Tax bills belong in a cash flow forecast before they become payment emergencies. The amount, period and deadline need to be identified separately for each obligation. A generic percentage of sales cannot reliably cover every business structure, VAT scheme or personal tax position.
In this article
- List the taxes that may apply
- Confirm estimates with your adviser
- Add expected payment dates
- Review the cash set aside regularly
Start with the taxes and payroll remittances that actually apply, then agree estimates and dates with the accountant. Keep confirmed amounts distinguishable from forecasts and review them as trading changes.
Build a tax payment register
For each item, record the taxpayer, tax type, period, payment date, amount, estimate status and source. Add the person responsible for approval and payment. A limited company’s tax and an owner’s personal Self Assessment are different obligations.
| Item | What to confirm |
|---|---|
| Corporation Tax | Accounting period, payment timetable and estimate |
| VAT | Return period, scheme and actual payment deadline |
| Employer PAYE | Remittance period and payment method |
| Self Assessment | Balancing payment and any payments on account |
| Other relevant liabilities | Specific obligation and adviser-confirmed date |
Check the register against HMRC accounts and the accountant’s schedules. A filing acknowledgement does not necessarily show that the related payment has been made.
Use the correct deadline for the obligation
GOV.UK’s company timetable separates Companies House filing, Corporation Tax payment and the Company Tax Return. For companies not paying by instalments, the usual Corporation Tax payment deadline is nine months and one day after the accounting period ends. Payment guidance identifies the different timetable for larger profits.
VAT guidance gives a usual online return and payment deadline of one calendar month and seven days after the period ends, with scheme-specific differences. Check the actual account deadline and allow for payment clearance.
PAYE guidance sets payment dates according to the remittance arrangements and method. Self Assessment guidance distinguishes the usual January balancing payment and first payment on account from the July second payment on account.
Put actual confirmed dates into the forecast rather than relying on a remembered generic rule. Changed periods and individual circumstances can affect the timetable.
Update estimates during the year
Use current records and tax advice, not last year’s bill alone. Higher profits, different spending, losses, changing VAT activity or a new payroll can alter expected liabilities. Reconcile amounts already paid against the outstanding estimate. A schedule showing the original bill without deducting an evidenced earlier payment can overstate the cash still required and lead to unnecessary funding decisions.
Mark estimates with their calculation date and assumptions. Ask the accountant which changes should trigger a new review. Keep supporting schedules so a later reviewer can explain why the amount increased.
Do not treat VAT collected from customers as evidence that the business can safely spend all receipts. The amount payable depends on the scheme, purchases and relevant adjustments; cash planning should use a supported estimate of the actual obligation.
Test the payment week
Illustrative example: a business expects £18,000 available before a confirmed £7,000 tax payment and £9,000 of other scheduled commitments. Its remaining cushion is £2,000. The £18,000 assumes that a £4,000 customer receipt arrives during that week. If that receipt is delayed, available cash falls to £14,000 against £16,000 of commitments, creating a £2,000 shortfall.
These invented figures demonstrate timing only and are not a tax calculation. Review the collection evidence and options before the week arrives. An apparently comfortable current bank balance can conceal overlapping commitments.
Reserve funds without double-counting
Where useful, transfer money into a separate business account for known obligations. Track both accounts in the forecast. An internal transfer is not a second external tax payment, and the reserve balance remains part of the business’s funds subject to its intended use.
For payroll, distinguish net wages, employee deductions and employer amounts. Avoid forecasting gross pay as one payment and then adding every deduction again. Ask payroll support for a payment schedule that identifies what goes to staff, HMRC and pension providers.
Act early if payment is at risk
Update the cash forecast and contact the accountant before relying on a hoped-for receipt. HMRC explains that payment plans may be available, but affordability is assessed and agreement is not automatic. A proposal should not be shown as confirmed relief.
Continue tracking the relevant filing duties separately. Discuss EPOS cash flow planning with tax support so amounts, dates and funding assumptions are reviewed together. For scope and fees, use pricing information rather than a generic tax-reserve formula.