Corporation tax forecast checklist for limited company directors
Written for directors of established limited companies who want the bill in writing before it lands. It covers the rates, the dates, the figures to collect, and what the number changes about dividends. Around ten minutes to read.
Updated 27 September 2026
10 min read
- The short version
- Why the bill catches directors out
- The rate your forecast should actually use
- The dates that decide when you need the number
- The figures to gather before you forecast
- What the forecast changes about your dividends
- The checklist, step by step
- Where forecasts go wrong
- When this is worth handing over
- Frequently asked questions
The short version
- Corporation tax is due nine months and one day after your period end, three months before the return.
- Profits under £50,000 are taxed at 19%, over £250,000 at 25%, with marginal relief between.
- Associated companies and short accounting periods reduce both limits, which changes the rate your forecast should use.
- Dividends come out of post-tax reserves, so the tax number sets your dividend headroom, not the bank balance.
- From 1 April 2026 company tax returns go to HMRC through commercial software or an agent.
Why the bill catches directors out
A corporation tax forecast checklist exists for one reason: most directors find out what they owe far too late to do anything about it.
The pattern is familiar. Accounts get prepared six or eight months after the year end. A figure arrives. The money has already been spent on dividends, a van, or a hire that felt affordable at the time.
None of that is a filing problem. The return may well go in on time. It is a timing problem, because the decisions that move the bill all happen before the year end, and the number usually appears afterwards.
Forecasting corporation tax is ordinary arithmetic done early. You take profit to date from books that reconcile, add what the rest of the year looks like, adjust for the items tax treats differently, and apply the right rate band.
What follows is the checklist I work through with clients before a year end: the rates, the dates, the figures to gather, the things that go wrong, and what the answer should change about how much you take out of the company.
The rate your forecast should actually use
There has not been a single corporation tax rate since April 2023, and using the wrong band skews everything downstream.
The three bands
Taxable profits up to £50,000 are charged at the small profits rate of 19%. Profits above £250,000 are charged at the main rate of 25%. Between the two, marginal relief tapers the charge upwards using a standard fraction of 3/200 for the 2026 financial year.
The practical effect is that profit earned inside the middle band carries a higher effective rate than 25% at the margin. A £10,000 cost brought forward into this year is worth more than the headline rate suggests.
Associated companies divide the limits
Both limits are shared between associated companies. Two companies under common control means £25,000 and £125,000 each, so a company with £60,000 of profit is no longer sitting where its director assumed.
Directors with a second trading company, or a company held with a spouse, are often caught by this. A forecast built on the full limits understates the bill.
Short periods reduce them too
If your accounting period is shorter than twelve months, the limits reduce in proportion. A six-month period halves them.
Check this whenever a year end moves. It is one of the more common reasons a forecast and the final CT600 disagree by thousands.
The dates that decide when you need the number
Payment comes first and filing comes second, which is the wrong way round for most people’s mental calendar.
Payment: nine months and one day
For taxable profits up to £1.5 million, corporation tax is payable nine months and one day after the end of the accounting period. A 31 March year end means payment by 1 January.
The company tax return itself is due twelve months after the period end. So the money leaves three months before the paperwork is legally required.
Larger profits pay in instalments
Above £1.5 million of taxable profit, payment moves to quarterly instalments, with a separate set of rules once profits pass £20 million. Instalments start during the accounting period, so a forecast stops being optional at that size.
Interest runs in both directions
HMRC charges interest on tax paid late and pays interest on tax paid early. Late filing penalties apply even where there is no tax to pay.
Working backwards
Count back from the payment date, not the filing date. If you want the option to reduce the bill, the forecast has to exist before the year end, while salary, pension and capital spend decisions are still open.
For Nexus clients the corporation tax and dividend position is forecast a month before the bill lands. The money is there and the decision is yours.
The figures to gather before you forecast
A forecast is only as good as the numbers underneath it, and most of them are already in your records.
Work through this list. If an item is missing, the answer will move later.
- Profit to date from bookkeeping that reconciles to the bank, not a rough export.
- Sales invoiced but not yet posted, plus work delivered and not yet invoiced.
- Costs committed for the remainder of the year, including subcontractors and stock already ordered.
- Capital purchases made or planned, and whether the annual investment allowance covers them.
- Disallowable items sitting in the profit and loss: client entertaining, depreciation, some legal fees, fines.
