When a small business owner reviews the company’s accounts after a busy financial year, the last thing they expect is to discover that the business has paid more Corporation Tax than it owed. Perhaps the original calculation was based on an estimate, a later adjustment reduced the taxable profit, or a loss-relief claim was overlooked.
Whatever the reason, an overpayment can leave money tied up with HMRC when the business could put it towards wages, supplier invoices for working capital
If this has happened to your company, understanding how to claim a Corporation Tax Refund can help you reclaim overpaid Corporation Tax and recover money you are entitled to without creating further accounting or compliance problems.
The process depends on why the overpayment occurred. You may need to amend a Company Tax Return, request repayment through your HMRC account, claim relief for a trading loss or make a formal overpayment-relief claim. The correct route and deadline matter.
This blog post explains how Corporation Tax refunds work, what to check before claiming, how HMRC handles repayments and how to record the refund in your company’s accounts.
When Is Your Company Owed a Corporation Tax Refund?
A company may be entitled to a Corporation Tax repayment when it has paid more tax than its final liability for an accounting period.
Common reasons include:
- An estimated tax payment was too high. The company paid based on forecast profits, but its final accounts showed a lower taxable profit.
- The tax calculation contained an error. Income, expenses, capital allowances or other adjustments were entered incorrectly.
- The company became entitled to additional relief. A qualifying loss or other relief reduced the tax payable.
- A return was corrected. An amended Company Tax Return reduced the liability.
- A payment was allocated incorrectly. The company may have paid more than was due or may need HMRC to review how a payment was allocated.
It is important to distinguish a genuine overpayment from a disagreement about how the company’s taxable profits should be calculated.
Corporation Tax is not necessarily calculated by applying a single rate to the accounting profit. The final liability may be influenced by tax adjustments, reliefs, losses, associated companies and by the accounting period.
Estimates are a common cause of overpayment because the rate applied depends on the level of profit. For most companies, profits up to £50,000 are taxed at 19% and profits above £250,000 at 25%, with marginal relief applying between the two. These limits are reduced where the company has associated companies. Companies with profits above £1.5 million, again shared between associated companies, will generally pay by quarterly instalments, which have their own interest rules.
Before asking for a repayment, make sure the tax calculation is correct against the final accounts and check every payment made to HMRC. This will help determine if the refund is due or not and avoid a claim for an incomplete calculation.
Corporation Tax Refund Time Limits at a Glance
The time limit that applies depends on the route you use. The table below summarises the main deadlines, although the exact date should always be checked against the accounting period concerned.
| Route | Time limit | Key point |
|---|---|---|
| Repayment of a credit on your Corporation Tax account | Request as soon as the credit is confirmed | Check that HMRC is not holding the credit against another liability. |
| Amend the Company Tax Return (CT600) | Within 12 months of the filing deadline | The filing deadline is 12 months after the end of the accounting period, so amendment is normally possible until about 24 months after the period end. |
| Corporation Tax overpayment relief | Within four years of the end of the accounting period | Made by the company in writing. Not available while the return can still be amended. |
| Carry back a trading loss | Within two years of the end of the loss making period | Relief is given against profits of the preceding 12 months. |
| Terminal loss relief | Within two years of the end of the accounting period in which trading stopped | Losses of the final 12 months may be set against profits of the previous three years. |
For example, suppose a company has an accounting period ending 31 March 2025. The Corporation Tax is due on 1 January 2026, which is 9 months and 1 day after the period end. The return is due by 31 March 2026 and can normally be amended until 31 March 2027. An overpayment relief claim would then need to be made by 31 March 2029. This is a simplified example, so the dates for your own company should be checked against its accounting period.
How to Claim a Corporation Tax Refund From HMRC, Step by Step
The exact process depends on the reason for the overpayment and whether the Company Tax Return has already been filed.
Step 1: Review the company’s tax calculation
Start with the company’s accounts and Corporation Tax computation.
Check the accounting period, taxable profits, allowable expenses, capital allowances, losses and reliefs. Compare the final liability with the amount actually paid.
For example, a company may have paid £12,000 towards its Corporation Tax liability. Following completion of the final accounts, its correct liability is calculated at £9,500.
The potential overpayment is:
£12,000 − £9,500 = £2,500
This is a simplified example. Before claiming the £2,500, confirm that the liability is correct and that HMRC has allocated all payments to the appropriate accounting period.
