Key takeaways

• Corporation tax is paid annually:
  Due 9 months and 1 day after your accounting year-end
• There is no standard HMRC instalment plan:
  But a corporation tax loan effectively creates one
• HMRC charges interest immediately on late payment:
  From the day after the deadline
• Only limited companies pay corporation tax:
  Sole traders pay income tax through Self Assessment instead
• Planning ahead is key:
  Estimate your liability early and arrange finance before the deadline

Corporation tax is one of the most predictable costs a limited company faces, yet it remains one of the most disruptive. The bill arrives once a year, it is calculated on your profits, and HMRC expects full payment within a fixed deadline. For scaffolding and construction businesses with cash tied up in projects, payroll and materials, that single lump-sum payment can put serious pressure on working capital.

This guide explains what corporation tax is, when it is due, what happens if a limited company cannot pay, and how a corporation tax loan works to protect cash flow while keeping your business fully compliant with HMRC.

What is corporation tax?

Corporation tax is charged on the taxable profits of UK limited companies, covering trading income, investment income and gains from asset sales. Unlike income tax, which individuals pay on their earnings, corporation tax is a liability of the company itself. This means your personal tax affairs and your company’s tax affairs are completely separate.

As of the 2025/26 tax year, the UK corporation tax rates are: 19% on profits up to £50,000 (the small profits rate), 25% on profits above £250,000 (the main rate), and a tapered marginal relief rate for profits between those two figures.

Rate change
Corporation tax rates changed significantly from April 2023. Many scaffolding businesses with healthy turnover now face bills at or approaching 25%. For current rates, see gov.uk/corporation-tax-rates.

Your accountant will calculate your corporation tax liability when preparing your company accounts and submit a Company Tax Return (CT600) to HMRC. Unlike VAT, there is no invoice or demand from HMRC: you are responsible for calculating what you owe, filing the return, and making the payment by the deadline.

When is corporation tax due?

Quick answer
Corporation tax must be paid 9 months and 1 day after the end of your company’s accounting period. This is earlier than the deadline to file your CT600 Company Tax Return, which is 12 months after the period end. Payment is due before you file.

Example
Accounting year ends 31 March 2025. Corporation tax payment due by 1 January 2026. CT600 return due by 31 March 2026. Payment falls three months before the filing deadline.

For most scaffolding and construction businesses, corporation tax is a single annual payment. Larger companies with profits above £1.5 million are required to pay in quarterly instalments throughout the year, but this applies to relatively few businesses in the scaffolding sector.

Why corporation tax creates cash flow problems for contractors

For scaffolding and construction companies, the annual nature of corporation tax makes it particularly disruptive. Several factors specific to the sector compound the problem.

Profits look better on paper than in the bank

A profitable year on the accounts does not always mean the cash is available when the bill arrives. Working capital may have been committed to materials, equipment purchases or vehicles during the year. The corporation tax bill is calculated on what the accounts show, not what is sitting in your bank account when payment falls due.

Cash is tied up in live projects

By the time the corporation tax deadline arrives, capital may be committed across multiple active sites. Scaffolding companies often have significant value tied up in materials deployed on jobs, in vehicles and in equipment. Pulling cash out for a large annual tax payment can disrupt those projects and your ability to fund new ones.

Seasonal patterns hit at year-end

If your accounting period ends in autumn, your corporation tax falls due in early winter, often when construction work is at its quietest and cash flow is tightest. A business that has had a strong summer may find its reserves have been absorbed by autumn investment in stock, vehicles or equipment, leaving it short precisely when the tax bill arrives.

Simultaneous tax obligations

Corporation tax does not arrive in isolation. VAT returns, PAYE and CIS payments continue throughout the year. When a large annual bill lands alongside regular monthly and quarterly obligations, the combined cash pressure can be significant, even for businesses that are fundamentally profitable.

What is a corporation tax loan?

Quick answer
A corporation tax loan is a short-term unsecured business loan designed to pay your HMRC corporation tax bill. The lender pays your tax bill and you repay in fixed monthly instalments over 3 to 12 months. Applications are typically processed within 24 to 48 hours.

