By
August 11, 2026
Can a UK Limited Company Pay Corporation Tax in Instalments?
If your UK limited company has a Corporation Tax bill approaching, you may be wondering whether you can pay Corporation Tax in instalments instead of making one payment.
For most small and medium-sized UK companies, Corporation Tax is normally due as a single payment by the applicable deadline. However, if your company is experiencing genuine difficulty paying its tax bill, HMRC may agree to a payment arrangement, often referred to as a Time to Pay arrangement.
Different rules apply to certain larger companies, which can be required to pay Corporation Tax by instalments under the normal Corporation Tax payment regime.
This guide explains when a UK limited company may be able to pay Corporation Tax in instalments, how HMRC payment arrangements work and what to do if your company cannot pay its tax bill on time.
Potentially, yes — but it depends on why your company wants to pay by instalments.
There are two situations that should not be confused:
1. Your company cannot afford to pay its Corporation Tax bill by the deadline.
In this situation, HMRC may potentially agree to a Time to Pay arrangement, allowing the company to repay its tax debt over an agreed period.
2. Your company falls within the Corporation Tax instalment payment rules for larger companies.
Certain companies are required to make Corporation Tax payments in instalments rather than following the normal payment timetable applying to most smaller companies.
For most small UK limited companies, the first situation is the more relevant one.
For most UK limited companies, Corporation Tax is normally due 9 months and 1 day after the end of the relevant accounting period.
For example, if your accounting period ends on:
31 December
your Corporation Tax would normally be due by:
1 October of the following year.
Your Company Tax Return has a separate deadline and is generally due 12 months after the end of the accounting period it covers.
This means your Corporation Tax payment can become due before your Company Tax Return filing deadline.
A small company should not assume it can simply convert its Corporation Tax bill into monthly payments after the normal deadline.
If your company cannot pay the full amount when it becomes due, you should contact HMRC and discuss the situation.
HMRC may consider allowing the outstanding amount to be paid over an agreed period through a Time to Pay arrangement.
The arrangement needs to be agreed with HMRC.
Simply deciding to make smaller payments without an agreed arrangement does not automatically change your company's legal payment deadline or prevent interest or recovery action.
A Time to Pay arrangement is an agreement between a taxpayer and HMRC that allows an outstanding tax liability to be paid over an agreed period.
For a limited company, this could mean paying an outstanding Corporation Tax bill through a series of instalments rather than paying the entire amount immediately.
HMRC considers payment arrangements according to the circumstances of the taxpayer.
There is no guarantee that every company requesting instalments will receive the arrangement it wants.
HMRC may consider a payment arrangement where a company is experiencing genuine financial difficulty but is capable of paying its tax debt over time.
The company may need to demonstrate that the proposed payments are realistic and affordable.
HMRC may want to understand:
The precise information required will depend on the circumstances.
If you already know your company will struggle to pay its Corporation Tax bill, it is generally better to deal with the issue before the payment deadline rather than ignoring it.
Waiting until HMRC begins chasing an overdue liability can reduce the time available to resolve the problem.
Before contacting HMRC, make sure you understand:
How much Corporation Tax is due
When it is due
How much the company can pay immediately
How much it can realistically afford each month
Why the company cannot pay in full
When you expect the company's cash flow to improve
Having this information available can make the discussion more productive.
HMRC will generally consider whether the proposed arrangement is realistic based on the company's circumstances.
A business may be asked to provide information about its finances, potentially including:
HMRC's objective is generally to collect the tax owed within a reasonable period while considering the taxpayer's ability to pay.
The exact arrangement will depend on the individual case.
There is no single repayment period that applies to every Corporation Tax Time to Pay arrangement.
The repayment schedule will depend on factors such as:
Companies should therefore avoid assuming that HMRC will automatically provide a particular number of months to repay the debt.
The agreed arrangement needs to be affordable but should generally clear the liability as quickly as reasonably possible.
Paying Corporation Tax through an agreed payment arrangement does not necessarily mean the debt becomes interest-free.
Interest can continue to apply to late Corporation Tax, including amounts being repaid after the original payment deadline.
Companies should therefore understand the total cost of delaying payment when considering a payment arrangement.
Check the current HMRC late-payment interest rules and rates because they can change over time.
Yes.
A company does not necessarily have to wait until the final Corporation Tax deadline to start putting money towards its tax liability.
Businesses can plan ahead and make appropriate payments before the deadline.
Alternatively, many companies prefer to transfer money regularly into a separate business savings account so funds are available when Corporation Tax becomes due.
For example, a company could estimate its Corporation Tax liability throughout the year and reserve part of its cash each month.
This can help prevent a large tax bill from becoming a cash-flow problem later.
There is a separate Corporation Tax regime under which certain larger companies may be required to make quarterly instalment payments.
