Get a refund or interest on your Corporation Tax

Get a refund or interest on your Corporation Tax

This blog provides an overview of when you would receive a corporation tax refund or interest on your corporation tax payments and is based on  information obtained from the HMRC website https://www.gov.uk/get-refund-interest-corporation-tax

If your company or organisation pays too much Corporation Tax, HM Revenue and Customs (HMRC) will repay what you have overpaid and may also pay you interest on it.

HMRC’s current rate of interest is 0.5%.

Corporation Tax Refunds

You should use your Company Tax Return to tell HMRC if you think you are due a Corporation Tax refund (known as a “repayment”) and how you want it paid.

You can choose to:-

  • have it paid directly to your company’s bank account or someone else’s account – include the account number and sort code on your tax return
  • use it to pay your next Corporation Tax bill or a late filing penalty
  • use it to pay other tax your company owes, (e.g. PAYE or VAT)

When HMRC will pay you interest

HMRC will pay you interest if you have:

  • paid tax early (known as “credit interest”)
  • paid more than your company owes (known as “repayment interest”)

The interest is taxable and should be included as income in your Company Tax Return.

Early payments of Corporation Tax

HMRC will usually pay interest from the date you pay your Corporation Tax to the payment deadline.

The earliest date that they will pay interest from is 6 months and 13 days after the start of your accounting period.

If you pay more than you owe

HMRC will usually pay interest on your refund from either:-

  • when the tax was due
  • when you paid the tax, if you paid after the due date

If you pay in instalments

HMRC automatically pays you the interest after they know your final Tax bill for the accounting period, which is normally when you file your Company Tax Return.

If you pay by quarterly instalments, your interest is calculated from the later date of either:-

  • the first instalment date
  • the date your balance goes above what you owe

If you require further information please contact Stallion Accountancy Services.

About the author...

George Greer is an experienced ACCA qualified Business Owner with a demonstrated history of working in the accounting industry. He is skilled in Accounts and Finance Management, Budgeting and Business Planning with excellent knowledge of Sage and Xero Products. Strong professional with a BSc focused in Business Computing Systems from City University London.

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