Taxation (UK) · Taxable total profits

Short Periods and Quarterly Instalment Payments for TX-UK

Updated 11 October 2026 · Fact-checked

For a short accounting period, multiply the corporation tax limits by the months in the period ÷ 12, then divide by 1 plus the number of associated companies. A company with profits above the adjusted £1,500,000 threshold pays tax in four equal quarterly instalments instead of one payment.

Understand Short Periods and Quarterly Instalment Payments

Corporation tax limits are set for a full 12-month period. The lower limit is £50,000 and the upper limit is £250,000. The profit threshold for quarterly instalments is £1,500,000. If the accounting period is shorter than 12 months, you must scale these figures down. If the company has associated companies, you divide them again.

Why? The limits are meant to match a year of profits. A company trading for 6 months should not get a full year's allowance. In the same way, a group of companies under common control should share one set of limits, not each get its own.

The adjusted lower and upper limits decide whether marginal relief applies. You compare them with augmented profits, which are taxable total profits plus exempt dividends received from non-group companies. The standard fraction of 3/200 is not adjusted.

The same adjusted-limit idea applies to the instalment threshold. A large company has augmented profits above the adjusted £1,500,000 threshold but not above £20 million (also adjusted). A very large company has augmented profits above £20 million (adjusted). Large companies pay later than very large companies. Others pay in one amount, nine months and one day after the period ends.

Instalments are based on the company's expected tax liability for the period. Each instalment is 25% of that liability. Dates are always the 14th day of a month. Learn which months apply to which type of company.

Key rules to remember

Adjusted limits: Limit × (months in period ÷ 12) ÷ (1 + number of associated companies); Apply to the £50,000 lower limit, £250,000 upper limit and £1,500,000 instalment threshold. The £20 million very large threshold is adjusted in the same way.
Marginal relief: (Upper limit – augmented profits) × standard fraction 3/200 × taxable total profits ÷ augmented profits; Use the adjusted upper limit. It applies only when augmented profits fall between the adjusted lower and upper limits.
Corporation tax rates: Small profits rate 19%; main rate 25%; Both rates are given in the tax tables. Above the adjusted upper limit, the main rate applies to all profits.
Large company instalment dates: 14th day of months 7, 10, 13 and 16 after the start of the period; For a 12-month period starting 1 January: 14 July, 14 October, 14 January and 14 April.
Very large company instalment dates: 14th day of months 3, 6, 9 and 12 after the start of the period; For a 12-month period starting 1 January: 14 March, 14 June, 14 September and 14 December.
Instalment amount: Estimated corporation tax liability ÷ 4; Four equal instalments. Short periods still use four instalments, and the dates are worked back from the last one.
Short period: last instalment: 3 months and 14 days after the end of the period; Earlier instalments fall at three-month intervals before that. Check the date against the start of the period.
First-year exemption: Not required to pay by instalments if not large in the previous year and profits do not exceed £10 million (adjusted); The exemption does not apply to a very large company (£20 million threshold).

How to solve Short Periods and Quarterly Instalment Payments questions

Use this order for any question on short periods or instalments. Write the working so marks follow even if you slip on one figure.

1Count the months in the accounting period. If it is less than 12, note the fraction months ÷ 12.
2Count associated companies and work out the divisor: 1 plus the number of associates.
3Adjust each limit you need: £50,000, £250,000 and the £1,500,000 threshold. Show the working.
4Compute augmented profits and compare them with the adjusted limits to choose 19%, 25% or marginal relief.
5Calculate the corporation tax liability for the period.
6Compare augmented profits with the adjusted £1,500,000 and £20 million thresholds to decide if the company is large, very large or neither.
7If instalments apply, divide the liability by four and list the due dates from the start of the period.
8State the answer clearly with dates and amounts. If the company is not large, give the single due date, nine months and one day after the period ends.

Quickest way: Adjust once, then classify

When to use it: Use this for objective test questions where you only need the limit or the due date, not a full computation.

Write the fraction: months ÷ 12 ÷ (1 + associates). Multiply every limit by it.
Compare augmented profits with the adjusted figures. Stop as soon as you know the category.
For dates, use the pattern: very large is months 3, 6, 9, 12; large is months 7, 10, 13, 16. Each is the 14th.
Divide the liability by four for each instalment. Check that the four payments add back to the total.

