It’s not just your phone bill or gym membership that comes with late fees. Miss your Corporation Tax deadline, and HMRC will definitely take notice. Whether you forgot, miscalculated or just didn’t have the cash flow to cover your tax bill, HMRC doesn’t tend to let late payments slide. Instead, they charge Corporation Tax late payment penalties and interests - and those costs can add up quickly.

In this guide, we’ll explain what Corporation Tax late payment penalties actually are, how they’re calculated and what steps you can take to avoid them (or reduce the damage if you're already late).

What is Corporation Tax?

Corporation Tax is the tax Limited Companies pay on their profits. This includes trading income, investment profits and any chargeable gains. If you run a Limited Company in the UK, you must:

• Work out how much Corporation Tax you owe
• Report it on a Company Tax Return (CT600)
• Pay your Corporation Tax bill by the deadline

You can read our full guide to what Corporation Tax is - and how to register for it - here. 

The current Corporation Tax rate (as of 2025) is 25% for companies with profits over £250,000. For businesses with profits under £50,000, the rate is 19%. Profits between these thresholds are taxed at a marginal rate.

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When is Corporation Tax due?

Your Corporation Tax deadline depends on your company’s accounting period. The key dates are:

• The tax payment deadline: 9 months and 1 day after the end of your company’s accounting period.
• The filing deadline for your Company Tax Return: 12 months after the end of the accounting period.

So if your accounting period ends on 31st December 2024, you’ll need to pay your Corporation Tax by 1st October 2025.

What happens if you miss the deadline?

If you don’t pay your Corporation Tax by the deadline, HMRC will charge:

1. Interest on the overdue amount

2. Penalties for late filing (if your return is also late)

Let’s break each of these down:

Corporation Tax late payment interest

HMRC charges daily interest on late Corporation Tax payments. This interest starts the day after your payment is due and continues until the payment is received in full.

The current interest rate (as of July 2025) is 8.25% annually. For example, if you owe £10,000 and pay it 30 days late, the interest would be about £68 (£10,000 x 8.25% / 365 x 30). Unlike penalties, this interest is generally tax-deductible.

Penalties for late filing

Late payment interest is separate from penalties for late filing. If you pay your Corporation Tax late, HMRC charges interest but not a penalty for the late payment itself. Penalties only apply if you file your Company Tax Return late (even if you’ve already paid the tax), and HMRC will issue penalties depending on how late you filed it:

• 1 day late = £100 fine
• 3 months late = another £100 fine
• 6 months late = HMRC estimates your bill and adds a penalty of 10% of the unpaid tax
• 12 months late = another 10% of any unpaid tax

If you consistently file late (three times or more in a row), those £100 fines increase to £500 each.

What if you can’t afford to pay on time?

If cash flow is tight and you know you won’t be able to pay on time, contact HMRC as soon as possible to discuss a Time to Pay arrangement.

This is a payment plan that lets you spread the cost of your Corporation Tax bill over a series of monthly installments. You’ll still pay interest, but you can avoid further penalties or enforcement action (like debt collectors or court proceedings).

To apply for a Time to Pay arrangement, you’ll need to:

• Contact HMRC before the payment deadline
• Provide details about your financial situation
• Propose a realistic repayment schedule

How to avoid late payment penalties and interest

The best way to avoid penalties and interest is to stay organised and plan ahead. Here are a few practical steps to keep you on track:

1. Know your deadlines

Keep a record of your Corporation Tax due date and filing deadlines. Set calendar reminders well in advance so you’re not caught off guard.

2. File your return early

You don’t have to wait until the last minute. Submitting your Company Tax Return early gives you a clear picture of your tax bill and more time to plan your payment.

3. Put money aside throughout the year

It’s easy to underestimate how much you owe. Regularly setting aside a percentage of your profits can help ensure you have the funds when the bill arrives.

4. Work with an accountant

A good accountant - like one of our friendly Corporation Tax experts at Crunch - can help you calculate your Corporation Tax accurately, keep you compliant and flag any issues early. If your business’ situation is a little unique or you’re not confident in your tax knowledge, this can be a lifesaver.

5. Use accounting software

Digital tools and accounting software can help you stay on top of your finances, monitor cash flow and track tax liabilities in real time. Many also integrate directly with HMRC.

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What if HMRC makes a mistake?

If you think HMRC has wrongly charged interest or a penalty, you can challenge it. First, double-check your own records and ensure your payments and filings were made on time.

If you still think there’s been a mistake, contact HMRC or submit an appeal. You might need to provide evidence (like payment confirmations or submission receipts). In some cases, you can also request a reasonable excuse claim, like illness or a technical problem.

Beat the deadline, dodge the fine

Late Corporation Tax payments can cost your business money and credibility. Interest is charged daily, and repeated late filing can lead to escalating penalties. But with good planning - and possibly a bit of expert help - it’s not hard to get your Corporation Tax payments made on time.

If you’re struggling with a looming Corporation Tax deadline or aren’t sure how much you owe, Crunch’s expert accountants can help you work it out and stay compliant with HMRC. Don’t let late payment penalties catch you off guard. Get support before the deadline hits!