What happens if I pay Corporation Tax late?

Taxes Management Act 1970, section 59D(1): Corporation Tax for an accounting period is due and payable on the day following the expiry of nine months from the end of that period. The section has effect subject to section 59E and to section 357YQ of the Corporation Tax Act 2010 (section 59D(5)). HMRC's manual (CTM01800): where the accounting period ends on the last day of a calendar month, the normal due date is the first day of the tenth month. Where it ends on some other day, the due date is the day after the correspondingly numbered day in the ninth following month. Where that month has no corresponding day, the due date is the first day of the tenth following month. GOV.UK says some companies must pay their Corporation Tax in instalments.

SourcesThe law·HMRC·GOV.UK

Taxes Management Act 1970, section 87A(1): Corporation Tax carries interest at the rate applicable under Finance Act 1989, section 178, from the date when the tax becomes due and payable until payment. Section 87A(2): this applies even if the due date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882. HMRC's manual (CTM92180) says interest runs from the normal due date until payment. Its COTAX manual (COM80010) says the normal due date is a non-interest bearing date, so late payment interest is calculated from the day after it to the effective date of payment. The general late payment interest rules in Finance Act 2009, section 101 do not apply to Corporation Tax (section 101(2)(a)). HMRC's guidance does not say whether the day of payment counts as a day of interest, or how many days a year it divides by. The examples on this page count the payment day and use a 365-day year.

SourcesThe law·HMRC

For Corporation Tax for accounting periods ending on or after 1 July 1999, other than instalment amounts for large companies, the section 178 rate is set by regulation 3ZB of the Taxes (Interest Rate) Regulations 1989 (SI 1989/1297), inserted by SI 1998/3176. Its explanatory note says it provides the rate on unpaid corporation tax payable by any company on or after the normal due date. The formula was reference rate plus 2.5 as inserted. From 6 April 2025 it is reference rate plus 4 (SI 2025/386, regulation 2(2)). The revised text on legislation.gov.uk does not yet show regulation 3ZB.

The reference rate is the official bank rate set by the most recent meeting of the Bank of England's Monetary Policy Committee. The reference date is the working day after that meeting. The operative date, from which a changed rate applies, is the twelfth working day after the reference date (SI 2008/3234 as amended by SI 2009/2032). Under regulation 3ZB(2), a changed rate applies on and after the next operative date. Our working: tax unpaid across a change carries the old rate up to the day before the operative date, and the new rate from it. HMRC's guidance does not set out that split for a single late payment.

HMRC's table for Corporation Tax Self Assessment, from normal due date, shows: 7.00% from 25 February 2025; 8.50% from 6 April 2025; 8.25% from 28 May 2025; 8.00% from 27 August 2025; 7.75% from 9 January 2026.

SourcesThe law·GOV.UK