Advanced Taxation (UK) · Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects

Administration, Interest and Payment of Corporation Tax

Updated 11 October 2026 · Fact-checked

A company pays corporation tax nine months and one day after its accounting period ends, unless it is large and pays by quarterly instalments. It files its return within 12 months of the period end. Late or under-paid tax carries interest, and late filing or errors carry penalties. Interest rates are in the ATX-UK tax tables.

Understand Administration, Interest and Payment of Corporation Tax

Corporation tax works on self-assessment. The company works out its own tax, files a return and pays the tax. HMRC does not send a bill. You need to know three things: when to pay, when to file, and what it costs to get either wrong.

For most companies, the payment date is nine months and one day after the end of the accounting period. For a year ending 31 March 2026, tax is due on 1 January 2027. Interest runs from that date if tax is paid late.

A large company is one whose profits exceed the £1,500,000 threshold in the tax tables. That limit is divided by one plus the number of associated companies, and it is reduced for short accounting periods. Large companies pay by quarterly instalments instead of paying nine months and one day after the period end. Instalment dates, the profit test and the very large company rule are not in the tax tables, so learn them.

A large company pays on the 14th day of months 7, 10, 13 and 16 from the start of the accounting period. For a 12-month period, the first instalment is six months and 13 days after the start, and the next three follow at three-month intervals.

A company is very large if its profits exceed £20 million, divided by one plus the number of associated companies. A very large company pays earlier, on the 14th day of months 3, 6, 9 and 12 of the accounting period.

The company tax return (CT600) is due 12 months after the end of the accounting period, or three months after HMRC's notice to deliver a return if that is later. Late filing brings fixed penalties, and a further tax-geared penalty if the return is very late. Learn those penalty amounts, because the tax tables do not give them.

Interest is charged on underpaid tax and paid on overpaid tax. The tables give assumed rates: 8.50% on underpaid tax and 3.50% on overpaid tax. Interest on underpaid tax is deductible as a non-trading loan relationship debit, normally against non-trading income. It is not a trading expense. Interest on overpaid tax is taxable as a non-trading loan relationship credit. Errors in returns carry penalties based on behaviour, and the table gives the percentages.

Key rules to remember

Normal payment date: Accounting period end + 9 months + 1 day; Applies to companies that are not large. Year to 31 March 2026 is due 1 January 2027.
Filing deadline: 12 months after the end of the accounting period; Or three months after the notice to file if that is later. Learn this, it is not in the tax tables.
Large company threshold: £1,500,000 ÷ (1 + number of associated companies); Profits above this level mean quarterly instalments. Time-apportion for short periods. Check the exceptions in your notes.
Interest on underpaid tax: Tax underpaid × 8.50% × days late ÷ 365; Rate given in the tax tables. Use months if the question works in months.
Interest on overpaid tax: Tax overpaid × 3.50% × period ÷ 12 months; Rate given in the tax tables. The interest received is taxable.
Standard error penalties: Careless: max 30%, min 0% unprompted, 15% prompted. Deliberate not concealed: max 70%, min 20% unprompted, 35% prompted. Deliberate and concealed: max 100%, min 30% unprompted, 50% prompted.; Applied to the potential lost revenue. All given in the tax tables.

How to solve Administration, Interest and Payment of Corporation Tax questions

Use this method for any administration question. It stops you mixing up dates and rates.

1Identify the accounting period end date. Check whether the company has a period longer than 12 months or a short period.
2Decide if the company is large. Compare profits with £1,500,000 divided by (1 + associated companies), adjusted for short periods.
3Work out the due date: nine months and one day for a normal company, or the instalment dates for a large company.
4Work out the filing deadline: 12 months after the period end, or three months after the notice if later.
5Compare the actual payment or filing date with the due date. Count the days or months late.
6Calculate interest with the right rate from the tax tables: 8.50% for underpaid, 3.50% for overpaid.
7If the question mentions an error, identify the behaviour and give the penalty range from the table.
8State your conclusion clearly in the form asked, such as a letter, memo or short report.

Quickest way: Date first, rate second

When to use it: Use this for short lateness and interest questions where you have about five minutes.

Write the period end and add nine months and one day. Write the date in the margin.
Write the filing date in the margin as well.
Count the late period and tick whether it is days or months.
Pick the interest rate from the tax tables and calculate: tax × rate × time.
Add one line on the tax effect: underpaid interest is a deductible non-trading loan relationship debit, not a trading expense. Overpaid interest is a taxable non-trading loan relationship credit.