If you need help working out the liability, please check our guide on how to calculate Corporation Tax in the UK.
Step 2: Check your HMRC Corporation Tax account
Check the company’s records of Corporation Tax paid to HMRC. Look at payments received, the periods they cover and if they have been utilised by HMRC against another liability.
Corporation Tax is normally due 9 months and 1 day after the end of the accounting period, so it is worth checking whether a payment was made early, late or against the wrong period.
Money credited to your account does not necessarily mean it will be paid back. The correct way to handle a Corporation Tax credit with HMRC will depend on the account position and the reason for the credit.
Step 3: Identify the correct claim route
Depending on the circumstances, you may need to:
- Request repayment of a credit showing on the Corporation Tax account.
- Amend a Company Tax Return that contains an error.
- Claim relief for a qualifying trading loss.
- Make a claim for Corporation Tax overpayment relief where the relevant conditions are met.
A general repayment request is not a suitable way to correct a tax return with an error. Where the tax liability is incorrect, the calculation or return might need to be corrected first.
Overpayment relief is designed for situations where the normal period for amending the return has passed. HMRC may reject a claim if the return can still be amended or if one of the listed exclusions applies. The claim must be made by the company rather than by an agent on its behalf, and GOV.UK provides a tool to help you check whether overpayment relief is the correct route.
HMRC’s Corporation Tax guidance provides information about filing returns, paying tax and managing the company’s Corporation Tax affairs.
Step 4: Provide accurate supporting information
Have the relevant Company Tax Return, Corporation Tax computation, accounts and payment details available. It is also helpful to have the bank statements showing the payments made, your HMRC Corporation Tax account statement and, where a loss is involved, the loss calculation.
Depending on the claim, HMRC may require an explanation for the mistake, the revised tax calculation, information regarding the relief being claimed and evidence for the information provided.
Maintain a copy of the claim and any documents supporting the claim. If HMRC asks for more information, it will be easier to respond, since you should have a clear record of the data.
Step 5: Request the repayment and check the payment details
Once the credit has been confirmed, you can ask HMRC to repay it through your HMRC online account, by telephone or in writing. HMRC will usually need the company’s bank details in order to make the payment.
Ensure that the repayment details held by HMRC are correct and that the company can receive the payment through the appropriate route.
A company refund belongs to the company. It should not automatically be treated as money owed personally to a director or shareholder.
How to Get a Corporation Tax Refund After Filing Your Return
The first question is whether the Company Tax Return can still be amended.
A Company Tax Return can normally be amended within 12 months of the filing deadline, so an amended return can normally be submitted until about 24 months after the period end. This is different from the date the tax was due, which is 9 months and 1 day after the period end. To amend a CT600, submit the corrected return through your accounting or tax software.
If the amendment period has closed, it does not necessarily imply that all possible claims are lost. The company may still be able to make a Corporation Tax overpayment relief claim within four years of the end of the accounting period. This does not change the figures in the original return. Relief is given in terms of tax, and HMRC may reject the claim if an exclusion applies.
What should you check before amending?
Review whether the error affects:
- Turnover or other taxable income.
- Deductible expenses.
- Capital allowances.
- Losses brought forward or carried back.
- Tax reliefs or credits.
- The accounting period or tax computation.
Make sure the revised figures reflect the company’s books and are supported by evidence. The return should be amended on the basis of accurate figures rather than by simply entering a lower tax amount without proof.
If an accountant prepared the original return, ask for their explanation of the original calculation and confirm exactly what needs to change. This can help establish whether it is a simple error or a more complex technical question.
Getting a Refund by Carrying Back a Trading Loss
A company that makes a trading loss may be able to use it to reduce taxable profits from another period. Depending on the rules and the company’s circumstances, this may create or increase a Corporation Tax repayment.
For example, imagine a company paid Corporation Tax on profits from an earlier accounting period. In a later period, it makes a qualifying trading loss. If the company can carry the loss back and set it against eligible earlier profits, the earlier tax liability may be reduced.
The resulting repayment depends on the amount of loss available, the profits against which it can be set, the applicable relief rules and the tax originally paid.
