How to pay corporation tax online is something every UK company needs to understand. You are responsible for calculating the amount due, filing the correct return, and making sure the payment reaches HMRC on time. If you miss the deadline, HMRC will add penalties and interest that can quickly add up.
If you haven’t yet set up your company, the first step is to register your company. Once incorporated, HMRC will issue your Unique Taxpayer Reference (UTR). With that number, you can register for Corporation Tax, file your return, and pay your first bill online.
In this guide, we’ll:
- Explain what Corporation Tax is and who needs to pay it
- Walk through the current Corporation Tax rates
- Show you the different ways to pay Corporation Tax online
- Cover deadlines and what happens if you miss them
- Share practical tips to reduce your Corporation Tax bill
What is Corporation Tax and who needs to pay it?
Corporation Tax is the tax that UK companies pay on their profits. This includes trading profits, investment income, and any gains from selling assets. Unlike income tax, there is no personal allowance, so all taxable profit is subject to Corporation Tax.
You must pay Corporation Tax if you are:
- A UK limited company
- A foreign company with a UK branch or office
- Certain unincorporated associations, such as clubs or societies
If your company is registered in the UK, you will usually pay Corporation Tax on all taxable income worldwide. If your business is registered outside the UK but has a UK branch, you will only pay on the income linked to your UK activities.
It is also important to note that HMRC does not issue a bill. Companies are required to calculate the amount owed themselves, file a Company Tax Return, and then pay the Corporation Tax due.
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How much Corporation Tax do you pay?
The rate of Corporation Tax depends on your company’s taxable profits. For the financial year starting 1 April 2023, the rates are:
| Taxable profit | Corporation Tax rate |
| Up to £50,000 | 19% (small profits rate) |
| £50,001–£250,000 | Marginal relief applies |
| Over £250,000 | 25% (main rate) |
If your profits fall between £50,001 and £250,000, your company may qualify for marginal relief. This gradually increases the amount of tax you pay, rather than jumping straight from 19% to 25%.
Most small businesses will pay at the 19% rate. Larger or growing companies should review HMRC’s marginal relief calculator to work out their effective rate.
Remember, HMRC will not send you a bill. You must calculate the amount due in your Company Tax Return and make payment to HMRC directly..
How to pay Corporation Tax online
To pay Corporation Tax online, you first need your 17-character Corporation Tax reference. You can find it in your HMRC online account, on your ‘notice to deliver a Company Tax Return’, or via the Companies House search. This reference ensures HMRC matches your payment to the correct account.
Once you have the reference, there are several ways to pay your corporate tax bill online. Processing times vary, so it is best to pay a few days early to avoid penalties.
Pay through online or telephone banking
You can use Faster Payments, Bacs, or CHAPS. Faster Payments usually clear on the same day, while Bacs may take three working days.
Pay by debit or corporate credit card online
Log into your HMRC online account and follow the prompts. Debit cards can be personal or company cards. If paying by credit card, it must be a corporate card.
Pay by Direct Debit
You can set up a Direct Debit in your HMRC account. The first payment by Direct Debit takes five working days to process, and later payments usually take three.
Pay through your bank
If HMRC has sent you a payment slip, you can pay at your bank or building society using cash or cheque. Always write your 17-character reference on the cheque.
When is the Corporation Tax deadline?
Most companies must pay Corporation Tax within 9 months and 1 day after the end of their accounting period. For most businesses, this is the same as the company’s financial year.
For example, if your accounting period ends on 31 March, your Corporation Tax must be paid by 1 January of the following year.
For larger companies with annual profits above £1.5 million, Corporation Tax is paid in installments. HMRC sets out different rules depending on whether your profits are between £1.5 million and £20 million, or higher.
It is always best to pay a few days early. Payments can take up to 5 working days depending on the method, and deadlines that fall on weekends or bank holidays still apply. If your payment reaches HMRC late, penalties and daily interest will be charged.
Keep all company spending on the business account from day one. It keeps records clean and makes tax time easier.
3 ways to reduce your Corporation Tax bill
Paying Corporation Tax is unavoidable, but there are legal ways to lower how much you owe. Small changes in planning can make a noticeable difference.
Claim all allowable expenses
Everyday business costs such as office supplies, software, travel, and staff salaries can be deducted from your profits before Corporation Tax is calculated. Keeping detailed records ensures you do not miss anything.
Make employer pension contributions
Payments into a registered pension scheme for directors or staff are tax deductible. This reduces your taxable profits while also investing in retirement.
Donate to charity
Donations to UK-registered charities, whether as sponsorship or through Gift Aid, can usually be offset against profits. This reduces your tax bill and supports causes you care about.
Registering to pay Corporation Tax
After you set up a limited company, HMRC will send you a letter with your Unique Taxpayer Reference (UTR).
This is usually within a few weeks of incorporation. The letter explains how to create an HMRC online account and register for Corporation Tax.
You must register for Corporation Tax within 3 months of starting business activities. HMRC counts this as trading, advertising, employing staff, or earning income. Missing this deadline can result in penalties.
To register, you’ll need:
- Your company’s registration number from Companies House
- The date you started trading
- Your company’s main business activity
- Your company’s accounting period
Once registered, you’ll file your Company Tax Return each year and pay Corporation Tax online by the deadline.
Stay compliant and pay Corporation Tax online with LTD Companies
Paying Corporation Tax online is straightforward once you know the process. You calculate the amount due, file your Company Tax Return, and make payment through HMRC’s online system. What matters most is staying organised and meeting deadlines so you avoid penalties and interest.
The first step is always incorporation. If you haven’t set up your company yet, you can register your company with us today. From there, you’ll receive your UTR, be able to register for Corporation Tax, and start trading with confidence.
LTD Companies gives you the tools and guidance to stay compliant from day one, so your business finances are in order and your tax obligations are under control.
Sleek keeps you compliant with Corporation Tax & much more.
FAQs on how to pay Corporation Tax online
How do I pay my Corporation Tax to HMRC?
You can pay online through your HMRC account using Faster Payments, Bacs, CHAPS, debit card, or corporate credit card. Direct Debit and bank payments are also accepted if you have a payment slip.
Can I pay Corporation Tax by bank transfer?
Yes. Use Faster Payments, Bacs, or CHAPS through your online banking. Make sure you include your 17-character payment reference so HMRC allocates it correctly.
Can I pay Corporation Tax by Direct Debit?
You can set up a Direct Debit in your HMRC online account. The first payment takes up to 5 working days, later payments usually clear in 3.
What is the deadline for paying Corporation Tax?
Most companies must pay 9 months and 1 day after the end of their accounting period. Larger companies with profits over £1.5 million pay in installments.
What happens if I don’t pay my Corporation Tax on time?
HMRC charges interest on late payments and can apply penalties. The longer the delay, the higher the costs.
How can I reduce my Corporation Tax bill?
Claim all allowable expenses, make pension contributions, and consider charity donations. These reduce taxable profits and lower the amount owed.
