Taxation (UK) · The effect of a group corporate structure for corporation tax purposes

Group Payment of Tax and Quarterly Instalments for Large Companies

Updated 11 October 2026 · Fact-checked

A company pays corporation tax by quarterly instalments if its augmented profits exceed £1,500,000 divided by the number of associated companies, including itself, and time-apportioned for short periods. Count the group, work out augmented profits, compare with the reduced threshold, then pay four equal instalments in months 7, 10, 13 and 16.

Understand Group Payment of Tax and Quarterly Instalments

Most companies pay corporation tax nine months and one day after the end of the accounting period. Large companies cannot wait that long. They pay in four quarterly instalments, and the first falls due before the period has even ended.

A company is large when its augmented profits exceed the profit threshold. The tax tables give £1,500,000 for a 12-month period. Augmented profits are taxable total profits plus exempt dividends received from non-group companies. Dividends from group companies are ignored.

Group status matters because the threshold is shared. Divide £1,500,000 by the number of associated companies, counting the company itself. A stand-alone company has a threshold of £1,500,000. A company in a group of four has £375,000. Small groups can therefore be pushed into instalments even when each company looks modest.

This is the same associated-company count used to cut the £50,000 and £250,000 limits for the small profits rate and marginal relief. Count once, then use the number for both tests.

There is also a very large company category with a much higher profit threshold, and its instalments fall earlier. That threshold is also divided by the number of associated companies. It is not in the tax tables you are given, and TX questions mostly test the large company rules. Check your study text for how far your sitting goes.

Key rules to remember

Large company threshold (12-month period): £1,500,000 ÷ number of associated companies (including the company itself); Large if augmented profits EXCEED this figure. The £1,500,000 is given in the tax tables.
Short accounting period: Threshold = £1,500,000 × months in period ÷ 12 ÷ number of associated companies; Time-apportion first, then divide by the number of associated companies.
Augmented profits: Taxable total profits + exempt dividends received from non-group companies; Dividends from 51% group companies are left out.
Instalment amount: Estimated corporation tax liability for the period ÷ 4; Each of the four instalments is 25% of the liability for a 12-month period.
Instalment due dates (12-month period): 14th day of months 7, 10, 13 and 16 after the start of the accounting period; The first is 6 months and 13 days after the period starts.
Exception for newly large companies: Not treated as large if augmented profits ≤ £10,000,000 ÷ number of associated companies and the company was not large in the previous period; The £10,000,000 is not in the tax tables, so learn it. Check how your study text applies it.

How to solve Group Payment of Tax and Quarterly Instalments questions

Use the same sequence for any question asking whether a company pays by instalments, and when.

1Count the associated companies: the company, its 51% subsidiaries and its 51% parent, plus the parent's other 51% subsidiaries. Ignore dormant companies. Holdings of 50% or less do not count.
2Work out augmented profits: taxable total profits plus exempt dividends from non-group companies. Leave out group dividends.
3Adjust the threshold: £1,500,000, time-apportioned if the period is shorter than 12 months, then divided by the number of associated companies.
4Compare. If augmented profits exceed the threshold, the company is large. Equal to the threshold is not large.
5Check the exception: if profits are no more than £10,000,000 divided by the associated companies and the company was not large last year, it does not pay by instalments.
6Compute the corporation tax liability, using the associated company count for marginal relief limits if needed.
7Divide the liability by four and set out the due dates: the 14th day of months 7, 10, 13 and 16 from the start of the period.

Quickest way: Count, divide, compare

When to use it: Use this for objective test questions where you only need to decide whether a company is large.

Write the number of associated companies, counting the company itself.
Divide £1,500,000 by that number. Multiply by months ÷ 12 if the period is short.
Write down augmented profits, adding non-group dividends.
Large only if augmented profits are strictly above the threshold.
For dates, count 7, 10, 13 and 16 months from the period start and use the 14th day.

