Corporation tax - how does a company’s year-end affect the due dates?
Chris Campbell CA, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS looks at how a company’s accounting year end can affect the due dates for corporation tax purposes
The due date for a company to submit its corporation tax liability as well as any required corporation tax returns will largely depend on the company’s accounting year end and the length of its accounting period (See Schedule 18 Finance Act 1998).
Most companies will prepare their accounts for a twelve-month period – the most straightforward scenario. In this case, the due date for the corporation tax return will be 12 months after the end of the accounting period. Unless the company is classed as a large or a very large company, corporation tax liability will be payable 9 months and 1 day after the end of the accounting period. This means the corporation tax return for the year ended 31 March 2024 will be due for submission to HMRC by 31 March 2025 and the corporation tax liability due for payment by 1 January 2025.
A similar principle will apply for companies with an accounting period of less than 12 months. For instance, a company with a nine-month accounting period ended 31 December 2024 will have to submit its corporation tax return to HMRC by 31 December 2025 and the corporation tax liability will be due for payment by 1 October 2025.
The position gets more complicated where the company has an accounting period lasting more than 12 months as a corporation tax accounting period cannot exceed 12 months. For periods of account lasting 12 months, the submission deadline is normally 12 months after the end of the accounting period. However, this is extended to twelve months from the end of the accounting period when the accounting period isn't longer than 18 months, and 30 months from the beginning of the accounting period when the accounting period is longer than 18 months.
So, if a company had a period of account from 1 January 2023 to 30 June 2024, it would have two corporation tax accounting periods and would need to submit two corporation tax returns (one for the year ended 31 December 2023 and another for the six months ended 30 June 2024). Both returns would be due for submission by 30 June 2025.
Except for large or very large companies, the corporation tax liability is still payable 9 months and 1 day after the end of each corporation tax accounting period. Using the example above, the corporation tax payable for the year ended 31 December 2023 would be payable by 1 October 2024 and the corporation tax payable for the six months ended 30 June 2024 would be payable by 1 April 2025. The company would have two corporation tax payment dates but one submission date (30 June 2025 as per above).
Large or very large companies are required to pay their corporation tax by quarterly instalments. A large company is one where the taxable profits for the accounting period are between £1.5 million and £20 million per year. A very large company has taxable profits above £20 million. These thresholds are dividend by the number of associated companies (51% group companies before 1 April 2023). There are some exceptions to these rules, including the year of grace in most cases, where the profits for the accounting period are no more than £10 million.
A large company needs to pay its corporation tax liability in quarterly instalments. In most cases, these are due 6 months and 13 days after the first day of the accounting period then every 3 months thereafter. The final instalment is 3 months and 14 days after the last day of the accounting period.
For instance, large, a company with a 31 December 2024 year-end would be required to pay its corporation tax liability on
- 14 July 2024
- 14 October 2024
- 14 January 2025
- 14 April 2025
Different rules apply to corporation tax accounting periods which are less than 12 months.
A very large company also needs to pay its corporation tax liability in quarterly accelerated instalments. In most cases, these are due 2 months and 13 days after the first day of the accounting period and every 3 months following.
For instance, a very large company with a 31 December 2024 year-end would be required to pay its corporation tax liability on:
- 14 March 2024
- 14 June 2024
- 14 September 2024
- 14 December 2024
As for large companies, different rules apply to corporation tax accounting periods which are less than 12 months.
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