A Corporation Tax loan is a short-term business loan used to pay a company’s Corporation Tax bill by its deadline, repaid to the lender in monthly instalments. Most companies must pay 9 months and 1 day after their accounting period ends. The loan costs interest and fees, and HMRC’s Time to Pay arrangement is the main alternative.
At a glance
- Payment deadline, profits up to £1.5m
- 9 months and 1 day after the accounting period ends
- Company Tax Return deadline
- 12 months after the end of the accounting period
- Main rate
- 25% on profits over £250,000
- Small profits rate
- 19% on profits of £50,000 or less
- HMRC late payment interest
- 7.75% from 9 January 2026
- Quarterly instalments
- Profits at an annual rate above £1.5m
What is a Corporation Tax loan?
A Corporation Tax loan is a short-term business loan used to pay a company’s Corporation Tax bill on time, which the company then repays to the lender in instalments. It is sometimes called a tax bill loan or a business tax loan. It is a commercial loan from a lender, not something HMRC provides.
These loans are typically unsecured and commonly repaid monthly over 3 to 12 months, and the lender often pays HMRC directly. Those are general market patterns, not Capzy terms. This page sits alongside the other business finance guides on tax bills and government-backed schemes.
A loan adds interest and fees to the tax your company already owes. Capzy does not give tax advice. Ask your accountant to confirm the liability, and compare the loan with HMRC’s own payment plan before you borrow.
When is Corporation Tax due?
A company with taxable profits of up to £1.5 million must pay its Corporation Tax 9 months and 1 day after the end of its accounting period. Larger companies pay in quarterly instalments.
| Company | When payment is due |
|---|---|
| Taxable profits up to £1.5 million | 9 months and 1 day after the end of the accounting period |
| Large: profits at an annual rate of more than £1.5 million but less than £20 million | Four equal instalments for a 12-month period. The first is due 6 months and 13 days after the first day of the accounting period, the next two follow at 3-month intervals, and the last is due 3 months and 14 days after the last day of the period |
| Very large: profits at an annual rate of more than £20 million | Instalments start 2 months and 13 days after the first day of the accounting period, then quarterly |
| Company Tax Return, all companies | Filed within 12 months of the end of the accounting period it covers |
A large company does not need to pay by instalments if its total liability is under £10,000, or in the first year it becomes large if its profits do not exceed £10 million. These thresholds are divided between associated companies, so check your own position with your accountant.
What are the current Corporation Tax rates?
The main rate of Corporation Tax is 25% and the small profits rate is 19%, with Marginal Relief in between. The same rates apply for the financial years 2023 to 2026.
| Taxable profits | Rate |
|---|---|
| £50,000 or less | 19% small profits rate |
| Between £50,000 and £250,000 | 25% main rate, reduced by Marginal Relief (standard fraction 3/200) |
| Over £250,000 | 25% main rate |
The £50,000 and £250,000 limits are reduced proportionately for short accounting periods and by the total number of associated companies.
What does paying Corporation Tax late cost?
HMRC may charge interest if you do not pay Corporation Tax on time, and its late payment interest rate is 7.75% from 9 January 2026. The rate is set at the Bank of England base rate plus 4%, so it changes when the base rate does. As an illustration, 7.75% a year on a £30,000 bill paid 90 days late comes to about £573 in interest.
The illustration is our own arithmetic from HMRC’s published rate, assuming simple interest and no change in the rate. Interest on late quarterly instalments is set separately, so check HMRC’s interest rates page if your company pays that way. This page does not set out a penalty position for late payment of Corporation Tax; ask HMRC or your accountant.
Filing the Company Tax Return late is a separate matter with its own penalties, whether or not the tax has been paid:
| Time after the filing deadline | Penalty |
|---|---|
| 1 day | £200 |
| 3 months | Another £200 |
| 6 months | HMRC estimates the Corporation Tax bill and adds a penalty of 10% of the unpaid tax |
| 12 months | Another 10% of any unpaid tax |
If the return is late three times in a row, the £200 penalties rise to £1,000 each. A loan covers the payment only. The return still has to be filed on time.
How do you spread a Corporation Tax bill with a loan?