The mechanics are straightforward. Once you know your corporation tax liability from your accounts, you apply for a loan for that amount. The lender assesses your application based on your business profile and, if approved, releases the funds to pay HMRC directly or into your account for you to do so. You then repay the loan in fixed equal monthly instalments over the agreed term.

1. You receive your company accounts and know the corporation tax amount due
2. You apply for a corporation tax loan through a broker or lender directly
3. The lender assesses your application based on your business profile
4. Once approved, funds are released to pay HMRC in full on time
5. You repay in equal monthly instalments over the agreed term

The whole process can often be completed in 24 to 48 hours, which makes it practical even when a payment deadline is approaching. There is no need to arrange the finance weeks or months in advance, though doing so gives you more time to compare options and terms.

What lenders look at

Corporation tax loans are assessed on the overall strength of your business rather than a single credit score. Lenders typically consider the following:

• Trading history:
  How long the company has been trading and whether it has a consistent record. Most lenders prefer at least 12 months, though some will consider younger businesses with strong accounts.
• Company turnover:
  Recent financial performance shows the scale of the business and its capacity to support repayments.
• Existing finance commitments:
  What is already being repaid each month, and does the business have sufficient headroom for additional repayments?
• Director information:
  Most applications require basic director personal information and a credit check. Personal credit history is considered alongside the company’s.
• The size of the tax liability:
  The loan amount relative to the business’s turnover and overall financial position is assessed as part of affordability.

Past credit challenges do not automatically disqualify a business. Lenders assess the overall application, and a scaffolding company with a consistent trading record and strong contracts can often access finance even where there have been issues in the past.

Note
Corporation tax is a liability of UK limited companies only. Sole traders pay Income Tax through Self Assessment. Self Assessment loan products exist but fall under a separate category.

What happens if a limited company does not pay corporation tax on time?

Quick answer
HMRC charges interest from the day after the payment deadline at the Bank of England base rate plus 2.5%. There are no automatic fixed penalties for late payment itself, but filing the CT600 late attracts fixed fines starting at £100. Persistent non-payment can escalate to enforcement action.

• Interest from day one:
  Charged at Bank of England base rate plus 2.5%, approximately 6.5% at current rates. Accrues daily until paid in full.
• CT600 filing penalties:
  £100 if filed up to 3 months late; £200 if more than 3 months late; further tax-based penalties at 6 and 12 months.
• HMRC enforcement:
  Continued non-payment can result in formal demands, enforcement agents and, in serious cases, winding up proceedings.

For full detail on HMRC’s late payment approach, see corporation tax: late payment interest at gov.uk.

How much does a corporation tax loan cost?

The cost of a corporation tax loan depends on the amount borrowed, the term, and the lender’s assessment of your business. Interest is fixed for the term and included in the monthly repayment, so there are no surprises once the loan is agreed.

The right way to evaluate the cost is to weigh it against the alternative. Draining cash reserves that are needed for wages, materials or the next contract has an immediate operational cost. Paying HMRC late means interest from day one, and repeated late payment has longer-term consequences for your compliance record and your ability to access finance in future.

For most scaffolding businesses, spreading a corporation tax bill over 3 to 12 months with a fixed monthly repayment is a straightforward and cost-effective way to protect working capital at year-end.

How to plan ahead for your corporation tax bill

The businesses that handle corporation tax most smoothly are those that treat it as a known, manageable cost rather than an annual surprise. There are a few habits that make a meaningful difference.

Estimate your liability early

You do not need finalised accounts to estimate your corporation tax. Once you have a reasonable view of annual profit, apply the relevant rate and set that amount aside monthly. Many directors do this as a rolling estimate, updating it quarterly as the year progresses and discussing it with their accountant at regular intervals.

Talk to your accountant before the deadline

Your accountant can provide an estimated figure well before the payment deadline, often three to four months in advance. If the amount looks like it will be a stretch on cash flow, that gives you time to arrange finance on your terms rather than in a rush when the deadline is a week away.

Consider your accounting year-end date

If you have flexibility over your company’s accounting year-end, it is worth considering whether the current date creates awkward timing for tax payments relative to your busiest trading periods. This is worth discussing with your accountant when you set up or review the company structure, as the year-end date can be changed with HMRC approval.