How to Pay Your Corporation Tax

Paying Corporation Tax is an essential responsibility for limited companies in the UK. Here’s a step-by-step guide to help you understand how to pay your corporation tax.

How to Pay Your Corporation Tax

Understand Your Tax Liability

Before you can pay your Corporation Tax, you need to determine how much you owe. Your tax liability is based on your company’s profits for the accounting period. Make sure you have accurate financial records and calculate your taxable profits correctly.

Register with HMRC

If you’re setting up a new limited company, you must register for Corporation Tax with HMRC within three months of starting your business. You can do this online through the HMRC website or by contacting HMRC directly.

Obtain Your Unique Taxpayer Reference (UTR)

Once you’ve registered for Corporation Tax, HMRC will send you a letter containing your Unique Taxpayer Reference (UTR). This is a 10-digit number that you’ll need for all correspondence and payments related to your Corporation Tax.

Keep Track of Deadlines

HMRC imposes strict deadlines for paying Corporation Tax. Your payment deadline is usually nine months and one day after the end of your accounting period. Make sure you mark this date in your calendar and set reminders to avoid late payment penalties.

Calculate Your Tax Bill

Using your company’s annual accounts, calculate the amount of Corporation Tax you owe. Remember to take into account any deductions, reliefs, or allowances that may apply to your business.

Set Up Your Payment Method

HMRC offers several payment methods for Corporation Tax, including:

Direct Debit
Bank transfer
Debit or credit card
CHAPS
BACS
Online or telephone banking

Choose the method that is most convenient for you and ensure that you have sufficient funds available to cover your tax bill.

Make Your Payment

On or before the deadline, make your Corporation Tax payment to HMRC using the chosen payment method. Include your company’s UTR as the payment reference to ensure that HMRC correctly allocates the payment to your account.

Keep Records

After making your payment, retain records of the transaction for your company’s financial records. This includes confirmation of payment from your bank or payment provider, as well as any correspondence from HMRC acknowledging receipt of your payment.

Review and Adjust

After paying your Corporation Tax, take the time to review your company’s financial performance and tax obligations. Identify any areas where you can optimise your tax planning and make adjustments as necessary to minimise your tax liabilities in future accounting periods.

Understanding How to Pay Your Corporation Tax

Paying Corporation Tax is a fundamental aspect of running a limited company in the UK. By understanding the process and meeting your obligations in a timely manner, you can ensure compliance with HMRC regulations and avoid penalties. If you have any questions or need assistance, don’t hesitate to seek professional advice from a qualified accountant or tax advisor.

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