If you run a UK limited company, here is the direct answer. For both 2025/26 and 2026/27, corporation tax is charged at 19% on profits up to £50,000 (the small profits rate) and 25% on profits over £250,000 (the main rate). Between those figures, marginal relief gives you a blended effective rate somewhere between 19% and 25%. The rates did not change at April 2026, so the same numbers hold for accounting periods across FY2025 and FY2026.
Since April 2023 there has been no single flat rate, yet many directors still assume they pay 19% across the board. Whether that is true for you depends entirely on your taxable profit, not your turnover, and on how many companies you control. This guide works through what you actually pay at every profit level, with recomputable examples, the marginal relief formula, the associated company trap, payment deadlines including quarterly instalments, and the reliefs that reduce the bill.
UK Corporation Tax Rates at a Glance
Which rate applies depends on your company's augmented profits: taxable profit plus any dividends received from non-group companies.
| Augmented profits | Rate (2025/26 and 2026/27) | What applies |
|---|---|---|
| Up to £50,000 | 19% | Small profits rate |
| £50,001 to £250,000 | Effective 19% to 25% | Main rate less marginal relief (3/200 fraction) |
| Over £250,000 | 25% | Main rate, no relief |
Two adjustments catch people out. The limits are divided by the number of associated companies (covered in detail below), and they are time-apportioned for accounting periods shorter than 12 months. A company with a 6-month period has a small profits limit of £25,000, not £50,000.
How Much Corporation Tax Should I Pay? Worked Examples
Every figure here uses the current rates and assumes no associated companies unless stated. The numbers are identical for 2025/26 and 2026/27.
Example 1: A consultancy with £40,000 profit
- Augmented profits £40,000, under the £50,000 limit
- Corporation tax at 19%: £7,600
- Profit after tax: £32,400
Straightforward. The small profits rate applies in full.
Example 2: A company with £100,000 profit
- Tax at the main rate: 25% x £100,000 = £25,000
- Marginal relief: (£250,000 minus £100,000) x 3/200 = £150,000 x 0.015 = £2,250
- Corporation tax: £22,750
- Effective rate: 22.75%
Example 3: A software company with £180,000 profit
- Tax at the main rate: 25% x £180,000 = £45,000
- Marginal relief: (£250,000 minus £180,000) x 3/200 = £70,000 x 0.015 = £1,050
- Corporation tax: £43,950
- Effective rate: approximately 24.4%
Example 4: A manufacturer with £420,000 profit
- Augmented profits above £250,000, so the main rate applies in full
- Corporation tax at 25%: £105,000
- Profit after tax: £315,000
Here is the effective rate across the band, so you can place your own company without running the formula:
| Taxable profit | Corporation tax | Effective rate |
|---|---|---|
| £50,000 | £9,500 | 19.0% |
| £75,000 | £16,125 | 21.5% |
| £100,000 | £22,750 | 22.75% |
| £150,000 | £36,000 | 24.0% |
| £200,000 | £49,250 | 24.6% |
| £250,000 | £62,500 | 25.0% |
How Marginal Relief Works (The Formula)
If augmented profits fall between £50,000 and £250,000, you start at the 25% main rate and deduct marginal relief. The statutory formula is:
(Upper limit minus augmented profits) x standard fraction x (taxable profits divided by augmented profits)
The standard fraction is 3/200 (0.015), unchanged since April 2023. For most owner-managed companies, taxable and augmented profits are the same figure, so the formula simplifies to (£250,000 minus profits) x 3/200, as in the examples above.
The consequence worth knowing: the marginal rate inside the band is 26.5%. Each extra £1,000 of profit between £50,000 and £250,000 costs £265 in corporation tax, more than either headline rate. That is why timing a capital purchase or a pension contribution to land in a marginal relief year saves more than the same deduction in a 19% year. Our dedicated guide on corporation tax marginal relief works through the planning angles.
