Calculate UK corporation tax with marginal relief for profits between GBP 50,000 and GBP 250,000 (2026-27).
This calculator provides estimates only. Corporation tax depends on your accounting period and specific circumstances. Always consult a qualified accountant.
Corporation tax is the tax that UK limited companies pay on their taxable profits. Since April 2023, the UK has operated a two-rate system: a small profits rate of 19% for companies with profits up to GBP 50,000, and a main rate of 25% for companies with profits over GBP 250,000. Companies with profits between these thresholds benefit from marginal relief, which gradually increases the effective rate from 19% to 25%. For the 2026-27 tax year, these rates and thresholds remain unchanged. The marginal relief calculation uses the fraction 3/200, meaning the relief is calculated as 3/200 multiplied by the difference between the upper limit (GBP 250,000) and the company's actual profits. This relief is deducted from the tax that would be due at the main rate of 25%. The effective tax rate in the marginal relief band varies from 19% at GBP 50,000 to 25% at GBP 250,000. Notably, the marginal rate on each additional pound of profit in this band is 26.5% -- slightly higher than the main rate. This is because each additional pound reduces the marginal relief available, creating a small additional tax charge. If your company has associated companies (companies under common control), the GBP 50,000 and GBP 250,000 thresholds are divided by the total number of associated companies plus one. For example, if you have one associated company, the thresholds become GBP 25,000 and GBP 125,000. This prevents companies from splitting profits across multiple entities to benefit from the lower rate. Corporation tax is self-assessed: your company calculates its own tax liability and reports it to HMRC via a Company Tax Return (CT600). The tax is normally due 9 months and 1 day after the end of your company's accounting period. Companies with annual profits exceeding GBP 1.5 million (or GBP 20 million for very large companies) must make quarterly instalment payments.
To calculate your corporation tax: 1. Enter your company's annual taxable profits. This is your total revenue minus allowable business expenses, capital allowances, and any other deductions. If you are unsure, use your management accounts or speak to your accountant. 2. Enter the number of associated companies. Associated companies are other companies under common control (typically where the same person or group controls more than 50% of each). Do not count the company you are calculating for -- only additional associated companies. 3. Review the results. The calculator shows the corporation tax due, the effective tax rate, any marginal relief applied, and the profit remaining after tax. The rate category tells you whether you fall under small profits, marginal relief, or the main rate. 4. Experiment with different profit levels to see the breakpoints. The transition from 19% to 25% is gradual but the marginal rate in the middle band is actually 26.5%, so planning around the GBP 50,000 threshold can be worthwhile.
Corporation tax for 2026-27 uses three tiers: 1. Small profits rate (19%): applies when annual profits are GBP 50,000 or less - Tax = Profits x 19% 2. Main rate (25%): applies when annual profits are GBP 250,000 or more - Tax = Profits x 25% 3. Marginal relief: applies when profits are between GBP 50,000 and GBP 250,000 - Tax = (Profits x 25%) - Marginal Relief - Marginal Relief = 3/200 x (Upper Limit - Profits) - Where Upper Limit = GBP 250,000 If there are associated companies, both thresholds are divided by (1 + number of associated companies): - Adjusted lower limit = GBP 50,000 / (1 + N) - Adjusted upper limit = GBP 250,000 / (1 + N) For example, with profits of GBP 100,000 and no associated companies: - Tax at main rate: GBP 100,000 x 25% = GBP 25,000 - Marginal relief: 3/200 x (GBP 250,000 - GBP 100,000) = 3/200 x GBP 150,000 = GBP 2,250 - Corporation tax: GBP 25,000 - GBP 2,250 = GBP 22,750 - Effective rate: 22.75%
Inputs: Annual profits: GBP 40,000, Associated companies: 0
Inputs: Annual profits: GBP 100,000, Associated companies: 0
Inputs: Annual profits: GBP 300,000, Associated companies: 0
When extracting profits from your company, you will also face personal tax on dividends or salary. A common strategy for owner-directors is to take a salary up to the NI threshold (GBP 12,570) and then extract the rest as dividends, which are taxed at lower rates than salary. The optimal extraction strategy depends on your total income and other factors -- consult an accountant for personalised advice. Capital allowances can significantly reduce your taxable profits. The Annual Investment Allowance (AIA) allows businesses to deduct the full cost of qualifying plant and machinery up to GBP 1 million per year. Full expensing allows companies to deduct 100% of qualifying expenditure on main rate plant and machinery. Research and Development (R&D) tax relief can also reduce your corporation tax bill. Small and medium companies can claim an enhanced deduction on qualifying R&D expenditure, while larger companies can claim an R&D expenditure credit. If your company makes a loss, you can carry it back one year to offset against profits in that year, or carry it forward indefinitely against future profits. Loss relief can provide a valuable tax refund in difficult years. Companies must file their CT600 return within 12 months of the end of the accounting period, but the tax is due earlier -- 9 months and 1 day after the period ends. Late payment incurs interest charges, and late filing results in automatic penalties starting at GBP 100.