either specify a rate outright or provide for it to be determined by reference to another rate or an average of rates.

The rate is therefore a moving figure set under delegated powers. The statutory formula is the stable thing; any given percentage is not. This page states the formula and names the rate-setting mechanism, and deliberately quotes no percentage — a figure copied from a rate table has a shelf life the statute does not.

Note also that corporation tax is expressly outside the general late payment interest regime in section 101 of the Finance Act 2009: section 101(2)(a) excludes it. That is why the charging provision here is section 87A of the 1970 Act.

Is corporation tax interest appealable?

No, and this is a real difference in kind. Interest is compensation for the lost use of money, not a sanction. A penalty can be appealed on reasonable-excuse grounds; interest cannot, because there is no excuse-based relief attached to a compensatory charge.

What if I pay corporation tax early?

HMRC pays interest in the other direction where corporation tax is paid before the due date. The mechanism runs both ways.

Is paying the same as filing the CT600?

No — and the deadlines are three months apart. Payment falls due nine months and one day after the accounting period ends. The Company Tax Return is generally due twelve months after the same period end.

That gap catches people out in a specific way: the tax has to be paid before the return that calculates it is legally due. The penalty consequences also differ sharply — the return carries a flat-rate penalty that steps up, the payment carries no penalty at all.

Is there an extension mechanism?

No. Section 59D states a due date and provides no extension route, no application, and no discretionary deferral. Time to pay arrangements are an HMRC collection practice operating on the debt once it exists; they do not move the statutory date from which interest runs.

How do I pay corporation tax?

Through HMRC's payment channels, quoting the accounting period reference for the period being paid. The critical operational point is clearance, not initiation: what matters is the date the money reaches HMRC, and, per section 87A(2), that date does not get the benefit of a weekend or bank holiday shift.

Related

• Company tax return (CT600) — the separate filing obligation, due three months later, with its own penalty regime
• Annual accounts and late filing penalties — the Companies House filing that shares your accounting period end
• Confirmation statement — the other annual company-level filing
• Pillar hub: UK company tax deadlines (placeholder)
• Companies House deadline checker — enter your company number to see the accounting period end this deadline counts from