Associated Companies: How the Thresholds Shrink
If you control more than one company, the £50,000 and £250,000 limits are divided by the total number of associated companies, counting the company itself. This is the single most common reason a "small" company ends up at the 25% main rate.
| Associated companies | Small profits limit (each) | Upper limit (each) |
|---|---|---|
| 1 (no associates) | £50,000 | £250,000 |
| 2 | £25,000 | £125,000 |
| 3 | £16,667 | £83,333 |
| 4 | £12,500 | £62,500 |
So if you have three companies in a group, or three subsidiaries under a holding company, each one hits the full 25% rate at just £83,333 of profit. Companies are associated when one controls the other or both are under common control, and the test reaches connected persons, so a spouse's company can count. Overseas companies count too. Genuinely dormant companies are excluded, but a company with any trade or business activity in the period is not dormant for this purpose.
Worked example with associated companies
A husband-and-wife company makes £63,400 profit. The couple also control one other active trading company, so there are two associated companies and the limits halve to £25,000 and £125,000.
- £63,400 sits between the adjusted limits, so marginal relief applies
- Tax at the main rate: 25% x £63,400 = £15,850
- Marginal relief: (£125,000 minus £63,400) x 3/200 = £61,600 x 0.015 = £924
- Corporation tax: £14,926
- Effective rate: approximately 23.5%
With no second company, the same profit would have cost £15,850 minus £2,799 relief, that is (£250,000 minus £63,400) x 0.015, leaving £13,051. The second company costs £1,875 a year in extra corporation tax at this profit level. If you control multiple companies, check the count carefully; our guide to the associated companies rules covers the control tests and the dormant exclusion in full.
When Do You Pay Corporation Tax?
For most companies, corporation tax is due 9 months and 1 day after the end of the accounting period. A 31 March 2026 year end means payment by 1 January 2027.
The CT600 is the corporation tax return itself. You must file one for every accounting period, even with no tax to pay, and the filing deadline is 12 months after year end. Note the mismatch: the money is due three months before the return. Late filing penalties start at £100 and escalate; late payment interest runs at 7.75% (base rate plus 4%, as at January 2026) from day one. Paying early works the other way: HMRC pays credit interest at 2.75% (base minus 1%, from 9 January 2026) from your payment date to the normal due date. Both rates float with the Bank of England base rate. Our guide on paying corporation tax early or in instalments covers the mechanics.
Quarterly instalments for larger companies
Large companies, meaning augmented profits over £1.5 million, pay by quarterly instalment payments (QIPs) instead of the single 9-month deadline. The £1.5 million limit is divided by the number of associated companies plus one and time-apportioned for short periods, so a group of four companies is into instalments at £300,000 of profit each. The four instalments fall 6 months and 13 days after the start of the accounting period, then at 3-month intervals, with the last 3 months and 14 days after the period ends. Very large companies (profits over £20 million) pay earlier, on the 14th day of months 3, 6, 9 and 12 of the period.
Two escape routes matter for growing companies: a company is not required to pay by instalments in the first year it becomes large if it was not large in the preceding 12 months and profits are £10 million or less, and there is a de minimis exemption where the total liability is £5,000 or less. Instalment balances carry their own interest rates, 3.50% credit and 6.25% debit from 29 December 2025.
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What Reduces Your Corporation Tax Bill?
Corporation tax is charged on taxable profit, so anything that legitimately reduces profit reduces the bill at your marginal rate, which in the £50,000 to £250,000 band means 26.5p per pound.
Capital allowances
Spending on plant, machinery, computers and equipment earns capital allowances in place of depreciation. The Annual Investment Allowance (AIA) gives 100% relief on up to £1 million of qualifying spend per 12-month period, permanent and available to companies and unincorporated businesses alike, but use-it-or-lose-it in each period. Full expensing, for companies only, gives 100% first-year relief on new and unused main-rate plant with no cap, plus 50% on new special-rate assets. There is also a 40% first-year allowance on new and unused main-rate plant and machinery bought from 1 January 2026 (Finance Act 2026 s.29), relevant where AIA is already used up.
Anything left in the pools attracts writing-down allowances, and the main-pool rate fell from 18% to 14% for periods from 1 April 2026 (corporation tax) or 6 April 2026 (income tax) under Finance Act 2026 s.28, with the special-rate pool unchanged at 6%. Cars are excluded from AIA, full expensing and the 40% FYA: only new zero-emission cars get a 100% first-year allowance, other cars go into the 14% or 6% pool by CO2 emissions. Commercial buildings earn the Structures and Buildings Allowance at 3% a year on construction cost.
