Agency Corporation Tax Payment Dates and Penalties: 2026/27 Deadlines

Rayhaan Moughal

28.11.2025

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Corporation tax deadlines can make or break an agency's cash flow. Miss a payment date, and you're facing interest charges that eat into your profit margins. Fall behind on instalments, and the penalties compound faster than client change requests.

The 2026/27 tax year brings familiar deadlines with familiar consequences for those who aren't prepared. Agency owners juggling client retainers, team salaries, and project costs often push tax planning to the bottom of their priority list. That approach costs more than the initial oversight suggests.

Corporation Tax Payment Deadlines

Corporation tax payments follow a structured schedule based on your company's accounting period end date and profit levels. The basic rule applies to companies with profits under £1.5 million: pay your corporation tax nine months and one day after your accounting period ends.

For agencies with accounting periods ending 31st March 2026, the corporation tax payment deadline falls on 1st January 2027. Companies ending their accounting year on 30th April 2026 face a payment deadline of 1st February 2027.

Large companies—those with profits exceeding £1.5 million—must pay corporation tax in quarterly instalments. These payments begin in the seventh month of the accounting period, continuing every three months until the fourth instalment.

Quarterly Payment Requirements

When your agency's profits hit £1.5 million, HMRC expects quarterly payments on account. This threshold applies to your current year profits, not the previous year's figures that determine your payment amounts.

The quarterly payment schedule works as follows:

First instalment: Due in month 7 of your accounting period
Second instalment: Month 10 of your accounting period
Third instalment: Month 13 (first month of following accounting period)
Fourth instalment: Month 16 (fourth month of following accounting period)

For a company with a 31st March year-end, instalments fall due on 14th October, 14th January, 14th April, and 14th July.

Each instalment equals 25% of your estimated corporation tax liability for the current period. HMRC bases the calculation on the previous year's corporation tax charge, adjusted for the current year's corporation tax rate.

Late Payment Penalties and Interest

If you pay your Corporation Tax late, HMRC charges late payment interest from the day after the normal due date until the tax is paid. Interest is calculated on a simple, daily basis rather than compounding.

The rate is set as a margin above the Bank of England base rate; from 6 April 2025 the government increased this margin so that late payment interest is effectively base rate plus 4 percentage points.

At the time of writing (late 2025), this gives a late payment interest rate of around 8% per year, but the exact figure will move in line with future base rate changes. Any late payment interest you pay is normally deductible for Corporation Tax purposes.

Penalties linked to late Corporation Tax returns

While there is currently no standard percentage “late payment penalty” for Corporation Tax, HMRC does charge penalties if you miss the filing deadline for your Company Tax Return.

If your return is even one day late you face a £100 fixed penalty, with another £100 added after three months. If the return is still outstanding after six months, HMRC can estimate your Corporation Tax bill and add a penalty of 10% of the unpaid tax, with a further 10% charged on any tax still unpaid after twelve months.

These penalties are based on the tax shown as unpaid on a late return and sit on top of any late payment interest charged.

Cash Flow Planning for Corporation Tax

Effective cash flow planning anticipates corporation tax obligations months before payment deadlines. Agency finances fluctuate with client payment cycles, project completions, and seasonal variations. Overlaying tax payments onto these patterns prevents financial strain.

Establish a corporation tax reserve account separate from your main business current account. Transfer monthly amounts equal to your estimated annual corporation tax liability divided by twelve. This approach spreads the cash flow impact across the year rather than creating a single large payment shock.

Monthly tax provisioning calculation: Take your estimated annual profit, multiply by the applicable corporation tax rate (25% for profits over £250,000, 19% for profits under £50,000, with marginal relief between these thresholds), and divide by twelve.

For agencies with variable profit margins, base calculations on conservative estimates rather than best-case scenarios. Better to over-provide and have surplus funds than scramble for last-minute payments.

Instalment Payment Strategies

Large agencies subject to quarterly payments need sophisticated cash flow management. The instalment system helps spread payments but requires accurate profit forecasting throughout the year.

Forecast accuracy matters because instalments are based on estimated current year profits. Underestimate significantly, and you'll face a large balancing payment. Overestimate, and you're providing HMRC with an interest-free loan.

Review profit forecasts quarterly when preparing instalment payments. Factor in known client wins, project completions, and team changes that affect profitability. Adjust subsequent instalments if your forecast changes materially.

Working capital considerations: Quarterly payments reduce available working capital throughout the year. Plan major investments, equipment purchases, and team expansion around instalment due dates. Avoid scheduling large expenditures immediately before corporation tax payments.

Penalty Mitigation and Payment Plans

HMRC offers various options when agencies struggle to meet corporation tax deadlines. Time to Pay arrangements allow businesses to spread payments over agreed periods, though interest continues accruing on outstanding amounts.

Reasonable excuse provisions may apply in exceptional circumstances:

Serious illness of key personnel responsible for tax affairs
Major system failures affecting payment processing
Postal delays (though electronic payment is expected)
Significant unforeseeable events affecting business operations

Document any circumstances that might constitute reasonable excuse. HMRC evaluates each case individually, considering the steps taken to minimise delays and prevent recurrence.

Professional advice timing: Contact HMRC before missing payment deadlines rather than after. Proactive communication demonstrates responsibility and often results in more favourable payment arrangements. Waiting until after penalties apply limits your options and negotiating position.

Technology and Payment Management

Modern payment systems simplify corporation tax management and reduce error risks. HMRC's online services allow electronic payments, deadline tracking, and payment history review.

Automated payment scheduling through direct debit arrangements ensures deadlines aren't missed due to diary oversight. Set up standing orders to transfer funds into tax reserve accounts monthly, maintaining adequate balances for payment dates.

Integration with accounting software provides real-time corporation tax estimates based on current year profits. Regular monitoring identifies when quarterly payment thresholds approach, allowing advance planning for the instalment system.

Getting Your Tax Planning Right

Corporation tax compliance requires systematic planning rather than last-minute scrambling. Agencies that embed tax planning into their financial management processes avoid penalties while maintaining healthy cash flow. The key lies in treating corporation tax as a regular business expense rather than an annual shock to absorb.

Understanding your payment obligations, setting aside appropriate reserves, and maintaining clear communication with HMRC creates a foundation for sustainable tax compliance that supports rather than hinders business growth.

Planning your corporation tax strategy requires more than just knowing the deadlines. You need systems, forecasting accuracy, and cash flow management tailored to your agency's specific revenue patterns. Building these foundations protects your working capital while ensuring compliance.