What Are the Penalties for Late UK Corporation Tax Payments?

When you’re running a business and managing deadlines, Corporation Tax can easily slip off your radar. But even a small delay can lead to bigger costs than you might expect. If you’re using accounting services in the UK, it’s important to stay ahead of key tax dates and understand what happens if you miss them.

While there’s no specific penalty for paying Corporation Tax late, interest charges and other financial consequences can quickly build up. Here’s what you need to know.

1. Is There a Penalty for Late Corporation Tax Payment?

There’s no direct late payment penalty from HMRC, but that doesn’t mean you’re off the hook. Interest is applied on any unpaid Corporation Tax from the day after it’s due until it’s fully settled.

• Payment deadline: 9 months and 1 day after your company’s accounting period ends 
• Late payment interest (as of 28 May 2025): 8.25% per annum 
• Interest is charged daily, not monthly 

2. What About Late Filing Penalties?

Even if you’re only a few days late filing your Company Tax Return, HMRC applies automatic penalties that escalate quickly:

• 1 day late: £100 penalty 
• 3 months late: Additional £100 penalty 
• 6 months late: HMRC estimates your bill and charges a 10% penalty on unpaid tax 
• 12 months late: Another 10% penalty is added 

These penalties are separate from interest charges and can significantly increase your tax bill.

3. Current Interest Rates for Late Corporation Tax Payments

Interest on late Corporation Tax payments is based on the Bank of England base rate, with a margin added by HMRC.

As of 28 May 2025, the rates are:

• Late payment interest: 8.25% per annum 
  • Bank of England base rate (4.25%) + 4% 
• Repayment interest: 3.25% per annum 
  • Base rate – 1%, with a minimum floor of 0.5% 

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Key details:

• Applies not just to Corporation Tax, but most other HMRC taxes 
• Interest is charged daily until the full amount is paid 
• Rates are updated regularly based on base rate changes 
• The rate was reduced from 8.50% to 8.25% in May 2025 

4. How Late Payments Impact Your Business

The consequences of late payments go beyond just added costs.

A. Financial and Cash Flow Stress

• Daily interest eats into your cash reserves 
• Penalties from late filing add to the burden 
• May signal wider financial trouble, affecting operations 

B. Legal and Enforcement Risks

Failure to pay on time can trigger serious action from HMRC, such as:

• Distraint: Seizing business assets to cover debt 
• Statutory demands: A formal notice demanding payment 
• Winding-up petitions: Legal action to liquidate your company 

These steps can have long-lasting effects on your business’s stability and credit standing.

C. Damage to Business Reputation

• Lowers your standing with HMRC 
• Can deter investors, lenders, and potential partners 
• May reduce your chances of securing contracts or funding 

5. How to Avoid Late Payment Issues

Being proactive makes all the difference. Here’s how to stay ahead:

• Know your deadlines: Mark key Corporation Tax dates in your calendar 
• Work with an accountant: Reliable accounting services in the UK can help keep you compliant 
• Contact HMRC early: If you can’t pay, ask about a Time to Pay arrangement 
  • Spread payments over a longer term 
  • Helps prevent penalties and enforcement 
• Communicate regularly: Don’t ignore letters or reminders from HMRC 

Summary

There’s no official late payment penalty for Corporation Tax in the UK—but interest starts building the day after the due date. As of May 2025, HMRC’s late payment interest rate is 8.25% annually, and late filing penalties can add up fast if you miss key milestones. The real risk goes beyond the money: legal enforcement, disrupted operations, and reputational damage can follow if your company repeatedly misses deadlines. Using reliable accounting services in the UK and staying in touch with HMRC early can help you manage your obligations, avoid stress, and keep your business financially healthy.

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