There are several options available to pay corporation tax. We go through them all in detail so you can decide the best option. If your payment is received late HMRC will automatically charge you interest so ensure you pay corporation tax on time.
Recap: what is corporation tax?
Corporation tax is payable on profits of a limited company. The current tax rate is 19%.
A company with profits up to £1.5 million pays corporation tax once a year. This is typically 9 months and 1 day after the limited company year end.
So a company with a 31 December 2017 year end will pay corporation tax before 1 October 2018 deadline.
What you need to pay corporation tax?
To pay corporation tax you will need a 17 digit pay reference. HMRC uses this to know how the payment should be allocated.
The first 10 digits is the company unique tax reference (known as a UTR). The last 7 digits relates to the specific tax year.
Therefore the full pay reference will look something similar to this 0123456789A00001A.
How do I find my pay reference?
The 17 digit pay reference will be on the payslip you received from HMRC. The payslip is typically sent out shortly after the year end accounts are filed with HMRC.
If you don’t have a payslip? You can login to your HMRC online account and it can be retrieved there. To do this log in to your HMRC account. Then on the left menu select view account. Then select accounting periods. The drop down option lets you change the accounting period. After selecting the correct accounting period the 17 digit pay reference will be visible.
If you don’t have a HMRC online account and you are one of our clients then contact us. We will be able to provide you with the pay reference.
Pay corporation tax by card
In our opinion the easiest way to pay corporation tax is using a debit or credit card.
Simply select this link to go to HMRC payment
Then type in the payslip reference and the amount you need to pay.
Select continue and then type in your card details.
Pay corporation tax by electronic banking
Login to your online banking.
Then set up a payment to:
Account name: HMRC Cumbernauld
Sort code: 08-32-10
Account number: 12001039
Make sure to enter the reference number which is the 17 digit pay reference mentioned above.
Pay corporation tax by phone
Phone your bank.
You will need to provide the bank with the same information as mentioned above in how to pay by electronic banking.
Pay corporation tax at the bank
You can pay by cash or cheque by going into any of your banks branches. However you will need the payslip received from HMRC.
Then make the cheque payable to HM Revenue & Customs only. Make sure to write the 17 digit pay reference on the cheque. Even if it is just wrote on the back of the cheque ensure it is written somewhere.
Other options to pay corporation tax
There are other options on how to pay corporation tax. These include setting up a Direct Debit or setting up a CHAPS payment.
For more details on how to set these payment options up see HMRC Corporation Tax options.
Tip: Some of the options can take up to 5 working days. Therefore make the payment a few days in advance to avoid interest.
After you’ve made the payment
Unfortunately things do go wrong.
We often see payments allocated incorrectly by HMRC. This can be anything from mistyping the 17 digit reference to a glitch in HMRC systems.
Therefore to ensure the payment has been made. The first thing we recommend is to check the money has left your bank account.
Then you can check the payment has been received by going onto your HMRC online account. You may need to wait a few days for the account to be updated.
If you don’t have a HMRC online account and you are one of our clients then contact us. We will then check that the payment has been allocated correctly.
Tip: We recommend paying HMRC using a bank account in the company name. Often clients will pay Limited company taxes using personal bank accounts and vice versa. We recommend you avoid doing this as it increases the likelihood of errors occurring.
DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer