By
August 11, 2026
What Happens If My UK Company Pays Corporation Tax Late?
If your UK limited company does not pay its Corporation Tax by the required deadline, HM Revenue & Customs (HMRC) can charge late payment interest on the outstanding amount.
Missing the payment deadline does not necessarily mean your company is immediately facing a large penalty, but leaving Corporation Tax unpaid can make the situation increasingly expensive and may eventually lead to HMRC taking action to recover the debt.
This guide explains what happens when a UK company pays Corporation Tax late and what you should do if your business cannot pay on time.
For many UK companies with taxable profits of up to the relevant instalment-payment threshold, Corporation Tax is normally due 9 months and 1 day after the end of the accounting period.
For example, if a company's accounting period ends on 31 December, its Corporation Tax would normally need to be paid by 1 October of the following year.
Different payment arrangements can apply to larger companies that are required to pay Corporation Tax in instalments.
Importantly, the Corporation Tax payment deadline and Company Tax Return filing deadline are not the same thing.
If your company misses its Corporation Tax payment deadline, the most immediate consequence is usually late payment interest.
HMRC charges interest on Corporation Tax that is paid late, underpaid or remains outstanding.
Interest generally runs from the normal payment due date until the outstanding Corporation Tax is paid.
This means that the longer the tax remains unpaid, the more interest the company may owe.
Late payment and late filing should not be confused.
HMRC charges interest when Corporation Tax is paid late. Separate penalties can arise when a company fails to submit its Company Tax Return by its filing deadline.
Therefore, a company could potentially:
Each situation can have different consequences.
This distinction is particularly important for company directors.
HMRC can charge late payment interest on the outstanding Corporation Tax.
Separate late-filing penalties can apply if the Company Tax Return is not submitted by the deadline.
For returns with filing dates on or after 1 April 2026, the standard flat-rate late-filing penalties start at £200 and can increase depending on how late the return is and whether there is a history of repeated late filing.
Additional tax-related penalties can also arise when returns remain outstanding for much longer.
Because penalty rules can change, companies should always check the latest HMRC guidance rather than relying on historical penalty amounts.
Yes.
HMRC states that late payment interest on Corporation Tax is charged daily.
The applicable interest rate can change over time, so businesses should check the current HMRC rate when calculating how much they may owe.
Paying the outstanding Corporation Tax as quickly as possible can therefore help prevent additional interest from accumulating.
Do not simply ignore the bill.
If your company is experiencing genuine cash-flow difficulties, contact HMRC as early as possible.
Depending on the circumstances, HMRC may discuss arrangements for paying an outstanding tax debt over an agreed period.
Whether an arrangement is available will depend on the company's individual circumstances and its ability to repay the debt.
Directors should also consider speaking with an accountant or qualified adviser if the company is experiencing wider financial difficulties.
If your company cannot immediately pay the entire amount, making a payment towards the outstanding liability may still reduce the amount on which further interest can accumulate.
However, making a partial payment does not automatically create a formal payment arrangement with HMRC.
If the remaining balance cannot be paid promptly, the company should contact HMRC about its options.
Ignoring Corporation Tax debt can turn a manageable problem into a much more serious one.
HMRC has powers to pursue unpaid taxes and may take debt-recovery action when liabilities remain outstanding.
The appropriate action will depend on the amount owed, how long it has remained unpaid and the company's circumstances.
For this reason, directors should deal with unpaid Corporation Tax as soon as possible rather than waiting for HMRC enforcement activity.
Yes.
Corporation Tax is a liability of the company, and HMRC can pursue the company for unpaid tax.
Persistent or substantial tax debts can potentially lead to increasingly serious recovery measures.
If your company is unable to pay Corporation Tax because it cannot meet its debts generally, you should obtain professional advice promptly because this may indicate wider financial or insolvency issues.
Late payment interest is generally not treated in the same way as a late-filing penalty.
HMRC describes interest as compensation for tax being paid later than it should have been rather than as a punishment.
If the underlying Corporation Tax liability changes, however, the associated interest calculation may also change.
If you believe HMRC has calculated your company's liability or interest incorrectly, you should check the company's HMRC records or speak with HMRC or your accountant.
The situation can become considerably more expensive if both the Corporation Tax payment and Company Tax Return are late.
Your company could face:
Late payment interest
Interest on outstanding Corporation Tax.
Late-filing penalties
Separate penalties for failing to submit the Company Tax Return on time.
Very late returns can also result in tax-related penalties based on the amount of Corporation Tax that remained unpaid.
This is why filing the return and paying the tax should be treated as separate compliance responsibilities.
Good financial planning can make Corporation Tax deadlines much easier to manage.
Consider:
Waiting until the Corporation Tax deadline arrives can leave your business with very few options.
Late payment interest can start running from the normal due date. Even if the delay is short, it is generally best to make the payment as soon as possible.
Late payment normally results in interest being charged. This should not be confused with the separate penalty regime for filing a Company Tax Return late.
Late payment interest generally continues to accrue until the outstanding Corporation Tax is paid.
If your company cannot pay its tax liability, HMRC may discuss a payment arrangement depending on the circumstances. You should contact HMRC rather than simply deciding to make monthly payments yourself.
Contact HMRC as soon as possible and consider obtaining professional advice. If the company cannot pay its debts as they fall due, directors may also need advice about the company's wider financial position.
Paying Corporation Tax late can result in daily interest being added to your company's outstanding tax liability. The longer the amount remains unpaid, the more the company may ultimately have to pay.
It is also important to distinguish between paying Corporation Tax late and filing a Company Tax Return late, because separate rules and penalties apply.
If you realise that your company will miss its Corporation Tax deadline, acting early is usually the best approach. Pay what you can, check the outstanding liability and contact HMRC if your company needs help managing the payment.
For the latest official information, check the GOV.UK Corporation Tax payment guidance and HMRC guidance on Corporation Tax interest charges.
This article provides general information about UK Corporation Tax and should not be treated as tax, accounting or legal advice. Rules and circumstances can change, so businesses should check current HMRC guidance or seek professional advice.
