Corporation Tax Payment Deadlines and Quarterly Instalments — A Guide for Growing Trade Companies (2026)

The Normal Payment Deadline — 9 Months and 1 Day

The vast majority of trade companies fall into the "small" category, and the rule for them is straightforward but easy to misremember. Corporation Tax is due 9 months and 1 day after the end of your accounting period.

So if your company's accounting period ends on 31 March, your Corporation Tax payment is due on 1 January the following year. If your year end is 31 December, payment is due on 1 October. The accounting period is normally the same as your company's financial year, which for most owner-managed trade companies runs to the end of a chosen month.

Here is the part that catches people out: the CT600 Corporation Tax return is filed 12 months after the period end — three months after the tax is due. In other words, you have to pay the tax before you legally have to file the figures. In practice this means you should have your accounts substantially prepared well before the 9-month payment date, so you know how much to pay. Leaving the return to the 12-month deadline and only then working out the bill means you have already missed the payment date and started racking up interest.

When Does a Company Become "Large"?

The single-payment rule above only applies to companies that are not classed as large. A company is "large" for an accounting period if its taxable profits exceed £1.5 million, and "very large" if its taxable profits exceed £20 million. Once you cross the relevant threshold, you no longer pay in one go after the year end — you pay in four Quarterly Instalment Payments (QIPs).

Most trade companies are nowhere near £1.5m of profit, so the normal rule is all they ever need. But a fast-growing contractor, a company that has had an exceptional year on a big project, or a member of a group of companies can be caught — and the consequences of not realising in time are interest charges and a cash-flow shock. It pays to know where the line is.

Quick Reference: How Corporation Tax Is Paid by Company Size

Instalment Timing for Large Companies

A "large" company with a standard 12-month accounting period pays its Corporation Tax in four equal instalments, due in months 7, 10, 13 and 16 measured from the start of the accounting period. The pattern is "two during the year, two after":

• Instalment 1: 6 months and 13 days after the start of the period (month 7)
• Instalment 2: 3 months after instalment 1 (month 10)
• Instalment 3: 3 months after instalment 2 (month 13 — i.e. one month after the period ends)
• Instalment 4: 3 months after instalment 3 (month 16 — i.e. three months and 14 days after the period ends)

So two of the four payments fall during the accounting period and two fall after it. The final instalment for a large company is due roughly five and a half months earlier than the normal 9-months-and-1-day deadline a small company would enjoy — which is exactly why crossing the threshold is a real cash-flow event.

Instalment Timing for Very Large Companies

A "very large" company (taxable profits over £20 million) pays earlier still. Its four instalments fall in months 3, 6, 9 and 12 from the start of the accounting period — meaning all four payments are made within the accounting period itself, with the last one due before the year has even closed. This brings the whole tax bill forward by a full four months compared with a merely "large" company. Very few trade companies reach this size, but the rule exists and group structures can occasionally trip into it.

Associated Companies Reduce the Thresholds

The £1.5m and £20m thresholds are not fixed per company — they are divided by the number of associated companies. If two companies are associated (broadly, under common control), the large-company threshold drops from £1.5m to £750,000 each. With three associated companies it falls to £500,000 each, and so on.

This matters a great deal for trade business owners who run more than one company — for example a separate company for plant hire, a property company, or a holding company over a trading subsidiary. Associated companies count even if they are dormant for only part of the year, and even overseas companies under common control can count. Always work out your effective threshold by dividing by the number of associated companies before assuming you are "small".

The thresholds are also pro-rated for short accounting periods. If your accounting period is only 6 months long, the £1.5m threshold halves to £750,000 (and is then further divided by any associated companies). A change of year end that creates a short period can therefore pull a company into the instalment regime unexpectedly.

The Year-of-Transition Rule

HMRC builds in some protection so that a company is not thrown into quarterly instalments the very first year it has a good year. A company is not treated as large for an accounting period — even if its profits exceed £1.5m — provided that:

• its taxable profits for the period are £10 million or less (this £10m limit is itself reduced by associated companies and short periods), and
• it was not large in the previous accounting period (or did not exist in the previous 12 months).

This is genuinely useful for a growing trade company. If you have a breakout year and your profit jumps from, say, £900,000 to £1.8 million, you can stay on the normal single-payment basis for that first year — provided you were not large the year before and your profit is under £10m. The instalment regime then catches you the following year, giving you time to plan the cash flow.

