How to Pay Corporation Tax UK: Deadlines, Rates & Methods

1. Corporation Tax Rates and Marginal Relief (2026/27)

Under the Corporation Tax Act 2010 (CTA 2010), company profits (trading profits plus chargeable capital gains minus allowable business expenses and capital allowances) are taxed under a tiered system:

How Marginal Relief Works in Practice

Under Section 18B CTA 2010, companies with profits between £50,000 and £250,000 calculate tax initially at the 25% Main Rate and then subtract a statutory Marginal Relief deduction calculated as:

Because of this mathematical formula, every additional £1 of profit earned between £50,000 and £250,000 is taxed at an effective marginal rate of 26.5%. Once profits exceed £250,000, the overall effective rate flattens out at 25.0%.

2. Statutory Deadlines: Payment vs Filing

Many first-time company directors assume tax is paid when the annual company tax return is filed. Under UK company tax law, this is incorrect and leads to automatic late payment interest charges:

Quarterly Instalment Payments (Large Companies)

Companies with taxable profits exceeding £1.5 million do not benefit from the 9-month payment window. Under the Corporation Tax (Instalment Payments) Regulations 1998, large companies must pay tax in four quarterly instalments (months 7, 10, 13, and 16 from the start of the accounting period). Very large companies (profits over £20 million) pay even earlier (months 3, 6, 9, and 12).

3. Your 17-Digit Payment Reference Number

Every payment made to HMRC must quote your company's specific 17-character Corporation Tax payment reference. If you use your personal UTR, PAYE reference, or VAT number, HMRC's automated reconciliation system will fail to allocate the funds, triggering automated debt collection letters and interest.

You can locate your reference on HMRC Form CT603 ("Notice to deliver a company tax return"), on official payment reminders, or by logging into your HMRC online business tax account.

4. Official HMRC Payment Methods Compared

HMRC accepts electronic payments via several channels, each with differing processing times:

5. What to Do If You Cannot Pay on Time

If your business experiences cash flow constraints and cannot settle its Corporation Tax bill in full by the statutory due date, take prompt action before HMRC initiates enforcement proceedings:

• Contact HMRC Payment Support Service: Call HMRC before the payment deadline on 0300 200 3835.
• Request a Time to Pay (TTP) Agreement: HMRC regularly agrees repayment plans allowing solvent businesses to clear liabilities over 6 to 12 monthly instalments.
• Eligibility Criteria: You must demonstrate that your company is currently unable to pay in full, has filed all outstanding returns, and has a credible recovery plan to clear future obligations.