Can't pay Corporation Tax? How to ask HMRC for Time to Pay

In short: If a limited company can't pay its Corporation Tax by the due date, contact HMRC, before the deadline if you can, and ask for a Time to Pay arrangement: monthly payments HMRC agrees only if they're affordable (GOV.UK: If you cannot pay your tax bill on time). Interest still runs, and the Company Tax Return (CT600) is still due on time. Taxley prepares and files that return for £49.95 with micro-entity accounts, showing the tax left to pay and its due date, and files the accounts at Companies House once the return is paid and the accounts are finished; it doesn't pay the tax or arrange a plan.

Take the 30-second check to see whether Taxley fits your company, or see what a return costs.

Key facts (checked on 10 October 2026)

What happens if a company can't pay its Corporation Tax on time?

HMRC charges late payment interest automatically from the day after the due date until the tax is paid, and tries to contact the company to agree a way forward. HMRC can work with a company that contacts it on an affordable way to pay; one that ignores HMRC risks debt collection (GOV.UK: if you do not pay your tax bill).

For a company with taxable profits of up to £1.5 million, Corporation Tax is due 9 months and 1 day after the accounting period ends (GOV.UK: Pay your Corporation Tax bill), and the law makes it carry interest from then until payment (Taxes Management Act 1970 s.87A). Except where it suspects fraud, HMRC says it will try to contact you and agree a way forward before taking action. It may ask you to agree a Time to Pay arrangement, or use overpaid tax that would normally be repaid to clear other tax debts (GOV.UK: What will happen if you do not pay your tax bill). Companies with profits above £1.5 million pay in quarterly instalments under different rules, which this guide doesn't cover.

Who do you contact at HMRC if the company can't pay?

Use HMRC's digital assistant for payment problems, which covers Corporation Tax, or call the Corporation Tax payment helpline on 0300 200 3840, Monday to Friday, 8am to 6pm (GOV.UK: Payment problems). That GOV.UK page offers no online payment plan service for Corporation Tax, so expect to agree the plan with HMRC directly.

HMRC calls these contacts its Payment Support Service, for anyone who can't pay the tax they owe or disagrees with the amount (GOV.UK: What will happen if you do not pay your tax bill). When the digital assistant can't answer, it can transfer you to a webchat with an HMRC adviser if one is available. The helpline is for companies that have missed the Corporation Tax payment deadline. If someone else, such as an accountant, will deal with a debt collection agency for you for more than 24 hours, HMRC needs written authority on form 64-8.

How do you ask HMRC for a Time to Pay arrangement, step by step?

Work out what the company owes and can afford, cut the debt as far as you can, gather the company's figures and bank details, then contact HMRC and propose monthly payments. File the CT600 on time whatever happens. Seven steps cover it, and the last one checks the plan stays on track (GOV.UK: Setting up a payment plan).

Step 1: Confirm how much is owed and when it was due

Take the Corporation Tax payable for the accounting period from the tax computation or CT600, less anything already paid. The due date is 9 months and 1 day after the period ends; HMRC's own example gives a deadline of 1 October 2010 for a period ending 31 December 2009 (GOV.UK: Corporation Tax interest charges). Our deadlines guide covers long periods.

Step 2: Reduce the debt before asking for a plan

Pay what you can now, because interest stops on every pound paid. For company tax debt, GOV.UK says you must reduce the debt as much as possible before a plan is set up, for example by releasing stock, vehicles or shares. HMRC may ask directors to put personal funds into the business, accept lending or extend credit (GOV.UK: Setting up a payment plan).

Step 3: Gather the company's figures and bank details

GOV.UK lists three things: the reference number for the tax, usually the company's Unique Taxpayer Reference from HMRC's letters; UK bank details you're authorised to set up a Direct Debit on; and the company's income and spending (GOV.UK: Setting up a payment plan).

Step 4: Contact HMRC, ideally before the payment date

Use the payment problems digital assistant, which can pass you to a webchat with an HMRC adviser, or call 0300 200 3840 (GOV.UK: Payment problems). Be ready to say whether the company can pay in full, how much it can repay each month, whether other taxes are due, what it earns and spends each month, and what savings or investments it has (GOV.UK: Setting up a payment plan).

