For a lot of UK business owners, the start of the year comes with a familiar pressure. Corporation tax.
If your company has a 31 March year end, you are not alone. In fact, March is the most popular accounting year end in the UK, with over one million companies choosing this date. That means a huge number of businesses are either facing a corporation tax bill now or will be very soon.
With nearly five million active companies across the UK, spring and early January are key pressure points for cash flow for a large proportion of SMEs.
The Reality of a Lump Sum Tax Bill
Corporation tax is due nine months and one day after your year end. For a March year end, that usually means payment is due around the beginning of January.
For many owner managed businesses, that single payment can feel heavy. It often lands at a time when cash has already been stretched by seasonal slowdowns, Christmas trading costs, payroll or growth plans for the year ahead.
Even profitable businesses can feel the pinch when a large tax bill leaves the account in one go.
There Is Another Way to Look at It
Instead of absorbing the full corporation tax bill in one payment, some businesses choose to look at spreading the cost over time.
By spreading the payment over 12 months, businesses can often improve cash flow and reduce pressure on working capital. It can make budgeting easier, smooth out monthly outgoings and help avoid dipping into overdrafts or emergency finance when the bill falls due.
For many businesses, it simply feels more manageable and far less disruptive.
Is It Worth Exploring for Your Business
Whether your year end is in March or another date coming up soon, it is worth understanding what options are available and whether a more flexible approach could support your plans.
At Funding Unlocked, we spend time understanding how businesses operate and what their cash flow actually looks like in the real world. From there, we can help explore ways to make large obligations like corporation tax easier to manage.
If you would like to find out whether spreading your corporation tax over 12 months could benefit your business, feel free to get in touch. A simple conversation could make a big difference to how the year ahead feels financially.
Funding Unlocked is a relationship-first commercial finance brokerage supporting UK SMEs with secured and unsecured funding. We believe finance works best when people sit down, talk openly and build…