R&D tax relief
For accounting periods beginning on or after 1 April 2024, the merged scheme gives a 20% expenditure credit on qualifying R&D, and loss-making R&D-intensive companies (30% or more of total spend on R&D) can use Enhanced R&D Intensive Support instead. Start with our R&D tax credit eligibility checklist to see whether your work qualifies.
Salaries and pension contributions
Director and staff salaries are deductible at a commercial rate, and employer pension contributions are deductible on a paid basis with no National Insurance. Dividends are not deductible: the company pays corporation tax on the full profit first, then you pay dividend tax personally on what you draw. From 6 April 2026 the ordinary dividend rate is 10.75% and the upper rate 35.75% (8.75% and 33.75% for 2025/26), so the combined corporation-tax-plus-dividend-tax cost of extraction has risen. Our guide to the tax-efficient salary and dividend split models the combined position, and the 2026/27 dividend tax rates guide has the personal-tax detail.
Losses
A loss-making period means no corporation tax at all for that period. Trading losses can be carried back 12 months against prior profits for a repayment, or carried forward against future profits. You still file the CT600.
How to Calculate Your Corporation Tax
- Start with net profit per the accounts.
- Add back disallowable items: depreciation, client entertainment, fines, most capital expenditure.
- Deduct capital allowances and any other reliefs (R&D, losses brought forward).
- The result is taxable profit; add non-group dividends received to get augmented profits.
- Count your associated companies and divide the £50,000 and £250,000 limits accordingly.
- Apply 19%, 25%, or 25% less marginal relief.
Depreciation is added back because capital allowances replace it; you cannot claim both. The step most DIY filers miss is step 5: HMRC's software calculates marginal relief correctly only if you enter the right associated company count.
Close Companies and Director Loans
Most owner-managed companies are close companies (controlled by five or fewer participators). Close status does not change the corporation tax rate, but it adds the s.455 charge: a director's loan still outstanding 9 months and 1 day after year end triggers a temporary tax charge on the company at 33.75% for loans made in 2025/26, or 35.75% for loans made on or after 6 April 2026 (the rate tracks the dividend upper rate). The charge is repaid after the loan is cleared, though the refund is deferred. Our guide to the director's loan account explains the 30-day rule and the benefit-in-kind trap on loans over £10,000.
Common Mistakes Directors Make
Confusing turnover with profit. Corporation tax is charged on profit. A company turning over £500,000 on a 10% margin pays tax on £50,000, not £500,000.
Forgetting associated companies. Two companies halve the thresholds; three cut them to a third. Directors regularly miss a second company incorporated years ago, or a spouse's company under the connected-persons rules.
Assuming a cliff edge at £50,000. You do not jump to 25% on everything the moment profit passes £50,000. Marginal relief means the effective rate climbs gradually, though the marginal cost of each extra pound in the band is 26.5%.
Confusing the payment and filing deadlines. Payment is due 9 months and 1 day after year end; the CT600 is due at 12 months. Paying "when the return is due" means three months of late payment interest at 7.75%.
Do You Need an Accountant for Corporation Tax?
A single company with one director, no capital spend and no associates can reasonably self-file through HMRC's online service. The moment you have associated companies, capital allowances choices (AIA versus full expensing versus the 40% FYA), an R&D claim, or an overdrawn director's loan account, professional review usually saves more than it costs, and the penalty for an incorrect return can reach 100% of the underpaid tax. Our guide to what a corporation tax accountant actually does sets out what you should expect for the fee, or you can get in touch for a quote.
The Key Figures, Summarised
- Small profits rate: 19% on profits up to £50,000 (2025/26 and 2026/27)
- Main rate: 25% on profits over £250,000
- Marginal relief fraction: 3/200; marginal rate in the band 26.5%
- Thresholds divided by the number of associated companies and time-apportioned for short periods
- Payment: 9 months and 1 day after year end; CT600 filing: 12 months
- Quarterly instalments: augmented profits over £1.5 million, divided by associated companies plus one
- AIA £1 million; full expensing uncapped for companies; 40% FYA on new plant from 1 January 2026; main-pool WDA 14% from April 2026
If your profit sits between £50,000 and £250,000, run the marginal relief formula rather than guessing a rate: the difference between the wrong rate and the right one is thousands of pounds. And because the corporation tax bill is only half the story for an owner-manager, read it alongside our guide to the salary and dividend split before you decide how to take the profit out.