Standard trading loss carry back
Under the general rules, a company can usually claim to carry back a qualifying trading loss against profits of the preceding 12 months, subject to the applicable conditions and restrictions. The loss must first be set against any profits of the same accounting period. Any remaining loss may then be carried back, and the claim must be made within two years of the end of the loss making period.
For example, a company may have paid £5,700 of Corporation Tax on £30,000 of profit, taxed at 19%, in its previous accounting period. In the next period it makes a trading loss of £30,000 and has no profits. If the company claims to carry the loss back, the earlier profit may be reduced to nil and the £5,700 may be repaid, subject to the relevant conditions. This is a simplified example.
The temporary three year carry back introduced during the pandemic applied only to accounting periods ending between 1 April 2020 and 31 March 2022, so it is not available for new losses.
The claim needs to follow the relevant Corporation Tax loss-relief rules. Not every accounting loss qualifies as a trading loss, and different types of losses can have different treatment.
Terminal loss relief
If a company stops trading, it may be able to claim terminal loss relief for trading losses made in the final 12 months of the trade. These losses can be set against profits of the three years before the loss period, subject to the relevant conditions. The claim must be made within two years of the end of the accounting period in which trading stopped.
Before claiming, it is important to identify the type of loss, the accounting periods involved and the relief that can be claimed. HMRC’s Corporation Tax guidance is a useful starting point, but complex loss-relief claims may require professional advice.
Can HMRC Keep Your Corporation Tax Refund?
Even when a company has overpaid Corporation Tax, the full credit may not always be paid directly into its bank account.
HMRC may use a credit to settle other outstanding tax liabilities or adjust the company’s account, depending on the circumstances. This is known as set off, and it can include amounts owed elsewhere within the company’s tax affairs where the relevant rules permit it.
For instance, a company may have a Corporation Tax credit of £4,000 and an outstanding liability of £1,500 elsewhere. HMRC may use the credit to clear that liability, so the cash repaid could be £2,500 rather than the £4,000 shown as “Credit”.
Before using a refund to pay an immediate business obligation, ensure that the account balance is correct and seek clarification from HMRC or your tax adviser on any offsets or any outstanding liabilities.
It’s important to remember that a credit on your HMRC account isn’t always the same as a cash repayment. Plan your cash flow with that difference in mind.
How Long Does a Corporation Tax Refund Take?
The processing time varies from case to case, depending on the Corporation Tax refund.
A simple repayment of a credit is usually quicker than a claim where HMRC needs to review revised computations, loss calculations or supporting documents.
The time taken can depend on:
- Whether the return and tax calculation are complete.
- Whether the claim is made through the correct route.
- Whether HMRC needs additional information.
- Whether the company has outstanding tax liabilities.
- Whether the claim raises complex technical questions.
If a repayment is late, check the Company’s Corporation Tax account and the acknowledgement/correspondence for the claim. Where the HMRC have asked for information, send them the necessary documents and note what you send.
It is best not to submit the same claim twice simply because payment is late. Multiple requests can complicate matters rather than resolve the delay.
If your business is relying on a large repayment, include a contingency for the repayment date in the cash flow forecast instead of assuming it will arrive on a fixed date.
Does HMRC Pay Interest on a Corporation Tax Refund?
HMRC may pay repayment interest on Corporation Tax overpayments, subject to the applicable rules. The rate is set at the Bank of England base rate minus 1%, with a minimum of 0.5%, so it changes whenever the base rate changes. Companies that pay by quarterly instalments are subject to a separate rate, so the current rate should be checked on GOV.UK before relying on a figure.
Interest is generally calculated from the later of the date the tax was due and the date it was paid, until HMRC repays the amount or sets it against another liability. It will not necessarily run from the date the company first expected to receive a refund.
If interest is due, check the calculation and see whether it is shown on the repayment statement or in the account records.
Repayment interest received by a company is taxable, so it should be recorded separately from the repayment of the tax itself.
If the amount is substantial and/or the calculation is not clear, request the accountant to check the interest computation and accounting and tax treatment.
How to Record a Corporation Tax Refund in Your Accounts
A Corporation Tax refund should be recorded in a way that reflects the reason for the original payment and how the overpayment was treated in the accounts.
The appropriate entries depend on whether the tax was previously recorded as a liability, paid in advance or recognised as an expense, and whether the refund relates to the current or an earlier accounting period.
