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Payment of tax: A company usually has to pay its CT liability 9 months and 1 day after the end of its AP, but large
companies are required to make quarterly instalment payments to settle their corporation tax liability.
A large company is a company whose “profits” exceed £1.5M.
“Profits” are defined as the TTP of the company plus dividends received (excluding dividends from
related 51% group companies).
Companies are related 51% group companies where one company controls another or two or more
companies are both 51% subsidiaries of another company. Dormant companies are excluded.
The limit of £1.5M is used for a single company with a 12 month AP. It is therefore divided by the
number of related 51% group companies at the end of the immediately preceding accounting period
and must also be time apportioned for an AP of less than 12 months.
Illustration 1 Large Ltd prepares its accounts to 31 March in each year and for the accounting year ended 31
March 2023 it had a TTP of £600,000 and also received dividends from a number of companies
including its two wholly owned subsidiary companies. This was its lowest profit recorded in several
years.
As Large Ltd has two subsidiary companies there are three related 51% group companies which will
reduce the profit limit for each group company to £500,000 (£1.5M/3) As Large Ltd has a TTP of
£600,000 then (even without including dividend income) its “profits” exceed the relevant profit limit
and it will therefore be required to make quarterly instalment payments to settle its CT liability for the
accounting period.
