How to pay corporation tax, UK?

by Benny Gala DNS Accountants

In this article, we will elaborate on how to pay corporation tax in the UK.

When it concerns corporation tax, UK companies need to consider it one of the most crucial factors to consider as they run their companies.

Definition of Corporation Tax

Corporation tax is a profit-based tax imposed on all limited liability corporations. Because firms in the United Kingdom do not have tax-free exemptions, they are taxed on their whole earnings when it comes time to pay the corporation tax. However, you may claim costs and deductions – such as for travel or machinery – to reduce your overall corporate tax burden.

Corporation Tax is the most important tax that a limited company has to pay every year. This article on paying Corporation Tax can help you meet tax deadlines and guide you on how to pay in the most efficient way possible.

If your company is established as a limited company, you must pay Corporation Tax on any income it produces. You'll have to pay Corporation Tax on any revenues for the financial year after completing your accounts with HM Revenue & Customs. Profit is the money left over after all permitted expenses and costs, such as salary, have been deducted. Tax relief and allowances can also be used to your business earnings to reduce your Corporation Tax bill.

How do you pay corporation tax?

HMRC provides numerous options for paying Corporation Tax, and it is important to note the payment date. If you skip a deadline, you'll be responsible for paying the rate of interest you owe. HMRC will offer interest to your firm if you pay your Corporation Tax quickly.

Depending on how fast you would like the transaction to settle with HMRC, you can pay Corporation Tax online, at the Post Office, or through your bank. You will have to provide your 17-digit Corporation Tax reference number for the accounting cycle you're paying for in every instance.


Payments made on the same day for corporation taxes

You must pay by CHAPS, online, or over the phone (Speedier Transfers) — many large banks with internet business accounts will accept online same-day payments to HMRC. Your Corporation Tax invoice will inform you if you need to pay HMRC Cumbernauld or HMRC Shipley. HMRC Cumbernauld should be paid if in uncertainty.


Payments for corporation tax within three working days

BACS bank transfers, Direct Debit, and online credit or debit card payments usually take three business days. If you pay at a Post Office, a bank, or a cooperative society, the duration is the same. If you pay at a bank, Post Office, or cooperative society, bring the Corporation Tax invoice that HMRC mailed you.


Payments of corporation tax within five working days

The payment to HMRC will take five days to complete if you want to set a Direct Debit for this and future Corporation Tax payments.

For further details on the following, visit the UK Governments official page.

  • Corporation Tax Registration

  • Corporation tax payment

  • Submitting your corporation's tax form by the due date


How do you inform HMRC that no tax is due?

If you've completed your financial year's books and determined that you don't owe corporation tax, you must notify HMRC that you do not owe any tax. Don't think that since you don't owe anything, you don't have to do anything. Fill and submit the 'nil to pay' document, or please return the invoice notice from HMRC with the text 'NIL due' written on it, to let HMRC know.

How can you tell if HMRC has received your tax payment?

HMRC will be updating your account with your current payments within the next few days of you having paid HMRC, based on your form of payment. To confirm if your account has been modified with your payment, log onto your online HMRC account.

When you sell company assets, you must pay corporation tax.

The revenue from the sale or disposal of an asset is normally subject to Corporation Tax.

The following are examples of assets:

  • Shares

  • Land and Property

  • Machinery

For further details on how to calculate and file your profit, go to


Who has to pay Corporation Tax?

Corporation tax is levied on the taxable profits made by your company from three sources:

  • Profits Trading.

  • Investments.

  • Profits on the sale of assets.


If your company is based in the United Kingdom, it is subject to Corporation Tax on all profits made in the UK and abroad. If the following conditions are met, the business is considered to be based in the United Kingdom.

Incorporated in the United Kingdom. For instance, a limited liability company (LLC) or a public limited company.

From the United Kingdom, everything is handled and managed. For example, Inc. is established outside of the United Kingdom, but the bulk of its directors live in the United Kingdom, and the board meetings are conducted there as well.

Your business will only pay corporation tax to HMRC if it conducts business in the United Kingdom.


Penalties for failing to pay your corporation tax on time include

If you intended to mention the incorrect or no reference in your liability, the HMRC would come after you for not paying the tax. You can change this by contacting the Collector of Taxes and providing all of the specifics of your payment, as well as your exact payment reference, then they will reallocate your payment against your company's liability. You will still be accountable for the underpayment penalty.

The HMRC's sanctions for your improper actions are as follows:

In the event of a late tax return, the following steps should be taken:

If you are overdue in filing your corporation tax return, HMRC will impose the following penalties:

  • For being overdue for one day, you will be fined £100.

  • A further £100 fine will be imposed for a period of three months.

  • HMRC will examine your invoice after six months and apply a 10% penalty to the amount of unpaid tax it believes you owe.



The process to pay the corporation tax isn't so taxing, after all! You simply need to follow certain instructions provided here and avail necessary information to proceed further. I think you have figured out, by now, who pays corporation tax.

If you have understood the above, grasping relative terms like trading profits, corporation tax liability, corporation tax deadline, corporation tax return, corporation tax reliefs, business assets, capital allowances, business properties, taxable profits, or business tax planning - won't be much of an issue.

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About Benny Gala Senior   DNS Accountants

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Joined APSense since, June 30th, 2017, From Harrow, United Kingdom.

Created on Jan 12th 2022 08:00. Viewed 66 times.


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