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HMRC internal manual

COTAX Manual

HM Revenue & Customs
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Payments: quarterly instalment payments: calculating instalment amount due

The amount of tax to be paid at each instalment date is calculated using the formula three multiplied by CTI divided by n.

‘CTI’ is the amount of the company’s total liability for the AP, net of all reliefs and set-offs, that is due to be paid in instalments. See COM95050 for more information.

‘n’ is the number of months in the AP, with part months calculated by reference to the number of spare days, divided by 30 and expressed as a decimal to two decimal places, rounded arithmetically.

When the AP is 12 months, the application of the formula results in a quarter of the liability being due at each instalment date. For APs of less than 12 months, the amount payable on each instalment date is the smaller of:

  • the amount resulting from the application of the formula
  • the amount of CTI that has not been allocated to any earlier instalments.

See the Company Taxation Manual (CTM) at CTM92610 and 92620 for examples of how to calculate CTI and n.

When the ‘quarterly instalment payer’ signal is set to Y, COTAX does the calculation automatically.