A Guide on How to Pay Corporation Tax Online in the UK

What is corporation tax?

Corporation tax is levied on the profits of limited companies, foreign companies with a UK branch/office, and all other organisations eligible to pay corporation tax. Before 1 April 1965, companies used to pay the same income tax rates as individual taxpayers with some additional tax on the companies' profits. After the Finance Tax 1965, this changed for companies and associations with a single corporate tax. Since 1997, the UK's tax legislation has been modernised according to the UK's Tax Law Rewrite Project; the rules governing income tax and corporation tax have also changed. 

Rate of Corporation Tax

Since 1 April 2023, the corporation tax rates for the UK's financial year have been revised. The primary rate was 19% before, and now it is 25%. This primary corporation tax rate applies to companies with profits over GBP 250,000; however, if your company's augmented profits fall below GBP 50,000, you might be eligible for the 19% corporation tax rate. Note that if your earnings fall between GBP 50,000 and GBP 250,000, then you will pay 25% tax which is the main tax, but with some marginal relief.

Corporation tax bill

Once you have calculated your corporation tax, HMRC will send you a corporation tax bill. The bill shows the amount of corporation tax you must pay and the filing deadline. It is important to regularly review your corporation tax bill to manage your finances effectively and stay on top of your tax obligations.

When is the corporate tax filing deadline?

The deadline for filing corporation tax is usually 12 months after the end of your accounting period. However, the deadline to pay a corporation tax bill differs: 9 months and a day after your accounting period ends. For example, if your accounting period ends on 31 December, your corporation tax is due on 1 October the following year. Companies that are larger in size and business have the option to pay corporation tax in instalments, in which case some of the payments might fail due to your accounting year instead of after the year-end. If you miss the deadline, it can result in penalties and fines.

How Do I Pay Corporation Tax Online?

To start paying your corporation tax online, you are required to register for corporation tax online first with HMRC. You can do this on the official website of HMRC, which will send you an activation code for your account to be activated. Once you have received the code, you can start the process by following the following steps:

Determine your accounting period

• Understanding your accounting period is very important before embarking on the journey of paying corporation tax. The accounting period tells you and HMRC the timeframe for which your company prepares its financial statements.

Calculate your corporation tax

• The corporation tax rate is mentioned above, which is essential to keep in mind. Check it out and calculate your taxable profits accordingly, but make sure your calculations are correct to avoid errors and noncompliance in your tax payment.

Access the HMRC Online Services

• Visit the official website of HMRC and log in to your account - Access HMRC's online services to pay your corporation tax online.

Locate the corporation tax section

• Once you log into your account on the HMRC website, you will find a section explicitly for corporation tax. You can find all the necessary tools and data to file corporation tax online here.

Fill in the relevant details.

• Provide accurate and up-to-date company details, including the profits and amount you are paying, Unique Taxpayer Reference (UTR), and any other necessary information. Once you are done, recheck the data you provided to ensure no errors.

Choose your payment method.

• Fill out the payment details along with the required details. HMRC offers multiple options for paying your corporation tax. Choose the payment method that suits you best, then proceed with the transaction securely, and Bob's your uncle! Your corporation has been paid.

Paying corporation tax on time and accurately is very important as it helps contribute to your business's financial health and compliance. Visit our Corporation Tax service page, check out our packages, and let us expertly handle your corporation tax, helping you free up your valuable time and resources.