Table of Contents
- Key Takeaways
- What Is Corporation Tax?
- Who Pays Corporation Tax?
- When Should You Pay Corporation Tax And What Happens If You Don’t Pay Your Corporation Tax?
- First Steps: Don’t Panic, Take Action
- Call HMRC: You Might Be Able to Set Up a Payment Plan
- Who Qualifies for a Payment Plan?
- What You’ll Need Before You Call HMRC
- What a Typical Payment Plan Looks Like
- Can I Still Get a Loan to Pay My Tax Bill?
- How MacManus Asset Finance Can Help (20 Years of Experience)
- FAQ
Key Takeaways
- If you can’t pay your corporation tax bill on time, it’s important to act quickly.
- Contact HMRC as soon as possible to discuss a payment plan.
- A payment plan lets you spread the cost over time instead of paying all at once.
- You will need to share some information about your business and finances when asking for a payment plan.
Paying taxes is an important part of running a business, not just in the UK, worldwide and although each country has a different approach when it comes to taxing their constituents, the essence of why it exists is still the same.
The reason why they exist is because they help the government fund public services like schools, hospitals, and roads that everyone depends on. But for many businesses, paying taxes can be a big challenge. This is because nothing is guaranteed in the business world, and usually it might be because of tight budgets, unexpected costs, or slower sales.
You also cannot opt not to pay taxes because it is fundamentally against the law. So inevitably you need to pay taxes to keep your business up and running so you won’t find yourself on the other side of the law.
There are remedies, however, if you cannot pay your corporation tax law on time. It is not the end of the world. This article will help you learn about payment plans, how to work with HMRC, and how expert support from companies like MacManus Asset Finance — with 25 years’ experience — can help you manage your business finances during tough times.
What Is Corporation Tax?
Corporation tax is a tax that corporation companies must pay on their profits. When a business makes money after paying its costs, such as wages, outstanding bills against other businesses, and other monthly costs such as utilities, expenses, furniture, and fixtures. It has to give a percentage of that profit to the government. This is the money that helps pay for public services like schools, hospitals, and roads.
This is the corporation’s way of chipping in for the overall development and welfare of the community.
Who Pays Corporation Tax?
Most limited companies and some organisations must pay corporation tax and usually the directors of the said limited companies are responsible for paying these taxes to ensure continuity of the business.
If your business is registered as a company with Companies House, it also has to pay corporation tax on its profits but it has to register first within the first 3 months since it started operations. Sole traders and partnerships don’t pay corporation tax but pay income tax instead.
When Should You Pay Corporation Tax And What Happens If You Don’t Pay Your Corporation Tax?
Corporation tax bills must be paid within nine months and one day after your company’s accounting period ends. Always keep in mind this deadline because this will prevent you from incurring unwanted chargers in the future. In a more detailed explanation, if your company’s financial year ends on March 31 2025, the tax must then be paid by January 1, 2026.
If you miss your corporation tax payment deadline, as expected, the HMRC will charge you interest and penalties. These extra costs make your bill bigger. This means you’ll owe more the longer you wait.
Currently, the interest rate is the Bank of England base rate plus 2.5%.
But starting in April 2025, it will go up to base rate plus 4%. That’s 1.5% higher than before. This can make things much harder for your business.
To learn more about the penalties and extra charges for late payments, visit Real Business Rescue.
First Steps: Don’t Panic, Take Action
HMRC will always find the best possible solution for your business, especially if you cooperate with them and not give them a hard time. Which is why if you are unable to pay your corporation tax, always remain calm and get in touch with HMRC as soon as possible.
They will be less harsh and will listen more to your concerns because they understand businesses that are struggling with their liabilities. You just have to be honest with them.
Call HMRC: You Might Be Able to Set Up a Payment Plan
HMRC offers what’s called a “Time to Pay” arrangement. Now this is the payment plan for corporation tax that HMRC offers to corporations. This is a payment plan that lets you pay your corporation tax bill in smaller amounts over a longer period. This is what you need to get if you do not know what to get in order to pay. To get this, you need to call HMRC or use their online service to explain your situation. They will look at your case and may agree to spread out your payments.
Who Qualifies for a Payment Plan?
Not every business will automatically get a payment plan, but many can qualify if they show they are struggling but want to pay. HMRC will ask questions about your income, expenses, and other debts to decide if you can afford the plan. Being honest and providing accurate information will help you get approved.
However, there will always be a chance you get rejected for a payment plan. Search online and look for reputable businesses that could offer to help you.
Call MacManus Asset Finance today for a free consultation!
What You’ll Need Before You Call HMRC
Before you contact HMRC, gather important documents and information like:
- Your company’s financial details (profit and loss, cash flow)
- How much tax you owe
- Your bank statements
- Details about other debts or payments due
Having this ready will make the process smoother and faster.
What a Typical Payment Plan Looks Like
Payment plans usually last a few months up to a year or more, depending on your business’s situation. You might pay a set amount every month until your tax is fully paid. Sometimes interest or small fees may still apply, but this is usually better than facing penalties for not paying at all.
Can I Still Get a Loan to Pay My Tax Bill?
Yes! Some businesses choose to get a business loan or other finance products to cover their corporation tax bill. This can help you avoid late payments and penalties. However, it’s important to consider the cost of borrowing and how it fits your business budget.
How MacManus Asset Finance Can Help (25 Years of Experience)
MacManus Asset Finance has helped businesses across the UK to solve their liabilities, such as corporation tax loans. Not just only that, you can also apply for other loans such as VAT, Invoice, Asset Finance, Business Loans, and Car Finance at a very affordable rate.
We prioritise your needs first before business. Which is why we have won the Moneyfacts Business Awards last year (2024) and now won the Commended award for the same awards this year. Proving that we care about our customers.
FAQ
Q: Can HRMC reject my request, of so, what happens?
A:Yes. Ask for your case to be referred to an independent adjudicator. If it is still not resolved, MacManus Asset Finance offers Corporation Tax Loans.
Q: Will a payment plan affect my credit rating?
A: No.
Q: How soon should I contact HMRC if I can’t pay?
A: Contact HMRC as soon as possible.
