Corporation Tax guide
Late Corporation Tax explained, including HMRC interest, CT600 penalties, Time to Pay, debt recovery and the practical steps directors should take.
Short answer
HMRC charges late payment interest at the Bank of England base rate plus 4% from the day after Corporation Tax was due until payment. CT600 penalties apply separately, and HMRC may pursue recovery unless Time to Pay is agreed.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityLate Corporation Tax creates interest immediately, but prompt action can stop the problem becoming enforcement. Work out the correct liability, pay what the company can and contact HMRC before ignoring letters or making an unaffordable promise.
Interest starts after the due date
CT600 penalties are separate
Time to Pay may spread the debt
Ignoring HMRC can lead to enforcement
HMRC charges late payment interest on unpaid Corporation Tax from the day after the statutory payment deadline to the date cleared funds arrive. Since 6 April 2025 the formula has been the Bank of England base rate plus 4%, so the exact percentage changes when the base rate changes.
Interest compensates HMRC for late use of the money. It is normally deductible in calculating company profit, unlike penalties for breaking tax or company law.
Paying late produces interest. For returns due from 1 April 2026, filing the CT600 late creates a separate penalty regime: £200 immediately, another £200 after three months, then tax-related penalties at six and 12 months. Companies House can also penalise late statutory accounts.
Paying the tax does not file the return, and filing the return does not pay the tax. Check both statuses independently; earlier return deadlines can fall under the previous fixed-penalty amounts.
If the company cannot settle in full, contact HMRC as soon as possible with cash flow forecasts, current bank position, other tax debts and a realistic monthly proposal. HMRC considers arrangements case by case.
Interest usually continues during the arrangement. Missing an agreed instalment without speaking to HMRC can cancel it and restart recovery action.
HMRC can issue demands, use debt collectors, take money directly in qualifying cases, pursue court action and, where a company cannot pay its debts, petition for winding up. Directors should take insolvency advice if the company cannot pay creditors as they fall due.
Do not pay connected parties ahead of HMRC without advice when insolvency is likely. Directors' duties shift towards creditors as financial distress deepens.
Bring bookkeeping up to date, file any overdue CT600, separate the amount that is not disputed, make a payment where possible and contact HMRC with a documented proposal. Correct figures make a payment plan easier to assess.
Rates and deadlines are reviewed for 2026/27, but HMRC interest rates and individual circumstances can change the result. Check the linked official guidance or ask us before acting.
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Frequently asked
HMRC normally charges late payment interest. Separate penalties arise when the CT600 itself is late.
It changes with the Bank of England base rate. Check HMRC's current interest rates on GOV.UK.
Yes, through a Time to Pay arrangement where HMRC accepts the proposal after reviewing the company's circumstances.
Yes. Filing establishes the liability and prevents additional late return penalties from accumulating.
HMRC late payment interest is generally deductible for Corporation Tax, while penalties are generally not.
HMRC can petition to wind up a company where tax remains unpaid and recovery steps fail.
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
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Check the current rules
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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