This is different from asking HMRC for additional time because the company cannot afford its tax bill.
Whether the instalment payment rules apply depends on factors including the company's level of profits, accounting period and potentially its relationship with associated companies.
Because the thresholds and detailed rules can change or depend on company circumstances, businesses approaching the relevant levels should check the current HMRC guidance.
Ignoring an unpaid Corporation Tax bill can make the situation worse.
Potential consequences can include:
If your company cannot pay, communicating with HMRC is generally better than simply allowing the debt to remain unresolved.
If the company can pay some, but not all, of its Corporation Tax liability, consider paying what it can and discussing the remaining balance with HMRC.
Reducing the outstanding balance may also reduce the amount on which late-payment interest accrues.
However, you should not assume that making a partial payment automatically creates a formal instalment arrangement.
Any Time to Pay arrangement should be agreed with HMRC.
A company experiencing cash-flow problems may owe more than Corporation Tax.
For example, it could also have outstanding:
If several amounts are outstanding, HMRC may need to consider the company's wider financial position.
The company should provide accurate information about all outstanding liabilities rather than considering Corporation Tax in isolation.
Being a new company does not automatically prevent a business from discussing payment difficulties with HMRC.
However, HMRC will consider the company's circumstances and ability to repay the debt.
A new business experiencing temporary cash-flow difficulties should still contact HMRC promptly if it expects to miss its Corporation Tax deadline.
A director or shareholder living outside the UK does not automatically change the company's Corporation Tax payment obligations.
If a UK company owes Corporation Tax and is having difficulty paying, the company may still need to address the issue directly with HMRC.
International ownership does not remove the company's responsibility to meet its UK tax obligations.
The best way to deal with Corporation Tax cash-flow problems is often to prepare for the bill before it becomes due.
Businesses can consider:
Regular bookkeeping helps you understand whether your company is making a taxable profit.
Estimate the likely Corporation Tax liability as the accounting period progresses.
Consider setting aside money regularly rather than relying on whatever cash remains when the payment deadline arrives.
Include future tax payments in your company's cash-flow forecasts.
Record your Corporation Tax payment date well in advance.
Regular financial reviews can help identify upcoming liabilities and legitimate tax-planning opportunities.
Suppose a company expects to have a significant Corporation Tax liability after its year end.
Rather than waiting until the payment deadline approaches, it could:
Step 1: Maintain accurate monthly bookkeeping.
Step 2: Estimate taxable profits throughout the year.
Step 3: Estimate the likely Corporation Tax liability.
Step 4: Reserve cash for the expected bill.
Step 5: Update the estimate as profits change.
Step 6: Pay the Corporation Tax by the required deadline.
If unexpected circumstances later mean the company cannot pay the full amount, it should contact HMRC as early as possible to discuss its options.
Most small companies normally pay Corporation Tax according to the standard payment deadline rather than through a standard monthly instalment plan. If a company cannot pay the amount due, HMRC may potentially agree to a Time to Pay arrangement.
HMRC may agree to a payment arrangement where appropriate, depending on the company's financial circumstances and ability to repay the debt.
If you know your company will be unable to pay its Corporation Tax liability in full, it is sensible to contact HMRC as early as possible rather than waiting for the liability to become overdue.
Late-payment interest can apply to Corporation Tax that remains unpaid after the relevant deadline. Check current HMRC guidance for the applicable rules and rates.
You can make payments towards your Corporation Tax liability. However, making a partial payment does not automatically create a formal Time to Pay arrangement for the remaining balance.
Certain larger companies are subject to separate Corporation Tax instalment payment rules. These should not be confused with Time to Pay arrangements for businesses experiencing payment difficulties.
Do not simply ignore the bill. Establish what the company owes, determine what it can realistically afford and contact HMRC promptly to discuss the available options.
So, can a UK limited company pay Corporation Tax in instalments?
In some circumstances, yes.
For most small and medium-sized companies, Corporation Tax is normally payable according to the standard payment deadline. If the company genuinely cannot afford to pay the full amount, HMRC may agree to a Time to Pay arrangement that allows the outstanding tax to be repaid over an agreed period.
Certain larger companies operate under separate Corporation Tax instalment payment rules.
The most important point is not to simply miss the Corporation Tax deadline and assume you can pay whenever you can afford it.
If your company expects difficulty paying:
Check the amount owed → Review cash flow → Work out what you can afford → Contact HMRC early → Agree a repayment arrangement where possible
Planning ahead is even better. Regularly estimating Corporation Tax and reserving money throughout the year can help prevent the tax bill from becoming an unexpected cash-flow problem.
This article provides general information only and does not constitute tax, accounting, financial or legal advice. HMRC procedures, interest rates and tax rules can change. Check current GOV.UK guidance or seek professional advice for your company's circumstances.