For example, if the company has already recorded a Corporation Tax receivable because it paid more than the liability, receipt of the refund would generally reduce that receivable and increase the bank balance.
A simplified entry might be:
| Account | Debit | Credit |
| Bank | £2,500 | Nil |
| Corporation Tax receivable | Nil | £2,500 |
This example assumes the £2,500 refund was already recognised as a receivable. It is not a universal journal entry for every situation.
If the original Corporation Tax liability was overstated in a previous period, the accounting correction may require a different treatment. The relevant accounting framework and materiality of the error also matter.
Keep the HMRC repayment statement, the original tax calculation, any amended return and the journal-entry explanation together. This gives your accountant or auditor a clear trail from the original payment to the final refund.
How MyIVA Can Help With a Corporation Tax Refund
It can be difficult to spot an overpayment when the business is busy running day to day operations, processing payroll, paying suppliers and preparing year end accounts. The tax computation, the return and the payment records must also agree before it is clear what repayment is due.
MyIVA is a UK online accountancy firm. Our qualified accountants prepare accounts and CT600 Corporation Tax returns for a fixed fee. If you think your company may have overpaid, we can review the calculations and payment records, help establish why and advise which route to take.
Support may be particularly helpful where the claim relates to amended accounts, losses or previous accounting periods, or where there is doubt about how the repayment should be accounted for.
Find out more about MyIVA’s services to understand how accounting support may fit your company’s needs.
Think Your Company May Have Overpaid Corporation Tax?
Our UK qualified accountants can prepare your CT600 for a fixed fee of £199 and review your computation and HMRC payments to check whether your company has overpaid.
FAQs: Frequently Asked Questions
Can I get a refund if my company made a loss?
Yes, in some cases. A qualifying trading loss may be carried back against profits of the preceding 12 months, or against profits of the previous three years where it is a terminal loss on the company ceasing to trade, and this may create a repayment. The claim must normally be made within two years of the end of the loss making period.
Can HMRC pay the refund to me personally?
Generally not. A Corporation Tax repayment is due to the company rather than to a director or shareholder. If the company receives the refund, any later payment to an individual must be treated appropriately, for example as salary, a dividend or the repayment of a director’s loan, depending on the circumstances.
What if the company is closing or struck off?
Any refund should ideally be claimed before the company is dissolved. Once a company has been struck off, a refund it is owed may not be paid unless the company is restored to the register. Where the company is in liquidation, the liquidator will normally deal with the claim, so it is sensible to take advice on the process that applies.
How far back can I claim?
The deadline depends on the type of claim. A Company Tax Return can normally be amended within 12 months of the filing deadline, an overpayment relief claim can be made within four years of the end of the accounting period, and loss carry back claims must normally be made within two years of the end of the loss making period.
Can HMRC use my refund for other debts?
Yes, where the rules permit. HMRC may use a Corporation Tax credit to settle other outstanding liabilities, so the amount repaid may be lower than the credit shown on your account. Check the account balance with HMRC or your accountant before relying on the full amount.
Do I need to amend my CT600?
Only where the refund results from an incorrect figure in the return and the amendment period is still open, which is normally 12 months after the filing deadline. If the credit arose for another reason, such as a payment above the liability, a different process may apply, so identify the cause of the overpayment first.
What is Corporation Tax overpayment relief?
Overpayment relief is a claim a company may make where it has paid Corporation Tax that was not due and the normal period for amending the return has passed. The claim must be made within four years of the end of the accounting period.
Conclusion
The Corporation Tax Refund can help a business recover much-needed cash, but the first step is to determine the cause of the over payment and to prove that the business’ revised tax position is accurate.
Before you pick the right way, check the company’s accounts, the computation of Corporation Tax and the records of HMRC for payment. Where appropriate a request for the return of a credit, an amendment to a Company Tax Return, loss relief or overpayment relief may become necessary.
Be mindful of the timeline for tasks. The normal return-amendment window, overpayment-relief period and loss-relief claim deadlines are not interchangeable. The supporting calculations and correspondence will also be easier to find if it’s kept together which will also help answer HMRC’s questions.
In a more complex claim or situation where the amount recovered is considerable, accounting assistance can prove beneficial to determine your options and ensure that the settlement is properly documented. This means the refund process could be part of good financial management and not be a further uncertainty.
