UK and International Tax news

Earlier Quarterly Instalments Of Corporation Tax From April 2019

Wednesday 20th March 2019

Companies with annual taxable profits over £20m in an accounting period will be required to pay quarterly instalments of corporation tax earlier from April 2019.

Under current law, companies with annual taxable profits of over £1.5m or, if a member of one or more 51% groups, a proportion of this amount, pay CT in instalments. For an accounting period of 12 months, companies are currently required to make payments in months 7 and 10 for the accounting period to which the liability relates, and months 1 and 4 of the next accounting period. Companies with taxable profits of £1.5m or less pay CT 9 months and 1 day after the end of the accounting period.

As originally announced in the Summer Budget of 2015, and following representations in 2016, the advancement of the quarterly payment dates was deferred for two years to allow companies more time to transition to the new payment schedules.

For accounting periods beginning on or after 1 April 2019, companies with annual taxable profits exceeding £20m in an accounting period will be required to pay instalments of CT four months earlier. For a company with a 12 month accounting period, instalments will be due in months 3, 6, 9 and 12 of the period to which the liability relates.

Where the company is a member of one or more 51% groups, the threshold of £20m will be divided by the number of related 51% group companies plus 1. For example, if a company has 3 related 51% group companies, the threshold is £5m (£20m/(1+3)).

This is the same way in which the threshold of £1.5m for entering the instalment payment regime is apportioned. A company is a related 51% company of another if either company is a 51% subsidiary of the other, or both are 51% subsidiaries of a third company.

For companies with annual taxable profits of £20m or less, payment dates will not change. For a 12 month accounting period, companies with taxable profits in excess of £1.5m but £20m or less will continue to make instalment payments in months 7 and 10 of the accounting period to which the liability relates, and months 1 and 4 of the next period. Companies with taxable profits of £1.5m or less will continue to pay CT 9 months and 1 day after the end of the accounting period.

Payment dates for bank levy and CT and the supplementary charge for ring fence profits and adjusted ring fence profits of oil and gas companies will not be subject to the changes.

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