Common mistakes in Administration, Interest and Payment of Corporation Tax

Giving the due date as nine months after the period end, without the extra day.
Students remember '9 months' and drop the 'and one day'.
Fix: Always write 'nine months and one day'. For 31 March year-ends, the date is 1 January.
Treating the filing deadline and payment deadline as the same date.
Both relate to the period end, so they blur together.
Fix: Payment is nine months and one day after the period end. Filing is 12 months after. Write both separately.
Using the £1,500,000 threshold without dividing by associated companies.
Students forget associated companies when the question mentions a group.
Fix: Divide by one plus the number of associated companies. Reduce it for a short accounting period.
Using the wrong interest rate or applying the underpaid rate to a refund.
The two rates are close together in the tax tables.
Fix: Underpaid is 8.50%. Overpaid is 3.50%. Label each rate in your working.
Forgetting the tax treatment of interest.
Students stop once they have the number.
Fix: Add one sentence: interest paid on late tax is deductible as a non-trading loan relationship debit (not a trading expense), and interest received on a refund is taxable as a non-trading loan relationship credit.
Applying the wrong penalty range to an error.
Students mix up unprompted and prompted disclosure columns.
Fix: Identify behaviour first, then whether HMRC found the error or the company told HMRC. Use the matching column in the table.

Worked examples

Example 1

Delta Ltd has a single 12-month accounting period ending on 30 June 2026. It has no associated companies and its profits are well below the large company limit. Corporation tax of £84,000 was paid on 1 June 2027. State the due date and calculate the interest on late paid tax, using the rate in the tax tables and counting in whole months.

Show the solution

The normal due date is nine months and one day after the period end of 30 June 2026. That is 1 April 2027.
The tax was paid on 1 June 2027, so it was two months late.
The interest rate on underpaid tax is 8.50%.
Interest = £84,000 × 8.50% × 2 ÷ 12.
£84,000 × 8.50% = £7,140 for a full year.
£7,140 × 2 ÷ 12 = £1,190.
The interest is deductible as a non-trading loan relationship debit, normally against non-trading income. It is not a trading expense.

Answer: The tax was due on 1 April 2027. Interest on the late payment is £1,190, and it is deductible as a non-trading loan relationship debit.

Example 2

Echo Ltd prepares accounts for the year ended 31 December 2025. It has no associated companies. Its profits are £1,200,000. Its final corporation tax liability is £300,000. It overpaid £10,000 of tax, which HMRC repaid three months after the due date. Explain whether Echo Ltd pays by instalments, give the filing deadline and calculate the interest it receives, using whole months.

Show the solution

The large company limit is £1,500,000 with no associated companies.
Profits of £1,200,000 are below the limit, so Echo Ltd is not large and does not pay by instalments.
The payment date is nine months and one day after 31 December 2025, which is 1 October 2026.
The filing deadline is 12 months after the period end, which is 31 December 2026.
The overpaid interest rate is 3.50%.
Interest = £10,000 × 3.50% × 3 ÷ 12 = £87.50.
Round to the nearest pound as the instructions require: £88.
The interest received is taxable as non-trading loan relationship income.

Answer: Echo Ltd does not pay by instalments. Tax is due on 1 October 2026 and the return is due by 31 December 2026. Interest received is about £88 and is taxable as non-trading loan relationship income.

Exam tips

Learn the dates by heart. The tax tables give the rates but not the due dates or filing deadlines.
Write the date and the reason together, for example '1 January 2027, nine months and one day after 31 March 2026'. This earns the mark even if the date slips.
Show the rate you used and say whether it is the underpaid or overpaid rate. This protects method marks.
In advice questions, mention cash flow. Late payment costs interest and instalments bring payments forward.
Add the tax treatment of interest in one line. It is an easy mark that students often skip.

Practice questions from Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects

Administration, Interest and Payment of Corporation Tax in other exams

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

ACCA Applied SkillsCorporation Tax Payment Dates and Interest on Late Tax

Administration, Interest and Payment of Corporation Tax: frequently asked questions

What is the corporation tax payment deadline?

For most companies, it is nine months and one day after the end of the accounting period. For a year ending 31 March 2026, that is 1 January 2027. Large companies pay by quarterly instalments instead.

When must the company tax return be filed?

The return is due 12 months after the end of the accounting period, or three months after HMRC issues a notice to file if that is later. Late filing brings penalties. Learn the penalty amounts, as they are not in the tax tables.

What interest rates do I use for late paid corporation tax?

The ATX-UK tax tables give 8.50% on underpaid tax and 3.50% on overpaid tax. These are the assumed rates, so use them unless the question says otherwise.

How are quarterly instalments decided for large companies?

A company pays by instalments when its profits exceed £1,500,000, divided by one plus the number of associated companies and reduced for short periods. Learn the instalment dates and the very large company rule, as they are not in the tax tables.