Corporation Tax Payment Plan: How HMRC Time to Pay Works

Corporation Tax is due nine months and one day after your accounting period ends. If your company's year-end is 31 March, the tax is due 1 January the following year. If cash flow makes that payment impossible, HMRC's Time to Pay (TTP) scheme can help — but only if you apply before the deadline, engage honestly, and meet the conditions HMRC sets.

What Time to Pay is: TTP is an informal arrangement (not a legal scheme) where HMRC agrees to let a company pay its tax liability in instalments over a defined period, typically up to 12 months. HMRC does not advertise a fixed maximum duration — it assesses each case individually based on the amount owed, the company's circumstances, and its ability to pay. Arrangements of 6–12 months are common; longer arrangements are possible in exceptional cases.

Interest on deferred amounts: HMRC always charges interest on tax paid after the due date, even if you are in a TTP arrangement. The current rate is 7.75% per year (the Bank of England base rate plus 2.5%) — applicable from the day after the due date until the tax is paid in full. A TTP arrangement does not waive or reduce this interest. There are no late payment penalties while a TTP is in place and you are complying with instalments, but interest accrues continuously.

How to apply — smaller liabilities (under £100,000): for Corporation Tax liabilities of less than £100,000, HMRC provides an online Time to Pay self-service portal. You access it through your Government Gateway account, navigate to the Corporation Tax payment options, and follow the prompts. The system will ask about the amount owed, your payment capacity, and propose an instalment plan. This is the fastest route and typically gives an immediate decision.

How to apply — larger liabilities (£100,000 and above): for liabilities of £100,000 or more, the online portal is not available and you must call HMRC's Business Payment Support Service (BPSS) on 0300 200 3835. HMRC will ask detailed questions about the company's financial position — recent accounts, cash flow projections, assets, liabilities, and what payment it can realistically make. Have these prepared before you call. HMRC may ask for a partial upfront payment before agreeing to a plan for the balance.

When to apply — timing is critical: you must apply before your Corporation Tax due date, not after. Applying after the deadline means HMRC will already have raised a penalty and the terms of any arrangement become harder to negotiate. If you know your company will struggle to pay, contact HMRC proactively — even weeks before the deadline. HMRC staff respond significantly better to companies that approach them honestly in advance.

What HMRC assesses: HMRC will ask why the company cannot pay on time, whether the difficulty is temporary or structural, what assets the company holds, and whether there are any related party transactions or director loan account balances. A company that has made large loans to its director while claiming it cannot pay tax will face much more scrutiny. HMRC expects companies to use available resources before requesting a TTP — including calling in director loan balances.

Defaulting on a TTP: if you miss an instalment under the TTP arrangement, HMRC can cancel the plan and demand immediate payment of the full outstanding amount. At that point penalty surcharges also apply. Keep HMRC informed if your circumstances change mid-arrangement — proactive communication preserves goodwill; silent default does not.