Quarterly Corporation Tax instalments: large companies pay before the accounting period is finished

Large companies can have to pay Corporation Tax in instalments before the annual accounts and Company Tax Return are final. The finance team therefore needs a live tax forecast during the accounting period rather than waiting until year end to calculate one tax payment nine months later.

Large-company instalment rules begin above the relevant profit threshold

HMRC's current manual says a company is generally "large" for quarterly-instalment purposes where taxable profits exceed £1.5 million for the accounting period, subject to rules that adjust thresholds for associated companies and other circumstances. Companies with profits above £20 million are generally treated as "very large" under the separate accelerated regime.

Do not test only the standalone headline threshold. Associated companies can reduce the effective limit. Groups should calculate status centrally so one subsidiary does not assume it remains outside instalments because its own profit is below £1.5 million before adjustment.

A normal large company with a 12-month period pays four instalments

GOV.UK says a normal large company with a 12-month accounting period generally pays four equal instalments. The first is due six months and 13 days after the first day of the accounting period, followed by instalments at three-month intervals.

For a calendar-year 2026 accounting period, GOV.UK's example dates are 14 July 2026, 14 October 2026, 14 January 2027 and 14 April 2027. Two payments therefore fall before the accounting period ends. Treasury needs tax forecasts while trading is still in progress.

Very large companies pay on an earlier schedule

HMRC's August 2026 manual confirms that very large companies use a more accelerated instalment regime, with all instalments falling within or close to the accounting period according to statutory formulas. The exact dates depend on the period length and company status.

A group moving from large to very large status should not simply reuse last year's calendar. Tax and treasury teams should determine the regime before the first due date and load the correct schedule into banking approvals.

Each instalment is based on an estimate of the current period's total liability

GOV.UK says the company first estimates the total Corporation Tax liability for the accounting period, including relevant additional charges and reliefs, then uses that estimate to calculate instalments. That means the forecast should be updated as profit, capital allowances and tax adjustments change.

If expected liability rises from £2 million to £3 million halfway through the year, later instalments may need to increase and earlier underpayments can create interest. Do not keep paying the original quarter amount merely because it was approved in the annual budget.

Build each instalment as a separate treasury event with the correct period reference

Use the Corporation Tax 17-character reference for the accounting period being paid and check it before release. The company can have several tax years and group entities paying HMRC at the same time, so saved beneficiary references are a common allocation risk.

Check bank limits before the first large instalment. A £750,000 quarterly payment may exceed ordinary online user authority even though the annual tax bill was expected. Arrange the approver or CHAPS route early rather than discovering the limit on due date.

Reconcile instalments to the final return and interest position

When the Company Tax Return is finalised, compare actual liability with instalments already paid. Any remaining amount must be settled according to the regime, while overpayments can become refundable or usable against other liabilities.

Keep an instalment schedule showing forecast liability, payments made, revised forecasts and final tax. This gives management visibility into whether the company is carrying an HMRC creditor or overpayment and prevents the final return from appearing to create a completely new tax bill.

Large groups should include associated-company threshold effects in acquisition planning. Buying or forming additional associated companies during an accounting period can alter the profit threshold used to determine whether quarterly instalments apply. Tax teams should model the consequence as part of transaction planning rather than discover after completion that the payment timetable accelerated.

Use forecast ranges, not one point estimate. If current tax is expected between £2.4 million and £2.8 million, treasury can reserve the higher scenario while tax refines the number. This reduces the risk that a late profit upgrade creates an unexpected instalment and interest charge just before the due date.