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📘 About the Corporation Tax
UK companies pay corporation tax on their taxable profits. Since 1 April 2023 the main rate is 25%, but companies with profits of £50,000 or less pay the 19% small profits rate. Between £50,000 and £250,000 the main rate applies, reduced by marginal relief, so the effective rate rises gradually from 19% to 25% (the marginal rate in that band is 26.5%).
The £50,000 and £250,000 limits are divided by the number of associated companies plus one, and reduced in proportion for an accounting period shorter than 12 months. Dividends received from non-group companies (exempt distributions) are added to profits to decide the rate, but are not taxed themselves.
🧮 Formula
Rates for financial years 2023 to 2026 (unchanged for 2026/27). Profits are your taxable total profits after allowances.
✏️ Worked examples
£120,000 profit, no associates
You get| Corporation tax (£) | 28,050 |
| Effective tax rate | 23.38% |
| Marginal relief (£) | 1,950 |
| Profit after tax (£) | 91,950 |
| Lower limit for this company (£) | 50,000 |
| Upper limit for this company (£) | 250,000 |
Tax £28,050 (23.38%), after marginal relief of £1,950.
Try this example →£40,000 profit
You get| Corporation tax (£) | 7,600 |
| Effective tax rate | 19% |
| Marginal relief (£) | 0 |
| Profit after tax (£) | 32,400 |
| Lower limit for this company (£) | 50,000 |
| Upper limit for this company (£) | 250,000 |
Small profits rate: £7,600.
Try this example →£120,000 with one associated company
You get| Corporation tax (£) | 29,925 |
| Effective tax rate | 24.94% |
| Marginal relief (£) | 75 |
| Profit after tax (£) | 90,075 |
| Lower limit for this company (£) | 25,000 |
| Upper limit for this company (£) | 125,000 |
Limits halve to £25,000–£125,000: tax £29,925.
Try this example →🧭 How to use this calculator
What you enter
- Taxable profits (£)
- Exempt distributions received (£)Dividends from non-group companies; they count towards the limits but are not taxed.
- Number of associated companiesOther companies under common control. The limits are divided by (this number + 1).
- Length of accounting period (months)
What you get
- Corporation tax (£)
- Effective tax rate
- Marginal relief (£)
- Profit after tax (£)
- Lower limit for this company (£)
- Upper limit for this company (£)
💡 Key dates
- Pay corporation tax 9 months and 1 day after the end of the accounting period (large companies pay in quarterly instalments).
- File the CT600 return within 12 months of the period end.
❓ Frequently asked questions
What is the UK corporation tax rate?
25% main rate for profits over £250,000; 19% small profits rate for profits up to £50,000; marginal relief in between.
How does marginal relief work?
Tax is first worked out at 25%, then reduced by 3/200 × (upper limit − profits). For £100,000 profit: £25,000 − 3/200 × £150,000 = £22,750.
Why is my marginal rate 26.5%?
In the marginal relief band, each extra pound of profit both pays 25% and loses 1.5p of relief, so the next pound is taxed at 26.5%.
What are associated companies?
Companies under the control of the same person or group. With one associated company, the limits become £25,000 and £125,000.