Corporation Tax late payment penalties

Interest from day one

If Corporation Tax is paid after the deadline (9 months and 1 day after period end), HMRC charges late payment interest from the day after the deadline. The interest rate is set by HMRC and tracks the Bank of England base rate plus 2.5%.

Unlike Self Assessment or VAT, there are no separate fixed late payment penalties — just the interest charge.

For large companies on quarterly instalments

Large companies (profits over £1.5m) pay Corporation Tax in four quarterly instalments. Late payments on each instalment trigger interest separately, and HMRC actively reviews these payments.

Time to Pay

If your company can't pay, contact HMRC's Business Payment Support Service before the deadline. A Time to Pay arrangement spreads the payment over months. Interest still accrues, but you avoid escalating enforcement.

HMRC usually agrees Time to Pay if the company is viable and the cash flow problem is short-term. They want to see realistic monthly figures and a credible plan.

What if you can't pay at all?

Persistent failure to pay Corporation Tax is one of the most common triggers for HMRC winding-up petitions. Get advice from an insolvency practitioner before things escalate — sometimes a Company Voluntary Arrangement or restructuring is better than liquidation.

Action plan if you'll be late

• Pay what you can immediately — interest applies only to unpaid amounts
• Contact HMRC before the deadline to request Time to Pay
• Keep clear records of every payment made and HMRC reference
• If facing serious cash issues, get insolvency advice before HMRC escalates