You borrow the amount of the bill, HMRC is paid by the deadline, and the company repays the lender over an agreed term. The usual steps are:
- Confirm the liability and the due date with your accountant, ideally well before the 9 months and 1 day are up.
- Gather the evidence a lender usually asks for: the tax computation or an HMRC statement showing the liability, recent business bank statements and the latest filed accounts.
- Apply. The lender assesses the company, subject to status and its own criteria, and a full application may involve a hard credit search.
- If you accept an offer, the lender often pays HMRC directly. Otherwise the funds reach the company’s account and you make the payment.
- The company repays the lender in instalments, typically monthly, including interest and fees.
If the loan completes after the deadline, HMRC’s interest still applies to the days the tax was overdue, so start early.
Corporation Tax loan or HMRC Time to Pay: which is which?
A loan replaces the HMRC debt with a debt to a lender, while Time to Pay leaves the debt with HMRC and spreads it over a plan HMRC considers affordable. Read our explainer on Time to Pay arrangements before choosing, because for some companies it is the better route.
| Corporation Tax loan | HMRC Time to Pay | |
|---|---|---|
| Who decides | The lender, subject to status and its criteria | HMRC, which checks whether the plan is affordable |
| What it costs | The lender’s interest and fees. Compare the total cost of credit | HMRC interest on the balance. Paying the debt quicker means paying less interest |
| Length | Set by the lender, commonly 3 to 12 months | No time limit. It depends on what you owe and what you can afford each month |
| What is expected of you first | Evidence that the company can afford the repayments | The company must reduce the debt as much as possible first, for example by releasing stock, vehicles or shares |
| Directors | A lender may ask for a personal guarantee | HMRC may ask directors to put personal funds into the business, accept lending or extend credit |
| Where the debt sits | With the lender, once HMRC has been paid | With HMRC until the plan is finished |
Who does a Corporation Tax loan suit, and when is it the wrong choice?
It suits a profitable company that can afford the monthly repayments and would otherwise have to drain working capital to pay a year’s tax in a single day.
It is the wrong choice in these cases:
- The company cannot afford the repayments. Speak to HMRC about a payment plan and to your accountant. Do not borrow.
- Time to Pay would cost less in total and HMRC is willing to agree it.
Where no payment is made and no plan is agreed, HMRC says it may use debt collection agencies, take goods, go to court or close down a company that owes a business tax.
How does Capzy help with a Corporation Tax bill?
Capzy is a credit broker, not a lender. We introduce your company to lenders that fund tax bills, set the offers side by side, and are paid by the lender. You can see what your company could borrow with a soft search that does not affect your credit score; a lender may run a hard search on a full application.
Any offer is subject to status and lender criteria. We do not give tax advice. Compare any offer with what HMRC’s own payment plan would cost before you decide.
What are the alternatives to a Corporation Tax loan?
The alternatives are a Time to Pay arrangement with HMRC, paying from reserves or an agreed overdraft, or a different kind of finance that frees up cash the company already has tied up.
- Time to Pay: instalments agreed with HMRC, with interest on the balance.
- Reserves or an overdraft: usually the simplest route if the limit is already in place.
- Invoice finance or revolving credit: releases or bridges working capital, so the tax can be paid from the company’s own cash.
If the bill in front of you is for VAT, the deadlines and penalties are different: see spreading a VAT bill with a loan. Before accepting any offer, read how to compare business lenders.
Sources
- Pay your Corporation Tax bill, GOV.UK
- Company Tax Returns, GOV.UK
- Company Tax Returns: penalties for late filing, GOV.UK
- Corporation Tax: paying in instalments, HM Revenue & Customs
- Pay Corporation Tax if you’re a very large company, HM Revenue & Customs
- Rates and allowances for Corporation Tax, HM Revenue & Customs
- Corporation Tax rates and allowances, GOV.UK
- Marginal Relief for Corporation Tax, HM Revenue & Customs
- HMRC interest rates for late and early payments, HM Revenue & Customs
- If you cannot pay your tax bill on time, GOV.UK
- If you cannot pay your tax bill on time: pay in instalments, GOV.UK
Capzy is a credit broker, not a lender. We get paid by the lender. This page is general information, not financial, tax or legal advice. Finance is subject to status, lender criteria and affordability; rates and terms depend on your circumstances.