When Does a Limited Company Pay Tax in the UK?

As a business owner in the UK, it's vital that you understand when your limited company is required to pay taxes. Limited companies are separate legal entities from their owners, which means they have their own tax obligations. In this article, we'll explore the different types of taxes that limited companies in the UK are required to pay and when they are due.

One of the main taxes that limited companies are required to pay in the UK is corporation tax. This tax is based on the profits that your company earns during its financial year. The current rate of corporation tax in the UK varies depending on the company.  It’s influenced by the company size, whether there are any associated companies and also the profit levels. 

The main rate of corporation tax is now 25%.  For small companies with no associated businesses, the rate of corporation tax starts at 19% on the first £50k profits and then any profits after that up to £250k are taxed at 26.5%.  Any associated companies will reduce this marginal relief rate, which is why the corporation tax rate can vary from one company to another.

When is corporation tax paid?

Corporation tax is typically due 9 months and 1 day after the end of your company's financial year. For example, if your Company year ends on 31 December, the deadline to pay is 1 October of the following year. Your Company Tax Return must then be filed with HMRC within 12 months of the year end, even if you’ve already paid what you owe.

For larger businesses, the rules are different. Companies with annual profits between £1.5 million and £20 million are required to pay in four installments spread throughout the year, starting in the seventh month of their accounting period. Very large companies with profits above £20 million must begin paying even earlier, with their first instalment due in the third month of the accounting period.

Example Of How Marginal Relief Works

To see how this looks in practice, imagine your company earns £100,000 in taxable profits. At the main rate of 25%, your liability would be £25,000. However, Marginal Relief reduces the amount payable by around £3,000, leaving you with a final Corporation Tax bill of roughly £22,000.

Other company tax obligations

In addition to corporation tax, there may be other taxes that your limited company is required to pay. For example, if your company has employees, you may need to pay employer's national insurance contributions. If your company is VAT registered, you'll also need to pay VAT on your sales and submit regular VAT returns to HMRC. Understanding your company's tax obligations is essential to ensure that you remain compliant with UK tax laws and avoid any penalties or fines.

If your turnover exceeds £90,000 (the 2025 VAT registration threshold), you must register for VAT and submit regular returns.

Making Tax Digital (MTD): while MTD applies to VAT and will extend to some self-employed taxpayers, the government has confirmed it will not be extended to Corporation Tax.

Why staying compliant matters

Staying on the right side of HMRC with the ever changing tax laws and landscape can be challenging, especially when you’re busy growing your business. That’s why, for over 20 years, Blue Skies have been one of the leading media accountants in the UK - helping businesses (media & non-media) maximise their profits while abiding by the rules & regulations set out by HMRC.

Paying Corporation Tax on time is more than just a legal requirement. Missing a deadline can quickly result in interest charges and late payment penalties, and persistent non-compliance may damage your company’s reputation. By planning ahead and keeping your records in order, you can avoid these costs and free up more time to focus on growth.

Corporation Tax Payment Deadlines

If you're running a limited company in the UK, you're required to pay Corporation Tax on your profits. The amount of Corporation Tax you need to pay will depend on your company's profits and the current Corporation Tax rate. Here are some important things you need to know about the payment deadlines:

Payment on Account

If you are a large company with profits over £1.5 million, you'll need to make Corporation Tax payments on account, i.e. in installments rather than 9 months after the year end. 

‘Payment on account’ refers to these quarterly installments based on estimated current-year profits, reconciled after the final liability is known.

Annual Accounting Period

Your company's annual accounting period is the period for which you need to calculate your profits and pay Corporation Tax. The length of your accounting period will depend on when your company was incorporated and when your first accounting period started.

For example, if your company was incorporated on the 1st of January 2024, and your first accounting period started on the same day, your first accounting period would end on the 31st of December 2024.

Final Payment Deadline

Your final Corporation Tax payment deadline will be nine months and one day after the end of your accounting period.

For example, if your accounting period ends on the 31st of December 2024, your final payment deadline will be the 1st of October 2025. You need to make sure you pay your Corporation Tax on time, as there can be penalties for late payment.

Make sure that you're aware of your payment deadlines, and if you're unsure about anything, seek professional advice. Remember that the % of tax owed can change each year, so it’s important to stay in the know of any changes to tax laws in the UK.

HMRC charges interest on late payments from the day after the deadline until the date paid.

Factors Affecting Tax Payment Dates

As a limited company, there are several factors that affect when you need to pay your taxes. These include your company year-end, HMRC notification, and your taxable profits and losses.

Note: associated company rules affect Corporation Tax thresholds but do not generally change payment deadlines. Payment timing mainly depends on profit size (instalment regime) and your accounting period dates.

Company Year-End

Your company year-end is the date that marks the end of your financial year. It is important to note that this date is not fixed and can be changed. However, changing your year-end can have an impact on when you need to pay your taxes.

For example, if you change your year-end to a date that is closer to the end of the tax year, you may have less time to prepare and submit your tax return. This could result in a penalty if you miss the deadline.

HMRC Notification

You are required to notify HMRC when your company is liable for Corporation Tax. This notification must be done within three months of starting your business. Failure to notify HMRC can result in a penalty.
Most companies notify HMRC on incorporation, but this is usually optional.

Since April 2011, most limited companies are automatically registered for Corporation Tax when they incorporate, but you should still check and confirm your registration to avoid penalties.

Taxable Profits and Losses

Your taxable profits and losses will also affect when you need to pay your taxes. If your taxable profits are below the small profits threshold, you will not be required to pay Corporation Tax. However, you will still need to submit a tax return.

On the other hand, if your taxable profits are above the small profits threshold, you will be required to pay Corporation Tax. Remember, the deadline for paying Corporation Tax is 9 months and 1 day after the end of your accounting period.

For accounting periods starting on or after 1 April 2023, the small profits rate applies up to £50,000, and the main 25% rate applies above £250,000, with Marginal Relief between.

As a limited company, one of the most important things that you can do is understand the factors that affect when you need to pay your taxes. By keeping track of your company year-end, notifying HMRC, and monitoring your taxable profits and losses, you can ensure that you meet your tax obligations on time.

For more information, or to speak to a member of our team to find out how we can help you and your business, contact us today on 01767 699996 or thecrew@blue-skies.tv.