Can't pay Corporation Tax? It does not work like VAT.
Most business owners assume a late Corporation Tax bill triggers the same penalties as a late VAT bill. It does not. Knowing the difference changes what you should do first. We are a commercial finance broker, and this page explains the position before it explains what we do.
Three things people get wrong
Corporation Tax is due 9 months and 1 day after your accounting period ends. The return is due three months after that. They are separate obligations and they carry different consequences.
No day-15 penalty
Unlike VAT, a late Corporation Tax payment does not trigger a 3% penalty at day 15 or another at day 30. Many people brace for a charge that is not coming.
Interest runs from day one
What you do get is daily interest from the day after the deadline, at 7.75% a year. It is not dramatic on day one, and it does not stop until the balance clears.
The penalties are on filing
The CT600 return is due 12 months after your period end, three months after the payment was due. Miss that and there are fixed penalties, and from 1 April 2026 they doubled to £200, then a further £200 at three months late.
Larger companies paying by quarterly instalments sit under a different set of rules, with their own underpayment interest. If that is you, the timings above will not match your position.
What you can do
Talk to HMRC about Time to Pay
There is no self-serve online route for Corporation Tax the way there is for VAT under £50,000, so this means a phone call and a negotiation. HMRC will want to understand the cashflow and may ask for a payment proposal. It can work, particularly with a clean history, but there is no guarantee of agreement.
How Time to Pay works →Fund the bill and stop the interest
Finance settles the bill so interest stops accruing, and you repay across 3 to 12 months instead. This tends to make sense when the amount is significant, when you want certainty rather than a negotiation, or when paying outright would leave nothing for payroll and suppliers.
See Corporation Tax loans →File the return regardless
Whatever you decide about paying, file the CT600 on time. Filing and paying are separate obligations with separate consequences, and filing late adds fixed penalties on top of a problem you already have. Filing on time while you sort the payment costs nothing.
Being straight about which is right
We arrange finance, so we have an obvious interest here. That is exactly why it is worth saying plainly when finance is the wrong call.
When to just pay the interest
If the money is genuinely arriving in a few weeks, 7.75% a year over a short window can cost less than arranging finance. Do the sum before you borrow.
When funding wins
Larger bills, or when the cash is not coming soon enough, or when you need certainty now rather than the outcome of a call with HMRC.
When it needs more than one piece
When the Corporation Tax bill is one of several pressures rather than the whole problem. That is usually a combination rather than a single loan, and working out the combination is the job. Tell us the full picture and we will build round it.