When you run a limited company, you must file and pay your corporation tax return annually. You’ll have to send over your return, alongside some other vital documents, to HMRC. And decide how you’re going to pay it.
What else is there that you need to know? Quite a bit, actually. Let’s dive in.
Working out how much to pay
Depending on your taxable profits, your yearly corporation tax will vary as of 1 April 2023.
If you:
- Made less than 50,000 in profit – you’ll pay a flat 19% rate on those profits
- Made over £250,000 – you’ll pay a higher rate of 25%.
If you’re between those bands, marginal relief will apply at a tapered rate.
If you don’t owe any corporation tax, you’ll need to send through a no corporation tax payment due form alongside your corporation tax return.
So when should I pay?
Most businesses will have to pay corporation tax once a year – you’ll have nine months and one day after your accounting period to pay the tax due.
Usually, the accounting period is the same as your business’s financial year. Still, some startups may run through two periods in their first year of operation.
You’ll need to pay in instalments if you’re recording more than £1.5 million in annual profits.
How do I pay corporation tax?
To pay corporation tax, you’ll need to choose your method. These are:
- Direct debit
- Online banking
- Cheque or visiting your local branch.
If you operate as part of a group, you’ll likely be able to pay your corporation tax bill through a group pay arrangement.
Make sure you note the time it will take for your money to go through. For example: if your payment date is on a bank holiday, you’ll need to send it through in advance of that date so that your bank and HMRC has time to process it.
Once you’ve chosen your method, you’ll need to provide your 17-digit corporation tax reference number and ensure it’s for the accounting period you’re paying for.
The reference number will be listed on your “notice to deliver tax return” letter, on HMRC’s reminders and notices, or listed in your HMRC online company account.
There’s a new number for each accounting period, so check that you’ve got the correct one. If you use the wrong number, your payment will be delayed.
Direct debit
You can pay directly through your company’s HMRC online account.
The payment will process in five working days after setting up the direct debit. Once authorised, your direct debits usually take only three days to make their way through the system.
Online and telephone banking
Make sure to use your “notice to deliver your tax return” to find which bank account to pay into if you make an online or telephone payment.
The payments will usually reach HMRC on the same day you paid them.
You can also use your company credit or debit card to make this payment – but it will come with a fee. You need to make payment in full (if you don’t have the funds, you’ll have to use a different method).
At your bank or building society
To pay at your bank, you’ll need a slip from HMRC that states you can make your payment there.
If you’re paying via cheque, make it payable to “HM Revenue and Customs only” and write your corporation tax payment reference on the back.
This will take around three working days to reach HMRC.
Don’t miss your corporation tax return
As a business owner, we know you’ve got a lot on your plate. But don’t worry, we’re here to help lighten the load.
Don’t forget about your corporation tax bill – paying it accurately and on time is crucial to avoid penalties. If you pay early, you might even get some interest from HMRC.
We’ll ensure your accounts and books are all in order, so you don’t have to stress about the administrative side of things.
And we’re here to help with anything else you need, so when it’s time to file your return, you’re in control and can focus on what matters – taking care of your business.
Get in touch with us today to see how we can help you submit your corporation tax bill.
