Late payment of Corporation Tax: interest and penalties
Late Corporation Tax is charged daily interest from the day after the due date. See the current rate, a worked example and what to do if you cannot pay.
In one sentence
If you pay Corporation Tax late, HMRC charges daily interest from the day after the due date, 7.75% from 9 January 2026, rather than a fixed penalty.
Quick answer
- Due date: 9 months and 1 day after the accounting period ends
- Interest runs daily from the day after the due date until you pay
- Rate: Bank of England base rate plus 4%, published as 7.75% from 9 January 2026
- No fixed late payment penalty, but late filing of the CT600 has its own penalties
- Late payment interest is tax deductible
What happens if you pay Corporation Tax late?
HMRC charges late payment interest, not a fixed penalty. Interest runs every day from the day after the due date until the day you pay. The due date is normally 9 months and 1 day after your accounting period ends.
The rate is the Bank of England base rate plus 4%. HMRC has published 7.75% from 9 January 2026. The rate moves with the base rate, so check the current figure on GOV.UK before you work out a bill.
Interest is automatic. HMRC does not charge interest on interest, and you cannot appeal an interest charge. If you think HMRC has got it wrong, you can make an interest objection in writing.
Is there a penalty for late payment of Corporation Tax?
Not for a standard late payment. Unlike Self Assessment or VAT, there is no fixed percentage surcharge for paying Corporation Tax late. The costs that can apply are:
| Situation | Cost |
|---|---|
| Tax paid after the due date | Late payment interest, daily, from the day after the due date |
| CT600 filed late | Separate late filing penalties: £200, another £200 at 3 months, then 10% of unpaid tax at 6 and 12 months |
| Large company deliberately underpays or misses instalments | HMRC can charge a penalty, but only after the return is delivered and the normal due date has passed |
| Tax still unpaid and no contact with HMRC | Collection action, including a debt agency, taking money from your bank account, court action or closing down the company |
Late filing is the expensive mistake. Many people search for late payment penalties when the real risk is the late CT600. Read the late filing penalties guide.
Worked example: how much interest does late Corporation Tax cost?
Your company owes £20,000 and pays 90 days after the due date. Using the 7.75% rate, a simple estimate is:
£20,000 x 7.75% x 90 / 365 = about £382
This is an illustration only. The real figure changes if the rate moves during the period. HMRC calculates it for you, and you can ask for a statement.
Late payment interest is tax deductible for Corporation Tax. You can include it in your accounts for the period in which it arose.
Large companies paying by instalments
Companies with taxable profits above £1.5 million (reduced if there are associated companies) normally pay in four instalments. A 12-month period has instalments 6 months and 13 days after the period starts, then every 3 months. Interest runs on each late instalment. It is worked out after the normal due date has passed and the return is in. A lower rate applies up to the normal due date and a higher rate after it.
Cannot pay Corporation Tax on time? Set up a payment plan
Contact HMRC before the deadline. You may be able to set up a payment plan to clear the overdue bill in monthly instalments. HMRC will check that it is affordable. For a company, they will ask about your income and spending, and expect you to reduce the debt where you can, for example by releasing stock or other assets. Interest still builds up, so paying more sooner costs less.
There is no fixed time limit on a plan. It depends on what you owe and what the company can afford. If you miss an instalment, HMRC will contact you and try to renegotiate. See our Time to Pay guide.
What if you cannot pay at all?
Persistent non-payment can lead to a winding-up petition. Get advice from a licensed insolvency practitioner early. Free debt advice is also available from MoneyHelper in England and Wales.
Action plan if you will be late
- Pay what you can now. Interest applies only to the unpaid balance.
- Use the 17-character Corporation Tax payment reference for the right accounting period.
- Contact HMRC before the deadline about a payment plan.
- File the CT600 on time even if you cannot pay, so you avoid filing penalties.
- Keep a record of every payment and conversation with HMRC.
Not sure of your own dates? See the CT600 and Corporation Tax deadlines guide, or ask us about our Corporation Tax service.
Frequently asked questions
What is the interest on late payment of Corporation Tax?
HMRC charges late payment interest at the Bank of England base rate plus 4%. HMRC published 7.75% from 9 January 2026. Interest runs daily from the day after the due date until you pay, and the rate changes when the base rate changes.
Is there a penalty for paying Corporation Tax late?
There is no fixed percentage penalty for paying standard Corporation Tax late, only interest. Penalties can apply to late filing of the CT600, and to large companies that deliberately miss or understate instalment payments.
What happens if you pay Corporation Tax late?
Interest starts the day after the due date and is added automatically. If you stay silent and do not pay, HMRC can use a debt agency, take money from your bank account, go to court or close the company down.
Can I appeal Corporation Tax late payment interest?
You cannot appeal an interest charge, but you can make an interest objection in writing if you think HMRC has made a mistake.
Is late payment interest tax deductible?
Yes. GOV.UK says late payment interest paid to HMRC is deductible for Corporation Tax. Include it in the accounts for the period in which it arose.
What if my company cannot pay Corporation Tax on time?
Contact HMRC before the deadline. You may be able to set up a payment plan to clear the bill in monthly instalments, based on what the company can afford. Interest still builds up on the unpaid balance.
Need help with this?
Book a call and we will explain the next steps clearly.