Corporation tax is normally due to HMRC nine months and one day after your company’s accounting period ends. However, if your company is large or meets certain criteria, you may be required to make quarterly instalment payments (QIPs) during the accounting period.
Large companies generally need to pay corporation tax in instalments rather than in one lump sum. A company is usually classed as large for quarterly instalments if its profits exceed a statutory threshold — often £1.5 million (though this can vary and is adjusted for group membership and short accounting periods).
Instalment rules also apply if your company is part of a group with combined profits that exceed the threshold.
Smaller companies that fall below the threshold usually pay their corporation tax in one payment after the year end.
Quarterly instalments are based on the company’s current accounting period profits, not the previous year’s figures.
The general process is:
Estimate the taxable profits for the period
Calculate the corporation tax due on those profits
Divide the tax liability into four quarterly amounts
Each instalment is normally calculated as 25% of the estimated tax due for the year.
Instalments are usually payable on the following dates:
6 months and 13 days after the start of the accounting period
9 months and 13 days
12 months and 13 days
15 months and 13 days
If your period isn’t exactly 12 months, the instalment dates are adjusted accordingly.
Making quarterly instalments:
Improves cash flow management for the business
Reduces the risk of large tax bills arriving all at once
Keeps your company compliant with HMRC’s payment regime
Minimises interest charges that may arise from late or missed payments
Failing to make the required instalments on time can trigger interest and penalties.
Estimating profits accurately is key. The estimate should reflect:
Actual trading results to date
Reasonable predictions for the remainder of the accounting period
Capital allowances and other tax adjustments
If profits are expected to fall significantly from earlier predictions, you may need to revise your instalment estimates and adjust payments accordingly.
HMRC charges interest on instalments that are late or underpaid. There can also be penalties for:
Missing an instalment date
Underestimating tax due without reasonable care
Failing to revise instalments when circumstances change
Maintaining good records and forecasting tax carefully helps avoid extra charges.
Smaller companies with profits below the statutory threshold generally aren’t required to pay quarterly instalments. However, you still must manage and pay your full corporation tax bill on time after the year end.
Companies with short accounting periods or adjusted thresholds may have different instalment requirements, so professional review is important.
Where a company is part of a group, the profits of all group members can be aggregated for instalment threshold purposes. This means:
Group companies may trigger quarterly instalments even if an individual company’s profits are below the threshold
Instalment dates and calculations may be influenced by group accounting periods
Special rules apply, and careful planning ensures compliance.
Quarterly instalment payments can be complex, especially when your business is growing, has changing profit patterns, or is part of a group structure. Applegrow Financial Advisors can assist you with:
Forecasting taxable profits accurately
Calculating quarterly instalment amounts
Planning cash flow to meet payment schedules
Reviewing and revising instalment estimates when trading conditions change
Minimising interest and penalties through careful compliance
We can also ensure your corporation tax strategy aligns with your broader financial planning.
Contact Applegrow Financial Advisors today for tailored support and expert guidance on quarterly corporation tax payments and compliance.