- Director salary and any employer pension contribution, which only count if paid before the year end.
- Losses brought forward from an earlier period.
- Any balance owed to the company by a director at the year end.
Accounting profit is not taxable profit
Depreciation comes out and capital allowances go in. Entertaining is added back. That gap is why the figure at the bottom of your software dashboard is a starting point rather than an answer.
For construction and trades companies the biggest swing is usually work in progress. For consultants and contractors it is invoicing timing near the year end.
What the forecast changes about your dividends
The reason to forecast early is that the number decides how much you can safely take out.
Reserves are what is left after tax
Dividends are paid from post-tax reserves. A director looking at a healthy bank balance is usually looking at money that already belongs to HMRC, VAT included.
Calculate the corporation tax charge first. Add retained profit from earlier years. What remains is the dividend headroom, and it is often lower than expected.
Drawings without a declared dividend
Money taken outside salary and declared dividends sits in the director’s loan account. If that account is overdrawn at the year end and still overdrawn nine months later, an additional tax charge falls on the company. It is repaid once the loan is cleared, but it ties up cash in the meantime.
Personal tax follows the dividend
Dividends also carry personal tax through self assessment, payable the following January. Forecasting corporation tax without the director’s position gives you half the picture.
This is why the salary and dividend plan and the corporation tax forecast are done together at Nexus, in the same conversation, rather than as two separate jobs at two different times of year.
Filing has changed, and DIY is harder
The route directors used to file their own return has closed, so factor that into your plan for the year.
The joint HMRC service has gone
HMRC’s combined service for filing annual accounts and company tax returns closed on 31 March 2026. From 1 April 2026, company tax returns must reach HMRC through commercial software.
Paper company tax returns are only accepted where there is a reasonable excuse, or where you are filing in Welsh. Companies House accounts can still be filed by other routes, including paper.
Corrections and rejections
If a return is rejected or needs amending, the options are commercial software, writing to the corporation tax office, or an agent filing on your behalf.
What this means practically
Directors who handled their own CT600 now need software, time to learn it, and a reliable set of books behind it. Some will find that worth doing. Others will find the licence cost and the hours point the other way.
Either way, the forecast matters more than the filing. Software will produce a figure in month eleven. It will not tell you in month nine that you can afford the hire.
How often to redo the forecast
One forecast a year is better than none, and it is rarely enough for a growing company.
A sensible rhythm
Update the figure every quarter once the VAT return is done, since the books are current at that point anyway. Then run a firm version two to three months before the year end, while salary, pension and capital decisions are still live.
A final check goes out a month before the payment date so the cash is set aside deliberately.
When to rerun it out of cycle
Rerun the forecast when a large contract lands, when you take on staff, when you are deciding on equipment or a vehicle, and when you change your year end. Each of those moves the taxable profit enough to change the band you sit in.
What is on the horizon
HMRC has been consulting on more frequent in-year payments for income tax self assessment, with any change projected for April 2029. That is a consultation, not law, and it concerns self assessment rather than corporation tax. It does point at the direction of travel: estimating tax earlier, more often.
The checklist, step by step
Six steps, in order. Allow an hour if the bookkeeping is current, longer if it is not.
- Confirm your accounting period — Find the period end date registered with HMRC and check it matches your accounts. An accounting period cannot exceed twelve months. Accounts covering a longer period need two company tax returns. If you are lengthening the year, tell HMRC before the original filing date for the return, or a late filing penalty can follow.
- Take profit to date from the books — Reconcile the bank, clear the suspense account and post supplier bills. Then take profit to date. If the bookkeeping is three months behind, stop and catch it up first. A forecast built on stale records produces a number nobody will act on, which is worse than no forecast at all.
- Add the rest of the year — Project sales for the remaining months from contracts, your pipeline and last year’s pattern. Add committed costs: subcontractors, staff, rent, insurance renewals. Include invoices you know are coming. The aim is a full-year profit figure, not a perfect one. Being close in month nine beats being exact in month eighteen.
- Adjust accounting profit for tax — Add back depreciation, client entertaining and anything else the rules disallow. Deduct capital allowances on equipment and qualifying vehicles. Deduct employer pension contributions actually paid in the period. Apply losses brought forward. The result is your estimated taxable profit, and it will differ from the profit your software shows.
