When Can You Get a Corporation Tax Refund?
If your company pays too much Corporation Tax, you’re entitled to a refund of the excess amount—officially referred to as a repayment.
This can happen for a number of reasons, including:
- Overestimating your profit and therefore your tax liability
- Making early payments that exceed your actual tax due
- Adjustments after filing your tax return
How to Claim a Corporation Tax Repayment
You can request a refund when you file your Company Tax Return. To ensure the repayment is processed smoothly, include your bank account details (sort code and account number). HMRC will automatically transfer the refund to your account.
If You Don’t Provide Bank Details:
HMRC will use the amount you’re owed to offset:
- Any other tax liabilities (e.g., VAT or PAYE)
- Future Corporation Tax bills or late filing penalties
You’ll receive confirmation of how your repayment was applied, and any remaining balance will be refunded via:
- The original payment method (e.g., card), or
- A payable order sent to your company’s registered address
When Will HMRC Pay Interest on Overpayments?
HMRC pays interest at a rate of 3.25% in certain cases:
1. Early Payments – “Credit Interest”
If you pay your Corporation Tax before the due date, you may earn interest from HMRC. The interest usually starts:
- From the date of payment up to the due date
- But not earlier than 6 months and 13 days after your accounting period begins
2. Overpayments – “Repayment Interest”
If you pay more than your actual liability, HMRC may pay interest from:
- The tax due date, or
- The payment date, if the payment was made after the due date
Note: Interest received from HMRC is considered taxable income and must be reported on your Company Tax Return.
What If You Pay Corporation Tax in Instalments?
For large companies that pay Corporation Tax by quarterly instalments, the process is slightly different.
HMRC will calculate any interest due after they know your final Corporation Tax bill, which usually happens when your Company Tax Return is submitted.
In this case, interest accrues from the later of:
- The first instalment date, or
- The date your cumulative payments exceed what you owe
Why This Matters to Your Business
Understanding Corporation Tax repayments and HMRC’s interest policies can offer tangible benefits:
- Improved cash flow: You get your money back faster
- Bonus interest: HMRC pays you back more than you overpaid
- Better planning: Avoid tying up cash unnecessarily
Final Thoughts
Overpaying Corporation Tax might not seem ideal, but if it happens, there’s a silver lining—HMRC will not only refund the excess but may reward your prudence with interest.
Just make sure your Company Tax Return is accurate, timely, and includes your bank details to ensure smooth processing. Get in touch with AccelUS to know more!
