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HMRC internal manual

COTAX Manual

Background: company taxation overview: quarterly instalment payments

This subject is presented as follows.

Large companies
Companies becoming large
Company not treated as large 


The Corporation Tax (Instalment Payments) Regulations 1998 (SI 1998 No 3175) as amended by the Corporation Tax (Instalment Payments) (Amendment) Regulations (S.I. 1999/1929), contain the requirement for large companies to pay tax in instalments. This requirement was introduced at the same time as CTSA.

Quarterly instalment payments were phased in over 4 years, and apply only to the following.

  • Large companies.
  • CTSA APs.
  • Tax required to be self assessed, that is CT chargeable on the company’s profits, tax chargeable under S455 CTA 2010 on close company loans to participators and tax chargeable under Section 747 ICTA 1988 (controlled foreign companies).

For more information about the working arrangements for payers of instalments see COM95000 onwards.

Large companies

A company is large for the purpose of instalment payments if its profits for an AP exceed the S13 ICTA 1998 upper limit which is in force at the end of that period.

‘Profits’ means profits chargeable to CT plus franked investment income that was not was received from the company’s group.

The upper limit is proportionately reduced where the AP is less than 12 months. Where the company has 51 per cent companies, the upper limit is reduced by dividing it by one plus the number of those companies.

A company is not large if its total tax liability does not exceed £10,000, proportionately reduced if the AP is less than 12 months.

Companies becoming large

Regulation 3 contains provisions to protect growing companies from having to make quarterly instalment payments for the first period in which they are large unless the growth is very substantial. Under these provisions, a company will not have to make instalment payments for an AP if:

  • its profits for the AP do not exceed £10 million
  • it was not large in the 12 months preceding the AP.

‘Profits’ means the same as it does above and the £10 million limit is proportionately reduced for:

  • APs of less than 12 months
  • 51 per cent companies.

Fifty one per cent companies are counted for this purpose as at the day before the start of the AP, or on the first day of the AP if the previous day did not fall within an AP.

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Company not treated as large

A company is not treated as large in the 12 months preceding the AP if there is any part of that 12 months in which it did not exist or did not have an AP or an AP in which it was not a large company, other than by virtue of its not being treated as large because of the companies becoming large provisions above, falls or ends within that 12 month period.

See COM30021 for legislation applying to this subject.