Step 5: Propose monthly payments the company can keep up

HMRC asks how the company will pay as quickly as it can, then checks the proposal is realistic and affordable (GOV.UK: Setting up a payment plan). A plan has no time limit: its length depends on the debt and what the company can afford, and paying more each month costs less interest (GOV.UK: How much you'll pay). If no plan is agreed, HMRC asks for the full amount.

Step 6: File the CT600 by its own deadline anyway

Send the Company Tax Return within 12 months of the end of the accounting period, even if none of the tax has been paid (GOV.UK: Company Tax Returns). A payment plan covers the tax, not the return, and a late return brings an automatic £200 penalty for filing dates from 1 April 2026 (GOV.UK: Penalties for late filing).

Step 7: Check the plan stays on track every month

Check each instalment leaves the bank on time. Contact HMRC if anything changes: the plan can be made longer or shorter. If a payment is missed, HMRC will contact you and, where possible, rearrange the plan, and a new tax bill you can't pay may be added to it (GOV.UK: How much you'll pay).

How much late payment interest does HMRC charge on Corporation Tax?

HMRC's late payment interest rate is 7.75% a year from 9 January 2026, set at the Bank of England base rate plus 4%. Interest is simple and daily: it runs from the day after the payment deadline until the day the tax is paid, and HMRC doesn't charge interest on interest (HMRC interest rates; GOV.UK: interest charges).

The margin over base rate rose from 2.5% to 4% on 6 April 2025, so rates quoted before then are out of date (HMRC interest rates). Interest is automatic and you can't appeal against it, but if you think HMRC has worked it out wrongly you can write to Corporation Tax Services with an "interest objection" (GOV.UK: Corporation Tax interest charges). Late payment interest is deductible for Corporation Tax in the accounting period, or periods, in which it's incurred. HMRC's manual explains that interest on late paid Corporation Tax is brought into account as a loan relationship debit, with timing following the accounts (HMRC manual BIM45740). HMRC's penalties, by contrast, aren't treated as normal recurring expenses (HMRC manual BIM42520).

How much interest does £12,000 paid 120 days late cost?

About £305.75. At 7.75% a year, £12,000 builds up about £2.55 of simple interest a day, so 120 days costs £12,000 × 7.75% × 120 ÷ 365 = £305.75. Paying the same £12,000 in four monthly instalments of £3,000 cuts the interest to £188.55, because each payment stops interest on its share (HMRC interest rates).

Worked example. Elm Row Lettings Ltd, a fictional company, has an accounting period ending 30 April 2025 and owes £12,000 of Corporation Tax, due on 1 February 2026. It files its CT600 on time, by 30 April 2026, but pays the tax on 1 June 2026. Counting the day of payment, as HMRC's example does, interest runs from 2 February to 1 June 2026: 27 days in February, 31 in March, 30 in April, 31 in May and 1 in June make 120 days (GOV.UK: Corporation Tax interest charges). All of it falls after the 9 January 2026 rate change, so 7.75% applies throughout. The formula is tax unpaid × annual rate × days late ÷ 365: £12,000 × 0.0775 = £930 a year, ÷ 365 = £2.5479 a day, × 120 = £305.753, rounded to £305.75.

Each row is £3,000 × 0.0775 × days ÷ 365, rounded to the penny: £232.50 × 28 ÷ 365 = £17.84, for example. The total of £188.55 is £117.20 less than paying all £12,000 on 1 June 2026. HMRC calculates the actual charge, and its figure may differ by a few pence from this simple-interest estimate, for example in a leap year.

Do you still have to file the CT600 if the company can't pay?

Yes. Filing and paying are separate duties with separate charges. The Company Tax Return is due 12 months after the accounting period ends, and a late return gets an automatic £200 penalty for filing dates from 1 April 2026, even while a payment plan is being agreed (GOV.UK: Penalties for late filing).

