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27th October 2020

So your accountant has just submitted your company tax return, and now the bank account has a substantial amount sitting in it that’s only due in nine months. You’re worried that you might forget to pay it in time or spend it on a shiny new MacBook (other laptops are available). Only if there was a way to solve this problem and make better use of the money. Well, good news, there is!

Interest

Did you know that HMRC pays 0.5% on Corporation Tax paid early? That’s better than some of the high street banks nowadays. The earliest date they’ll pay interest from is 6 months and 13 days after the start of your accounting period.

Corporation tax is normally due nine months after the accounting year-end date, so your company can bank three months of interest if the funds are in HMRC’s account early enough.

It is worth remembering that the interest is taxable, so it will appear in the company accounts.

Get it out of the way and Avoid penalties.

Why subject yourself to having to worry about remembering to pay this so far down the line? If the company can pay the tax, make the payment and save yourself from stress and a potential penalty.

Can’t spend it if it’s not there

Because it is due so late, it is a commonly made mistake to forget about the liability and spend the amount, only to realise closer to the deadline that a large sum needs to be paid.

Practical tips

Have your accountant confirm that they submitted your return before you make a payment, or otherwise HMRC might send the money back as they would have no tax bill to allocate it against.

Depending on your circumstances, it might not be possible for your company to pay early, so make sure you talk to your accountant first to see if you can take advantage of the early payment interest.

If you like quick and easy to read practical guides, why not check out our other articles here. For future posts, follow us on LinkedIn, Facebook, or Twitter.

If you are in the market for an FCSA accredited contractor specialist accountants who pride themselves in providing a personal service, give us a call on 0800 917 9100 or e-mail info@myaccountant.co.uk

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