Business finances rarely move in neat, tidy lines. One month your bank balance looks healthy, the next you’re chasing unpaid invoices that you're relying on, and the Corporation Tax deadline doesn’t always line up with reality.

The good news is that if paying your full tax bill in one go feels like a stretch, you’re not stuck. Depending on your business’ size and circumstances, you may be able to spread payments over the year with HMRC.

In this guide, we’ll break down the two main ways instalment payments work: Quarterly Instalment Payments (QIPs) for large companies, and Time to Pay arrangements for businesses that need temporary breathing room.

First things first: how Corporation Tax normally works

For most small and medium-sized businesses, Corporation Tax is paid nine months and one day after the end of your accounting period. So, if your company’s year end is 31 March, your payment is due by 1st January the following year.

It’s a once-a-year payment, and HMRC expects you to work out how much Corporation Tax you owe and pay it without a reminder. But for some companies, that single payment structure doesn’t always make sense. And that’s where these instalments come in.

{{ltd-guide}}

Option 1: Quarterly Instalment Payments (QIPs)

Let’s start with the official instalment system for large companies: Quarterly Instalment Payments, or QIPs.

These are designed for companies with profits exceeding £1.5 million. Instead of paying Corporation Tax once a year, large companies must make four advance payments throughout their accounting period. It helps spread the cost and ensures HMRC receives money steadily from big earners.

Who QIPs apply to

Most small businesses won’t fall into the QIPs regime, because of that £1.5 million profit threshold. But there’s a catch: if your company is part of a group, or has associated companies, the threshold is divided between them.

For example, if your company has two associated companies, the threshold drops to £500,000 each (£1.5 million divided by 3). Suddenly, even medium-sized firms can find themselves in the QIPs bracket.

When QIPs are due

The payment schedule for QIPs depends on your accounting period and whether your company is “large” or “very large”:

• Large companies (profits between £1.5m and £20m): Payments are due on the 14th day in months 7, 10, 13 and 16 after the start of your accounting period.
• Very large companies (profits over £20m): Payments are due on the 14th day in months 3, 6, 9 and 12.

Each instalment covers a quarter of your estimated Corporation Tax liability for the year. You then make a balancing payment (or claim a refund) once the final figures are confirmed.

QIPs in practice

Here’s a quick example:

Imagine your company’s accounting year runs from 1 January to 31 December, and you estimate a total Corporation Tax liability of £200,000. As a “large” company, you’ll make payments like this:

• 14th July: £50,000
• 14th October: £50,000
• 14th January (next year): £50,000
• 14th April: £50,000

If your profits end up being lower than expected, you can adjust your later payments to match. HMRC charges interest on underpayments, so keeping your estimates realistic matters.

{{cta-enterprise-calendly}}

Option 2: HMRC’s Time to Pay (TTP) arrangements

Now, for smaller companies (and even some larger ones during rough patches), there’s another way to spread Corporation Tax payments: a Time to Pay (TTP) arrangement.

Unlike QIPs, which are mandatory for high-profit companies, Time to Pay plans are negotiated directly with HMRC. This typically happens when your business is struggling to pay on time.

How Time to Pay works

A Time to Pay arrangement is essentially a payment plan for overdue or upcoming Corporation Tax. Instead of paying in one lump sum, you agree with HMRC to pay in monthly instalments, often over 3 to 12 months.

You’ll still pay interest on the outstanding balance. The current rate is 8%, as of August 2025, although HMRC updates this regularly. Even so, it’s usually better than facing penalties or enforcement action. The key is to contact HMRC before a payment becomes overdue because they’re much more flexible when you’re proactive.

How to request a Time to Pay plan

You can call HMRC’s Business Payment Support Service by phone or reach out to your Corporation Tax office directly. When you do, have these details ready:

• Your company’s name, UTR and registered address.
• The amount you owe and the payment due date.
• A realistic proposal for what you can afford monthly.
• Basic financial details (like income, expenses and cash flow forecasts).

HMRC will review your situation and decide whether to approve the plan. They’ll also want reassurance that your company is viable long-term, not insolvent or likely to miss future tax obligations.

What happens next

If your plan is accepted, HMRC will confirm it in writing and set up monthly payments, usually by Direct Debit. Stick to the schedule and keep your returns up to date, and they’ll leave you to it.

If you miss a payment, though, the arrangement can be cancelled, meaning the full amount becomes due immediately (along with possible penalties).

{{payroll-guide}}

The difference between QIPs and Time to Pay

Both systems involve paying Corporation Tax in instalments, but they’re very different in purpose:

QIPs and Time to Pay arrangements might both involve paying Corporation Tax in instalments, but they operate very differently. QIPs are mandatory for companies with high profits - typically large or very large businesses. 

Payments are made in advance of the usual due date and are based on forecasted profits, which means the company is expected to estimate its tax bill for the year and pay it quarterly. The aim is to avoid a huge lump-sum payment at year end.

A Time to Pay arrangement, on the other hand, is completely optional and designed for businesses experiencing temporary financial difficulty. Instead of paying in advance, payments are made after the Corporation Tax would normally have been due, and the instalments are based on the actual amount owed. Rather than smoothing cash flow for profitable companies, TTP plans exist to help smaller businesses avoid penalties, interest build-up or debt collection when cash gets tight.

For most small businesses, QIPs simply won’t apply, but a Time to Pay arrangement can be a genuine lifesaver if you’re worried about meeting a deadline. 

What not to do

Whether you’re paying through instalments or a one-off, there are a few mistakes to steer clear of:

• Don’t wait too long to contact HMRC: They’re far more sympathetic before a payment is officially overdue.
• Don’t overpromise: Don’t agree to a plan you can’t maintain. HMRC would rather have a longer plan that’s realistic.
• Don’t fall behind on other taxes: Missing PAYE or VAT payments can hurt your credibility when negotiating a TTP plan.
• Don’t forget interest: Even with a TTP plan, daily interest accrues until the balance is cleared.

How Crunch can help

At Crunch, we understand that managing Corporation Tax isn’t always straightforward, and especially when cash flow doesn’t play ball. Our accountants help small businesses forecast their tax liabilities, stay compliant, and negotiate with HMRC if needed.

If you’re unsure whether you qualify for a Time to Pay arrangement, or you’re worried about missing a deadline, we can help you put together a realistic payment proposal and liaise directly with HMRC.

We are all about helping you stay in control - without the stress of navigating it alone.

Staying in control of your Corporation Tax

Paying Corporation Tax in instalments might sound complicated, but it all comes down to scale. Larger companies spread the cost through QIPs, while smaller businesses can turn to HMRC’s Time to Pay scheme when cash flow gets tight.

Whichever camp you fall into, the key is communication and planning. The sooner you speak to HMRC (or your accountant), the more options you’ll have. Because while tax bills might be inevitable, unnecessary stress doesn’t have to be.