- Apply the correct rate band — Check how many associated companies you have and divide the £50,000 and £250,000 limits accordingly. Pro-rate them if the period is under twelve months. Apply 19%, 25%, or the marginal relief calculation in between. Write down which band you used so the figure can be checked later.
- Set the money aside and diarise — Move the estimated tax into a separate account. Put the payment date in the calendar: nine months and one day after your period end. Note the filing date three months after that. Then work out your dividend headroom from what is left, and plan drawings on that rather than the current balance.
Where forecasts go wrong
Four errors account for most of the gap between a director’s estimate and the final bill.
- Forecasting from the bank balance — The balance includes VAT collected, PAYE due, and money for suppliers who have not been paid yet. A company with money in the bank and an unpaid quarter of VAT is not sitting on profit. Start from the profit and loss, adjusted for tax, and treat the bank as a separate question.
- Assuming the 19% rate still applies — Plenty of directors still budget at 19% because that was the rate for years. Above £50,000 of taxable profit that is wrong, and the shortfall grows with the profit. Marginal relief means the effective cost of the profit in the middle band is higher than most people expect.
- Ignoring associated companies — A second company, including a dormant one with common control, divides both rate limits. Directors with a property company alongside the trading company are frequently affected. Check this before you forecast, because it can shift a company from the small profits rate into marginal relief territory.
- Treating a long period as one return — If you extend the year and the accounts cover more than twelve months, HMRC needs two returns: one for the first twelve months, one for the remainder. Each has its own payment date. Forecast them separately, and tell HMRC the new dates before the original filing deadline.
When this is worth handing over
If your company is straightforward and your books are current, the checklist above is something you can run yourself.
It stops being worth your time in a few situations. When profit sits in the marginal relief band and the rate depends on decisions you make before the year end. When there is a second company and the limits have to be divided. When the numbers drive a hiring or equipment decision and you need them to be right. When you also want the dividend and self assessment position, not the company figure in isolation.
At Nexus, the corporation tax forecast is part of the monthly fee rather than an extra you have to ask for. Every new client gets a full review of structure, VAT scheme, salary and dividends and software when they join, and I tell you why each is right or what should change.
Frequently asked questions
When is corporation tax actually due to be paid?
For taxable profits up to £1.5 million, payment is due nine months and one day after the end of your accounting period. The company tax return is due twelve months after the period end. Payment therefore comes three months before filing. Above £1.5 million of profit, quarterly instalments apply instead.
What rate of corporation tax will my company pay?
Taxable profits up to £50,000 are charged at 19%. Profits above £250,000 are charged at 25%. Between those figures, marginal relief applies using a standard fraction of 3/200 for 2026. Associated companies and accounting periods shorter than twelve months reduce both limits proportionately.
How early should I forecast my corporation tax bill?
Run a firm version two to three months before your year end, while salary, pension and capital spend decisions are still open. Update it quarterly alongside your VAT return. Then confirm the figure a month before the payment date so the cash is set aside on purpose.
Can I still file my company tax return on HMRC’s website?
No. HMRC’s joint service for filing accounts and company tax returns closed on 31 March 2026. From 1 April 2026, returns must be filed through commercial software or by an agent. Paper returns are only accepted where you have a reasonable excuse or are filing in Welsh.
Does a corporation tax forecast tell me my dividend headroom?
It gives you the main input. Dividends are paid from post-tax reserves, so you deduct the estimated corporation tax from profit, add retained profit from earlier years, and the remainder is available. Your personal tax on those dividends falls due the following January, so plan for both.
What happens to my forecast if I change the company year end?
Both rate limits are pro-rated for a period under twelve months, which can change the band you sit in. If your accounts cover more than twelve months, HMRC needs two returns with separate payment dates. Tell HMRC about a longer period before the original filing date for the return.
Related guides and tools
The other pieces that sit alongside a corporation tax forecast.
Final thoughts
A corporation tax forecast checklist is not complicated work. It is ordinary arithmetic done at a point in the year when it can still change something.
Get the accounting period right, use books that reconcile, adjust accounting profit for tax, check the rate band against associated companies, and count back from the payment date rather than the filing date. Then decide your dividends from what is left.
The directors who run into trouble are rarely the ones who cannot do the sums. They are the ones who never see a number until the year is closed and the money has gone somewhere else.
If you would rather have that figure in writing a month before it lands, along with your dividend position, that is how Nexus works with every client. Nexus takes three new clients a month, so there is time to do it properly.