What is a large company for corporation tax instalment purposes?

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## What is a "Large Company" for Corporation Tax Instalment Purposes?

### What the law says

The definition of a "large company" is set out in **Regulation 3 of the Corporation Tax (Instalment Payments) Regulations 1998 (SI 1998/3175)**, as substituted by the Corporation Tax (Instalment Payments) (Amendment) Regulations 2017 (in force from 1 April 2019).

**Basic profit thresholds:**
A company (other than a relevant entity or responsible member) is a **large company** in respect of an accounting period if its profits in that period exceed **£1.5 million** but do not exceed **£20 million**. A company is a **very large company** if its profits exceed **£20 million**.

**De minimis exclusion:**
A company is not a large (or very large) company if its **total liability for the period does not exceed £10,000** (proportionately reduced for short accounting periods).

**"Becoming large" exemption:**
A company is **not** a large company in respect of an accounting period ("AP") where its profits do not exceed **£10 million** and either:
- during the 12 months immediately preceding AP, the company did not exist or did not have an accounting period; or
- in respect of any accounting period falling within or ending in that 12-month period, the company was not a large company (other than by reason of this exemption itself) or a very large company.

**Related 51% group companies / associated companies:**
Where a company has one or more related 51% group companies in an accounting period, the thresholds are reduced by dividing by **(1 + N)**, where N is the number of related 51% group companies. So the large company threshold becomes **£1.5 million / (1+N)**, the very large threshold becomes **£20 million / (1+N)**, and the "becoming large" exemption threshold becomes **£10 million / (1+N)**. The number of related 51% group companies is determined by reference to the number existing at the end of the immediately preceding accounting period (or at the commencement of the AP if there is no such preceding period).

**Short accounting periods:**
All the monetary thresholds (£1.5m, £10m, £20m, and £10,000) are **proportionately reduced** where the accounting period is less than 12 months.

**Special rule — chargeable gains only:**
A company that is chargeable to corporation tax for an accounting period **only** because of a chargeable gain on disposal of an asset, and which would otherwise be a **very large** company, is instead treated as a **large** company for instalment purposes.

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### HMRC guidance / practice

**Meaning of "profits":**
For instalment payment purposes, "profits" means **chargeable profits plus non-group exempt distributions of a qualifying kind** (i.e. franked investment income not received from the company's own group, or exempt ABGH distributions for APs ending on or after 1 April 2023).

**"Becoming large" exemption in practice:**
HMRC guidance confirms that Regulation 3 protects growing companies from having to make QIPs for the **first period** in which they become large, unless the growth is very substantial (i.e. profits reach £10 million or more). The £10 million limit is proportionately reduced for short APs and for companies with 51%/associated companies.

**Payment timing:**
Large companies must pay their CT liability in **quarterly instalments** rather than in a single payment nine months and one day after the end of the AP. For large companies, two instalments are normally due **before** the end of the AP.

**Taxes covered:**
The instalment regime applies to CT chargeable on the company's profits, tax chargeable under s.455 CTA 2010 (close company loans to participators), and tax chargeable under s.747 ICTA 1988 (controlled foreign companies).

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### Summary Table

| Category | Profits threshold (12-month AP, no group companies) |
|---|---|
| **Not large** | ≤ £1.5 million |
| **Large** | > £1.5 million but ≤ £20 million |
| **Very large** | > £20 million |
| **De minimis (not large/very large)** | Total liability ≤ £10,000 |
| **"Becoming large" exemption** | Profits ≤ £10 million & not large in preceding 12 months |

All thresholds are divided by (1+N) where N = number of related 51% group companies / associated companies, and are proportionately reduced for short accounting periods.

Category	Profits threshold (12-month AP, no group companies)
Not large	≤ £1.5 million
Large	> £1.5 million but ≤ £20 million
Very large	> £20 million
De minimis (not large/very large)	Total liability ≤ £10,000
"Becoming large" exemption	Profits ≤ £10 million & not large in preceding 12 months