Common mistakes in Group Payment of Tax and Quarterly Instalments

Leaving the company itself out when counting associates
You think of associates as 'the other companies'.
Fix: Always count the company itself. A parent with two subsidiaries means three companies and a threshold of £500,000.
Using taxable total profits instead of augmented profits
Taxable total profits is the figure you have just computed, so you reuse it.
Fix: Add exempt dividends from non-group companies before comparing with the threshold.
Including dividends received from group companies in augmented profits
You add every dividend automatically.
Fix: Dividends from 51% group companies are excluded. Only non-group dividends are added.
Counting a company in which the group holds only 30% or 50% as associated
Any shareholding feels like a connection.
Fix: Associated needs control of more than 50%, so 51% or more. Holdings of 50% or less are not counted.
Forgetting to time-apportion the threshold for a short period
You use £1,500,000 straight from the tax tables.
Fix: Multiply by months ÷ 12 first, then divide by the number of associated companies.
Using the nine months and one day date for a large company
It is the normal payment date and the one you know best.
Fix: Large companies pay in four instalments on the 14th of months 7, 10, 13 and 16 from the period start.

Worked examples

Example 1

P Ltd has two wholly owned trading subsidiaries and is not dormant or part of a larger group. For the year ended 31 December 2025 its taxable total profits are £450,000 and it received £70,000 of dividends from unconnected UK companies. Is P Ltd large? If so, state the instalment amounts and dates.

Show the solution

Associated companies: P Ltd plus two subsidiaries = 3.
Threshold: £1,500,000 ÷ 3 = £500,000.
Augmented profits: £450,000 + £70,000 = £520,000.
£520,000 exceeds £500,000, so P Ltd is large.
Marginal relief limits are £50,000 ÷ 3 = £16,667 and £250,000 ÷ 3 = £83,333. Augmented profits are far above the upper limit, so the main rate applies.
Corporation tax: £450,000 × 25% = £112,500.
Each instalment: £112,500 ÷ 4 = £28,125.
The period starts on 1 January 2025. Months 7, 10, 13 and 16 give 14 July 2025, 14 October 2025, 14 January 2026 and 14 April 2026.

Answer: P Ltd is large. It pays four instalments of £28,125 on 14 July 2025, 14 October 2025, 14 January 2026 and 14 April 2026.

Example 2

Q Ltd prepares accounts for a nine-month period. Its augmented profits are £600,000. It owns 60% of R Ltd and 30% of T Ltd. No other companies are related. Q Ltd was also a large company in the previous accounting period. Is Q Ltd a large company for this period?

Show the solution

Associated companies: Q Ltd and R Ltd (60% is above 50%). T Ltd at 30% does not count. Total = 2.
Time-apportion the threshold: £1,500,000 × 9 ÷ 12 = £1,125,000.
Divide by 2: £1,125,000 ÷ 2 = £562,500.
Compare: £600,000 exceeds £562,500, so Q Ltd is large on these figures.
Check the £10,000,000 exception: £10,000,000 × 9 ÷ 12 ÷ 2 = £3,750,000. Augmented profits of £600,000 are below this, so the exception would apply if Q Ltd had not been large in the previous period. The question says it was large in the previous period, so the exception does not apply.

Answer: Yes. Q Ltd is large, because augmented profits of £600,000 exceed the reduced threshold of £562,500 and the £10,000,000 exception is unavailable as it was large in the previous period. It must pay by quarterly instalments.

Exam tips

In an OT case, find the shareholdings first. The associated company count drives several later questions.
Check whether the question gives dividends. If so, the instalment test and marginal relief both use augmented profits, so calculate it once and reuse it.
Write the threshold calculation out even in a Section C answer. Marks are often given for the divisor and the comparison.
Learn the due date pattern: months 7, 10, 13 and 16, on the 14th. Do not mix it with the nine months and one day date.
Read the period length. A short period changes the threshold and also the instalment timetable.

Practice questions from The effect of a group corporate structure for corporation tax purposes

Group Payment of Tax and Quarterly Instalments in other exams

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

Group Payment of Tax and Quarterly Instalments: frequently asked questions

How do I know if a company is large for quarterly instalments in ACCA TX?

Compare its augmented profits with £1,500,000 divided by the number of associated companies, including itself. Time-apportion the £1,500,000 for a short period. If augmented profits are higher, the company is large.

Do group dividends count towards augmented profits?

No. Dividends received from 51% group companies are excluded. Only exempt dividends from non-group companies are added to taxable total profits.

When are the quarterly instalments due?

For a 12-month period they are due on the 14th day of months 7, 10, 13 and 16 after the start of the accounting period. Each instalment is one quarter of the estimated liability.

Does a company with a 50% subsidiary count that subsidiary as associated?

No. Associated companies need control of more than 50%, so at least 51%. A 50% holding does not count towards the divisor.