This question has two answers because it describes two unrelated situations, and confusing them is expensive. Large companies pay in instalments because the law requires it. Small companies sometimes pay in instalments because they have asked HMRC for time to pay a debt they cannot clear. The first is a statutory schedule; the second is an arrangement, and it is not available simply because instalments would be convenient.
Instalments because you must
If taxable profits exceed £1.5 million, divided by the number of associated companies, the company is required to pay by quarterly instalments and the nine months and one day deadline does not apply to it at all. This is not optional and it is not a concession: missing an instalment date attracts interest from that date, even though the return that finalises the figure will not be filed for another year. A company approaching the threshold should be modelling the instalment dates before the period in which it crosses it.
Instalments because you cannot pay
A company below the threshold pays once, nine months and one day after the period end. If it cannot, the route is a Time to Pay arrangement, agreed with HMRC in advance of the deadline wherever possible. HMRC decides these case by case on the company's ability to pay, and an arrangement is more likely where the company approaches HMRC before the debt is overdue, has filed its returns, and can propose a schedule that clears the debt in a realistic period. Interest continues to run for the whole of an agreed arrangement; what stops is enforcement, not the cost.
What an arrangement does not do
A Time to Pay arrangement does not reduce the tax, does not stop interest, and does not extend the filing deadline for the company tax return. It also does not survive a missed instalment: default typically cancels the arrangement and returns the whole balance to collection. Companies sometimes assume that agreeing a schedule resets their compliance position, and it does not. File on time, agree the schedule before the due date, and treat the payments as fixed once they are agreed.
Questions people ask about can you pay corporation tax in installments
Can a small company choose to pay corporation tax in instalments?
Not as of right. Below the £1.5 million threshold the tax is due in one payment nine months and one day after the period end. Paying in stages requires a Time to Pay arrangement agreed with HMRC.
Does a Time to Pay arrangement stop interest?
No. Interest continues to run for the whole of the arrangement. What an arrangement stops is enforcement action, provided the agreed payments are made on time.
Is a company with profits over £1.5 million allowed to pay in one go?
It must pay by instalments on the statutory dates. Paying the whole amount early is possible, but the instalment dates are the ones interest is measured against.