Skip to content

Taxation (UK) · The comprehensive computation of corporation tax liability

Corporation Tax Payment Dates and Interest on Late Tax

Updated 11 October 2026 · Fact-checked

A company that is not large pays corporation tax nine months and one day after the end of its accounting period. Tax paid late carries interest at 8.50% a year from the due date to payment. Tax overpaid earns interest at 3.50% a year. Both are simple interest, shown in the ACCA rates table.

Understand Corporation Tax Payment Dates and Interest on Late Tax

Corporation tax is a self-assessed tax. The company works out its own liability for each accounting period. It must also pay that tax by a fixed date. The date does not depend on when the return is filed.

For a company that is not large, the due date is nine months and one day after the end of the accounting period. Count nine months from the period end, then add one day. A period ending 31 March 2026 gives 31 December 2026 after nine months, so the due date is 1 January 2027.

Large companies are different. They pay in quarterly instalments, and the profit threshold in the ACCA tables is £1,500,000. That threshold is lower where the company has associated companies. The instalment rules have their own topic. This page deals with the single nine months and one day payment.

If tax is paid after the due date, HMRC charges late payment interest. The ACCA table gives the rate on underpaid tax as 8.50%. If a company pays too much, HMRC pays repayment interest at 3.50% on overpaid tax. The 3.75% official rate is for beneficial loans to employees, so do not use it here.

Interest is simple, not compounded. It runs for the number of months or days between the due date and the date the tax is paid. Questions in this paper normally count whole months. Interest paid on late tax is a deduction for the company and interest received is taxable, as non-trading loan relationship items. Questions rarely ask for this adjustment.

Key rules to remember

Due date (non-large company)
Due date = period end + 9 months + 1 day
Applies to companies not required to pay by quarterly instalments.
Interest on underpaid tax
Interest = unpaid tax × 8.50% × months late ÷ 12
Runs from the due date to the date of payment. Rate is given in the ACCA tax tables.
Interest on overpaid tax
Interest = overpaid tax × 3.50% × months ÷ 12
Runs from the later of the due date and the date the tax was paid, up to the repayment date.
Large company threshold
Quarterly instalments if profits exceed £1,500,000
The limit is reduced where there are associated companies. See the instalments topic.
Official rate of interest
3.75%
Used for beneficial loans, not for late-paid corporation tax.

How to solve Corporation Tax Payment Dates and Interest on Late Tax questions

Use this method for any question on corporation tax payment dates or interest.

  1. 1Find the accounting period end date.
  2. 2Decide whether the company is large. If profits are over £1,500,000 (adjusted for associated companies), it pays by instalments, so use that topic.
  3. 3Otherwise add nine months and one day to the period end to get the due date.
  4. 4Compare the payment date with the due date. Work out the number of months late, or early for an overpayment.
  5. 5Pick the rate: 8.50% for underpaid tax, 3.50% for overpaid tax.
  6. 6Calculate tax × rate × months ÷ 12 and show the working.
  7. 7State the answer in £ to the nearest pound and say clearly whether it is interest payable or receivable.

Quickest way: Date first, then rate times months over twelve

When to use it: Use in Section A and Section B objective questions where time is short.

  1. Take the period end. Move forward nine months to the same day, or the month end, then add one day. This is the due date.
  2. If the period ends on the last day of a month, the due date is the first day of the month nine months later plus one. For example, 30 June gives 1 April.
  3. Count whole months from the due date to payment.
  4. Multiply tax by 8.50% and by months, then divide by 12. For repayment interest use 3.50%.
  5. Check that the answer is sensible: one year late should give 8.5% of the tax.

Common mistakes in Corporation Tax Payment Dates and Interest on Late Tax

  • Giving the due date as nine months after the period end.

    Students forget the extra day.

    Fix: Always write nine months and one day. A period ending 31 March gives 1 January, not 31 December.

  • Using the 3.75% official rate for late tax.

    It is the first rate in the interest table.

    Fix: Use 8.50% for underpaid tax and 3.50% for overpaid tax. Ignore 3.75% here.

  • Counting interest from the period end or from the filing date.

    Students confuse payment dates with filing dates.

    Fix: Interest on late tax runs from the due date. The filing date is a different deadline.

  • Forgetting to divide by 12 for part-year periods.

    The rates are annual and students apply them as flat charges.

    Fix: Multiply by months late and divide by 12.

  • Charging interest on the whole tax bill when only part was late.

    Students ignore amounts already paid on time.

    Fix: Apply interest only to the unpaid or overpaid amount and for the right period.

  • Applying the nine months and one day rule to a large company.

    Students do not check the profit threshold.

    Fix: Check profits against £1,500,000, reduced for associated companies, before choosing the method.

Worked examples

Example 1

Kestrel Ltd has an accounting period ended 31 December 2025. Its corporation tax liability is £48,000 and it is not a large company. It pays the tax on 1 January 2027. Calculate the due date and the interest on the late payment.

Show the solution
  1. Due date: 31 December 2025 plus nine months is 30 September 2026. Add one day to get 1 October 2026.
  2. Months late: 1 October 2026 to 1 January 2027 is 3 months.
  3. Interest: £48,000 × 8.50% × 3 ÷ 12.
  4. £48,000 × 8.50% = £4,080 for a year.
  5. £4,080 × 3 ÷ 12 = £1,020.

Answer: The due date is 1 October 2026. Late payment interest is £1,020.

Example 2

Merlin Ltd has an accounting period ended 30 June 2026 and is not a large company. It pays £60,000 on the due date, but its correct liability is £52,000. HMRC repays the excess on 1 October 2027. Calculate the due date and the repayment interest.

Show the solution
  1. Due date: 30 June 2026 plus nine months is 31 March 2027. Add one day to get 1 April 2027.
  2. Overpayment: £60,000 − £52,000 = £8,000.
  3. Interest runs from 1 April 2027, the date of payment, to 1 October 2027. That is 6 months.
  4. Interest: £8,000 × 3.50% × 6 ÷ 12.
  5. £8,000 × 3.50% = £280 for a year.
  6. £280 × 6 ÷ 12 = £140.

Answer: The due date is 1 April 2027. Repayment interest is £140.

Exam tips

  • Write the due date out in full. A correct date often earns a mark even if the interest is wrong.
  • Read the question for whether the company is large. If profits are above £1,500,000, check for associated companies.
  • Use only the rates in the ACCA tax table. Pick underpaid or overpaid carefully because the wrong rate scores zero in an objective question.
  • Show tax, rate and months as a single line in Section C. Workings must be shown.
  • Round to the nearest £ at the end, not during the working.

Practice questions from The comprehensive computation of corporation tax liability

Corporation Tax Payment Dates and Interest on Late Tax in other exams

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

Corporation Tax Payment Dates and Interest on Late Tax: frequently asked questions

When is corporation tax due for a company that is not large?

It is due nine months and one day after the end of the accounting period. For a period ending 31 March 2026, that is 1 January 2027. This is a payment date, not the filing date.

What interest rate applies to late corporation tax in ACCA TX-UK?

The rate on underpaid tax is 8.50% a year in the ACCA tax tables. Overpaid tax earns 3.50%. The 3.75% official rate applies to beneficial loans instead.

How do I calculate interest on overdue corporation tax?

Multiply the unpaid tax by 8.50%, then by the months late divided by 12. Count from the due date to the date of payment. The interest is simple, not compound.

Is interest on late-paid corporation tax deductible?

Interest paid is treated as a non-trading loan relationship debit, so it is deductible for the company. Interest received is taxable as a non-trading credit. Questions rarely test this.