Instalments Are Based on Estimates — and You Must Revise Them

A crucial feature of the instalment system is that you are paying before you know your final profit. The first instalment for a large company falls in month 7 — long before the accounts are finalised. So each instalment is based on your best estimate of the expected taxable profit for the whole period, divided into four.

As the year progresses and your figures become clearer, you are expected to revise that estimate and adjust later instalments up or down. If trading picks up and your forecast profit rises, you should increase the remaining payments; if a big job slips into the next year, you can reduce them. The estimate is not a one-off guess at the start — it is a rolling forecast you keep current.

This is where good, up-to-date management accounts earn their keep. A large company running off a shoebox of paperwork has no realistic way of estimating its instalments accurately, and that leads directly to the interest charges below.

Interest on Underpaid and Overpaid Instalments

HMRC charges interest on any instalment paid late or paid short, running from the date the instalment was due until it is paid. Equally, HMRC pays you credit interest on instalments paid early or overpaid. The rates are set by HMRC and the late-payment rate is higher than the credit-interest rate, so consistently underpaying costs you more than the equivalent overpayment earns.

Because instalments are based on estimates, HMRC looks at the position once the final liability is known and reworks the interest as if you had always known the correct figure. If your estimates were too low, you face debit interest on the shortfall for each affected instalment. If you genuinely could not have known better, the interest is usually still due — it is compensation for the timing, not a penalty — but reckless underestimating can attract penalties on top.

Paying Early to Earn Credit Interest

One practical consequence of the credit-interest rule is that a company sitting on cash can choose to pay instalments early and earn HMRC credit interest on the money from the date paid. For a cash-rich company, the credit-interest rate can be more attractive than leaving the money in a low-interest business account — and it removes any risk of underpayment interest later. It is worth comparing HMRC's current credit-interest rate against your bank's deposit rate before deciding where to hold tax money you know you will owe.

Where Marginal Relief Fits In

Corporation Tax itself is charged at the main rate on higher profits, the small profits rate on lower profits, and a tapered marginal relief applies between the lower and upper limits. Those rate bands are a separate question from when you pay — but the same theme runs through both: the limits that determine your rate, like the instalment thresholds, are reduced by associated companies and pro-rated for short periods.

For most readers the headline is simple: the overwhelming majority of trade companies are well under £1.5m of profit, so they pay Corporation Tax the normal way — one payment, 9 months and 1 day after the year end. The instalment rules only bite for the genuinely large, the fast-growing, and companies in groups where associated-company divisions pull the threshold down. Knowing the line is there means you will not be caught out when your business has the year that crosses it.

Worked Timeline — A Large Company With a 31 March Year End

Suppose a growing groundworks company has a single accounting period running from 1 April 2026 to 31 March 2027, expects taxable profits of around £2 million, has no associated companies and was already large in the prior year (so the year-of-transition rule does not apply). It is "large", so it pays in four instalments based on its estimated £2m profit:

• Instalment 1 — 14 October 2026 (month 7, 6 months and 13 days after the period started): pay one quarter of the estimated bill.
• Instalment 2 — 14 January 2027 (month 10): another quarter, revised if the profit forecast has moved.
• Instalment 3 — 14 April 2027 (month 13, two weeks after the year end): another quarter, now using near-final figures.
• Instalment 4 — 14 July 2027 (month 16): the final quarter, balancing the account to the true liability.

Notice that this company has fully paid its Corporation Tax by mid-July 2027, whereas a small company with the same 31 March 2027 year end would not have to pay a penny until 1 January 2028. The CT600 return is still filed by 31 March 2028 in both cases — so the large company pays its entire bill nearly nine months before it files. That gap between payment and filing is the heart of why estimating well, and keeping the estimate current, matters so much for larger trade companies.

Practical Takeaways

• Most trade companies pay CT once, 9 months and 1 day after the period end — and that is before the return is even due.
• Get your accounts substantially done before the payment date, not the filing date, so you know what to pay.
• You become "large" over £1.5m profit and "very large" over £20m — but those limits are divided by associated companies and pro-rated for short periods.
• Large companies pay in instalments at months 7, 10, 13 and 16; very large companies at months 3, 6, 9 and 12.
• The year-of-transition rule can keep you on the normal basis for your first big year if profits are £10m or less and you were not large before.
• Instalments are estimates — keep revising them, and remember HMRC charges interest on shortfalls and pays interest on overpayments.