Common mistakes in Short Periods and Quarterly Instalment Payments

Adjusting the limits for the number of associates but forgetting the short period, or the reverse.
Students remember one adjustment and treat the other as optional.
Fix: Always write the full fraction: months ÷ 12 ÷ (1 + associates). Check both parts every time.
Counting the company itself as an associate and dividing by the number of associates only.
The wording 'number of associated companies' hides the divisor.
Fix: Divide by 1 plus the number of associates. One associate means divide by 2.
Using taxable total profits instead of augmented profits for the limit and threshold tests.
Taxable total profits are the figure on the computation, so they feel natural.
Fix: Add exempt dividends from non-group companies to taxable total profits first. Use that augmented figure in the comparisons.
Mixing up the instalment months for large and very large companies.
Both use the 14th and four instalments, so the patterns blur.
Fix: Memorise: very large 3, 6, 9, 12; large 7, 10, 13, 16. Remember that very large companies pay sooner.
Adjusting the standard fraction of 3/200 for a short period.
Students adjust everything in sight once they start scaling.
Fix: Adjust only the limits. The fraction stays 3/200.
Using the nine-months-and-one-day rule for a company that should pay by instalments.
The single due date is the first rule students learn.
Fix: Test the threshold before choosing the payment method. Only companies that are not large use the single date.

Worked examples

Example 1

Dorset Ltd has one associated company. It prepares accounts for a six-month period. Its taxable total profits are £100,000, with no exempt dividends. Calculate its corporation tax and state whether it must pay by instalments.

Show the solution

Fraction: 6 ÷ 12 ÷ 2 = 1/4.
Adjusted lower limit: £50,000 × 1/4 = £12,500.
Adjusted upper limit: £250,000 × 1/4 = £62,500.
Augmented profits are £100,000, which is above £62,500. The main rate of 25% applies to all profits, with no marginal relief.
Corporation tax: £100,000 × 25% = £25,000.
Adjusted instalment threshold: £1,500,000 × 1/4 = £375,000. Profits of £100,000 are below this, so the company is not large.

Answer: Corporation tax is £25,000. Dorset Ltd is not large, so it pays in one amount, nine months and one day after the period ends.

Example 2

Harbour Ltd has no associated companies. For the year ended 31 December 2025 its taxable total profits are £3,000,000, with no exempt dividends. Calculate the corporation tax and the quarterly instalments.

Show the solution

The period is 12 months with no associates, so no adjustment to the limits. The upper limit is £250,000, which profits far exceed.
Corporation tax: £3,000,000 × 25% = £750,000.
Threshold test: £3,000,000 is above £1,500,000 and below £20 million, so the company is large.
Each instalment: £750,000 ÷ 4 = £187,500.
Period starts 1 January 2025. Dates are the 14th of months 7, 10, 13 and 16: 14 July 2025, 14 October 2025, 14 January 2026 and 14 April 2026.

Answer: Corporation tax is £750,000, paid in four instalments of £187,500 on 14 July 2025, 14 October 2025, 14 January 2026 and 14 April 2026.

Exam tips

In objective tests, the trap is usually the divisor. Check the number of associates and the length of the period before anything else.
Show the adjusted limits line by line in Section C. A wrong final figure still earns marks for correct method.
Write the dates in full with the year. Marks are lost for 'month 7' without the actual date.
Always test augmented profits, not taxable total profits, against the thresholds, and look for exempt dividends in the question.
Use the main rate and the small profits rate figures from the tax tables given in the exam. Do not rely on memory for them.

Practice questions from Taxable total profits

Short Periods and Quarterly Instalment Payments in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Short Periods and Quarterly Instalment Payments: frequently asked questions

How do I adjust the corporation tax limits for a short accounting period?

Multiply each limit by the number of months in the period divided by 12. If the company has associated companies, divide the result by 1 plus the number of associates. Do not change the 3/200 standard fraction.

When is a company large for quarterly instalments?

A company is large when its augmented profits exceed the adjusted £1,500,000 threshold, but do not exceed £20 million (also adjusted). Above £20 million it is very large. The thresholds are reduced for short periods and for associated companies.

What are the instalment due dates for large and very large companies?

Large companies pay on the 14th day of months 7, 10, 13 and 16 after the period starts. Very large companies pay on the 14th day of months 3, 6, 9 and 12. Each instalment is 25% of the expected liability.

Do instalments apply in the first year of a company?

Not if the company was not large in the previous year and its profits do not exceed £10 million (adjusted). A very large company has no such exemption. Check this exemption before calculating instalments.