Can I Pay Corporation Tax in Instalments: QIPs and Time to Pay

Yes, you can pay corporation tax in instalments, and for some companies it is compulsory rather than optional. If your company’s taxable profits are £1.5 million or less, the default is a single payment nine months and one day after your accounting period ends, though you can choose to pay earlier in smaller amounts if that suits your cash flow.¹ Companies with profits above £1.5 million are legally required to pay in four quarterly instalments, and those above £20 million pay on an accelerated schedule. Any company that cannot meet its bill can also ask HMRC for a Time to Pay arrangement to spread the debt over monthly payments.

The Default: One Payment for Smaller Companies

If your taxable profits are at or below £1.5 million, corporation tax is due as a single payment nine months and one day after the end of your accounting period.¹ This is separate from your Company Tax Return deadline, which falls 12 months after the accounting period ends.²

There is no formal instalment scheme for companies at this level, but nothing stops you from making voluntary payments earlier. Some businesses prefer to set aside monthly or quarterly amounts to avoid a large single bill. If you overpay, HMRC pays repayment interest at the Bank of England base rate minus 1%, with a floor of 0.5%.³ The financial gain is modest, so the reason to pay in advance is cash flow discipline, not return.

Paying late is a different matter. HMRC charges interest on overdue corporation tax at the base rate plus 4 percentage points, which stands at 7.75% as of January 2026.³ Penalties, as opposed to interest, apply to late returns rather than late payments.²

Mandatory Quarterly Instalments for Large Companies

Companies with taxable profits above £1.5 million are classified as “large” and must pay corporation tax in four quarterly instalments rather than as a single sum.⁴ The schedule sits in the Corporation Tax (Instalment Payments) Regulations 1998, and two of the four payments fall due before the accounting period ends.

For a standard 12-month accounting period, the instalments are due:⁵

6 months and 13 days after the start of the accounting period
3 months after the first instalment
14 days after the end of the accounting period
3 months and 14 days after the end of the accounting period

A company with an accounting period running 1 January 2026 to 31 December 2026 would therefore pay on 14 July 2026, 14 October 2026, 14 January 2027, and 14 April 2027.⁵ Each instalment should represent one quarter of the estimated total liability for the year. Because payments are based on estimates before the final return is filed, accurate forecasting matters. HMRC charges interest whenever a company underpays at any instalment date, running from that individual due date rather than from the end of the accounting period.⁴ Because the underpayment rate of 7.75% is far higher than the 0.5% floor on repayment interest, most tax advisers suggest erring slightly high on estimates.

Accelerated Instalments for Very Large Companies

Companies with taxable profits above £20 million are “very large” and pay on a compressed timetable. Instalments fall in months 3, 6, 9, and 12 of the accounting period, meaning the entire estimated bill is paid before the period closes. This schedule applies to accounting periods beginning on or after 1 April 2019.⁴ For a company with a January-to-December year, the first payment falls in March, when profit estimates are necessarily rough.

When Instalments Don’t Apply Despite High Profits

Two exemptions can keep a company above £1.5 million out of the instalment regime:⁵

If your total corporation tax liability for the period is less than £10,000, you pay at the normal deadline regardless of profit.
If your profits are no more than £10 million and either the company did not exist in the previous 12 months, or it was not large in any accounting period ending in the previous 12 months, you also pay at the normal deadline.

The second exemption gives newly-large companies a grace year. A business that crosses £1.5 million for the first time pays by the standard nine-months-and-one-day deadline, with the instalment obligation kicking in the following year if profits stay above the threshold.⁵

Associated Companies Lower the Thresholds

The £1.5 million and £10 million figures are not fixed. HMRC divides them by the total number of associated companies plus your own, which can pull a much smaller company into the instalment regime. A company is associated with another if one controls the other, or both are controlled by the same person or persons. For accounting periods beginning on or after 1 April 2023, the test uses “associated companies.”⁵

The practical effect catches many owner-managed businesses off guard. If you and your spouse each own a separate limited company, both companies are associated because both sit under connected control. The £1.5 million threshold halves to £750,000 for each. A group of five associated companies would see the threshold fall to £300,000 apiece.

Time to Pay When You Cannot Afford the Bill

If your company cannot pay its corporation tax by the deadline, you can ask HMRC for a Time to Pay arrangement, a formal agreement to spread the debt over monthly payments.⁶ There is no legal right to this relief. HMRC grants it at its discretion, and will refuse if it considers the proposed schedule unaffordable or the business unviable.

To be considered, your company needs to show that the cash flow difficulty is temporary and that you can realistically meet the payments. HMRC will assess affordability, and if it concludes you cannot keep up with the proposed instalments it will ask for the full amount.⁶ Interest continues to accrue on the outstanding balance at the standard late payment rate throughout the arrangement.

An approved arrangement pauses further enforcement action. Without one, HMRC can escalate through debt recovery proceedings or enforcement agents. The trade-off is strict compliance: missing a single payment typically voids the arrangement entirely.

How to Set Up a Time to Pay Arrangement

Before contacting HMRC, gather:

Your company’s 10-digit Unique Taxpayer Reference (UTR)
The exact amount owed
A cash flow summary showing current assets, liabilities, and income projections
A proposed repayment timeline, including monthly amounts and expected completion date

HMRC offers an online self-service tool for setting up payment plans on certain tax debts. The thresholds and availability for corporation tax debts through the self-service route may differ from those for self-assessment, where debts under £30,000 can be handled online. For larger or more complex situations you will need to phone HMRC’s Payment Support Service, where a representative works through your financial position and assesses the proposal.⁶

Treat the call as a negotiation. HMRC will probe your figures and may ask for further documentation. If approved, you get written confirmation. A Direct Debit is the safest way to stay compliant, because a single missed payment can collapse the whole arrangement. Keep the agreement reference number in case any dispute arises later about what was agreed.

1
GOV.UK. Pay Your Corporation Tax Bill
2
GOV.UK. Company Tax Returns – Overview
3
GOV.UK. HMRC Interest Rates for Late and Early Payments
4
HM Revenue & Customs. COTAX Manual – Payments: Quarterly Instalment Payments: Introduction
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GOV.UK. Pay Corporation Tax if You’re a Large Company
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GOV.UK. If You Cannot Pay Your Tax Bill on Time