The penalties grow with time: another £200 at 3 months, then HMRC estimates the bill and charges 10% of the tax still unpaid if the return is 6 months late (18 months after the accounting period ends), rising to 20% if it is 12 months late (2 years after the period ends) (GOV.UK: Penalties for late filing). The flat amounts doubled from £100 and £200 for filing dates on or after 1 April 2026 (GOV.UK: Increases to Corporation Tax late filing penalties). Because the 10% and 20% penalties are a share of tax still unpaid, a company that can't pay has more to lose from filing late, not less. Read what happens if you file your CT600 late for appeals, and HMRC Corporation Tax determinations for HMRC's estimate.

What can HMRC do if the company doesn't pay or agree a plan?

HMRC can use a debt collection agency, take and sell things the business owns or take money from its bank account (in England, Wales and Northern Ireland), take it to court or close the company down (GOV.UK: If you do not contact HMRC or refuse to pay). HMRC uses these powers only as a last resort (GOV.UK: enforcement powers).

Debt collection agencies working for HMRC contact you only by letter, text or phone, never by visiting, and you can agree a Time to Pay arrangement with them (GOV.UK: HMRC and debt collection agencies). HMRC can recover debts of £1,000 or more directly from bank accounts in England, Wales and Northern Ireland when enough funds are held (GOV.UK: direct recovery of debt). HMRC applies to make a company insolvent only after considering every other way to recover the debt (GOV.UK: Insolvency).

Which step should the company take now?

That depends on whether the payment date has passed, whether the CT600 is filed and whether HMRC is already chasing. The table matches each situation to the next action and its deadline, using GOV.UK's guidance on payment plans and late filing (GOV.UK: Setting up a payment plan).

Can Taxley help when the company can't pay its Corporation Tax?

Partly. Taxley (taxley.co.uk), UK online software that prepares and files the Company Tax Return (CT600) with HMRC and the annual accounts with Companies House, works out the tax, shows what's left to pay and the payment date, and lets you file the return on time even when none of the tax has been paid.

In the return's "Corporation Tax already paid" section, leave the amount blank if nothing has been paid: the whole tax then shows as still to pay, with a "Pay by" date, and you can still file. Taxley doesn't work out the 17-character payment reference, which is on HMRC's notice to deliver and in the company's HMRC online account. It's software, not an accountant or tax agent: it doesn't pay the tax, set up a payment plan or talk to HMRC for you, and it isn't tax advice. It doesn't support companies that pay by quarterly instalments. The fee is £49.95 with micro-entity accounts or £139 with small-company accounts, including filing the accounts at Companies House once the return is paid and the accounts are finished.

The late filing penalty and interest calculator works out the filing penalties and late payment interest at HMRC's published rates, assuming the tax is paid in one go, so it doesn't model part payments or a plan. The deadline calculator gives the payment and filing dates for a period end. Take the 30-second check to see whether Taxley fits your company, or see the prices.

Frequently asked questions

Does a Time to Pay arrangement stop late payment interest?

No. Interest keeps running on whatever is unpaid until it's paid, so a plan spreads the tax without freezing the cost. GOV.UK says paying the debt quicker means paying less in total, because less interest builds up (GOV.UK: How much you'll pay).

Can I appeal if HMRC refuses a payment plan?

No. GOV.UK says you can't appeal against HMRC's decision, but you can complain if you're unhappy with how you were treated (GOV.UK: Help and advice). Without a plan, HMRC asks for the full amount, so offer what the company can genuinely afford.

Is not having the money a reasonable excuse for a late CT600?

No. GOV.UK lists a payment that failed because you didn't have enough money among things that won't count as a reasonable excuse (GOV.UK: Reasonable excuses). File the return on time and deal with the tax separately with HMRC.

Can HMRC use a tax repayment to clear the Corporation Tax debt?

Yes. GOV.UK says HMRC may use overpaid tax that would normally be repaid to you to clear other outstanding tax debts (GOV.UK: What will happen if you do not pay your tax bill). A repayment due to the company may then reduce its debt instead of reaching its bank account.

General information, not personalised tax or accounting advice.