Corporation Tax can be complex, especially when deadlines and payment schedules vary depending on your company size and accounting period.
Whether you’re a small business or a large company working to quarterly instalment deadlines, getting prepared early is the best way to avoid penalties, improve your tax position, and manage cash flow effectively.
In this blog, we outline the essential steps, highlight common pitfalls to avoid, and explain why early collaboration with a corporate tax consultant is beneficial for businesses.
Understanding Corporation Tax deadlines
Corporation Tax deadlines aren’t one-size-fits-all. They depend on your company’s accounting period and profit levels.
Your Corporation Tax return must be filed within 12 months of the end of your company’s accounting period.
For example, if your year-end is 30 September 2024, then you would have a September corporate tax deadline, with the date for filing your return 30 September 2025.
Payment of your Corporation Tax
The Corporation tax payment deadlines vary depending on the size and profit level of your company. It’s important to understand which category your business falls into to avoid missing deadlines and interest charges.
Small companies (profits under £1.5 million):
Tax must be paid 9 months and 1 day after the end of the accounting period.
Example: For a 31 December 2024 year-end, tax is due by 1 October 2025.
Large companies (profits between £1.5 million and £20 million):
Tax is paid in four quarterly instalments, starting 6 months and 13 days after the start of the accounting period.
Very large companies (profits over £20 million):
Tax is paid in four quarterly instalments, starting just 2 months and 13 days after the accounting period begins.
For large and very large companies, these quarterly instalment payments (QIPs) require careful planning and forecasting well in advance. Without early preparation, it’s easy to fall behind on payments, putting unnecessary pressure on your cash flow.
Key steps for effective Corporation Tax preparation
Compile and review financial information
Accurate financial records are key to getting your Corporation Tax right. This means making sure all income, expenses and relevant adjustments are properly recorded for the full accounting period. The more reliable your records are, the smoother the preparation process will be.
Assess taxable profits and available reliefs
Understanding how your taxable profits are worked out is an important part of the process. However, identifying any tax reliefs or allowances your business qualifies for can make a real difference to your final bill. Spotting these opportunities early on can lead to smarter tax planning and valuable savings.
Submit Corporation Tax return accurately and on time
Submitting your Corporation Tax return on time is just as important as getting the figures right. Late filing triggers an automatic £100 penalty, with further fines if the delay continues. Keeping on top of the deadline gives you time to review the return properly and avoid unnecessary costs or HMRC enquiries.
Plan for your Corporation Tax payment
Your Corporation Tax payment should form part of your wider financial planning. Preparing early allows you to manage cash flow effectively, set aside funds in advance, and avoid the pressure of last-minute payments.
For small companies, it’s worth remembering that your tax bill is often due months before the filing deadline, making early planning even more important.
Common Corporation Tax pitfalls to avoid
Even well-run businesses can face challenges when it comes to Corporation Tax. Left unchecked, these issues can lead to costly problems if not managed carefully.
Leaving it to the last minute
Finalising accounts, calculating tax liabilities, and arranging payments all take time. Waiting too long can create unnecessary stress and risk fines or interest.
Overlooking reliefs and allowances
From R&D Tax Credits to Annual Investment Allowance, there are a range of reliefs and allowances that can reduce your bill. Failing to claim what you’re entitled to means your business could be paying more tax than necessary.
Errors in calculating taxable profits
Getting your taxable profit figure wrong, whether through errors in your accounts or a misunderstanding of tax rules can trigger HMRC enquiries or even fines. It’s one of the more common and costly mistakes businesses make.
Poor cash flow planning
Even if your return is submitted on time, being unprepared for the payment can cause problems. Without proper planning, paying your tax bill can put pressure on your cash flow, making it harder to manage daily operations or future investments.
The benefits of early Corporation Tax planning with Edwards Accountants
Working with Edwards Accountants ahead of your corporate tax deadline gives your business a real advantage.
We provide tailored advice specific to your business and industry through our specialist taxation services, helping you identify tax-efficient strategies and make the most of available reliefs.
Our team ensures your Corporation Tax return is accurate and submitted on time, reducing the risk of penalties and last-minute pressure. We also support your cash flow planning, making sure tax payments align with your wider financial goals.
We’re here to make tax preparation clear, proactive, and stress-free, so you can stay focused on growing your business. Contact Edwards Accountants to find out more.