- UK Corporation Tax rates range from 19% to 25%, depending on your company’s taxable profits.
- Companies with profits between £50,000 and £250,000 may qualify for marginal relief, reducing the effective rate.
- Corporation Tax is charged on profit, not turnover, and is calculated after allowable expenses and reliefs.
Knowing what the corporation tax rate is matters because Corporation Tax is charged on profit, not turnover. If you understand the rates, bands, and how your bill is calculated, you can plan cash flow properly and avoid unexpected liabilities.
If you want peace of mind without managing the details yourself, professional accounting services ensure your Corporation Tax is calculated correctly, filed on time, and optimised within the rules.
In this guide, you’ll learn the current UK Corporation Tax rates, how profit bands work, when marginal relief applies, and how Corporation Tax is calculated step by step.
What is the current Corporation Tax rate in the UK?
The UK no longer uses a single flat Corporation Tax rate. Instead, the rate you pay depends on your company’s taxable profits for the accounting period.
For most limited companies, there are three profit bands that determine how much Corporation Tax is due.
Taxable profit | Corporation Tax rate | Who it applies to |
£0 to £50,000 | 19% | Small profits rate |
£50,001 to £250,000 | Up to 26.5% effective | Marginal relief applies |
£250,001 and above | 25% | Main rate |
These rates apply to standard UK trading profits. Oil and gas ring fence profits follow different rules.
How do Corporation Tax bands work for limited companies?
Corporation Tax bands are based on taxable profit, not turnover. Taxable profit is calculated after allowable expenses, reliefs, and allowances are applied.
What counts as taxable profit?
Taxable profit starts with your accounting profit, then adjusts for items HMRC does not allow. Typical deductible costs include staff salaries, rent, professional fees, and software subscriptions.
Some costs, such as client entertainment or fines, are disallowed and must be added back. If you want a full breakdown, see our guide on limited company expenses.
How associated companies affect profit thresholds
If your company has associated companies under common control, the £50,000 and £250,000 thresholds are split between them. This can move companies into higher effective tax bands sooner than expected.
Your Corporation Tax rate is based on taxable profit for each accounting period, not last year’s results. Changes in expenses, investment, or associated companies can push you into a different band without warning. Reviewing your position before year end helps you manage cash flow and avoid unexpected Corporation Tax bills.
How does marginal relief work for Corporation Tax?
Marginal relief applies when taxable profits fall between £50,000 and £250,000. Instead of jumping straight from 19% to 25%, marginal relief gradually increases the effective tax rate.
When marginal relief applies
Marginal relief is available if your company:
- Has taxable profits between £50,000 and £250,000
- Is not a Close Investment Holding Company
- Does not exceed reduced thresholds due to associated companies
Why the effective rate is higher than 19% but lower than 25%
With marginal relief, the effective rate can reach up to 26.5% at the upper limit. HMRC uses a set formula to calculate the relief automatically as part of your Corporation Tax computation.
How is Corporation Tax calculated step by step?
Although the rates look complex, calculating Corporation Tax follows a clear process.
Step 1: Work out total income
Add up all trading income and other taxable income for the period.
Step 2: Subtract allowable business expenses
Deduct costs that are wholly and exclusively for business use to reach accounting profit.
Step 3: Adjust for disallowed expenses
Add back costs HMRC does not allow, such as client entertainment.
Step 4: Apply allowances and reliefs
Capital allowances, including the Annual Investment Allowance, reduce taxable profit. You can explore this further in our guide to the annual investment allowance.
Step 5: Apply the correct Corporation Tax rate
Apply 19%, 25%, or marginal relief depending on your final taxable profit.
How much Corporation Tax will my limited company pay?
Once taxable profit is calculated, applying the correct rate determines your bill.
For example, if a company has £120,000 in taxable profit, it falls into the marginal relief band. After relief, the effective tax rate is lower than 25%, but higher than 19%.
If your company made a loss, you may still need to file a return. Losses can often be carried forward to offset future profits. Our guide on trading vs non-trading for Corporation Tax explains when filing is required.
When do you pay and file Corporation Tax?
Corporation Tax has two separate deadlines.
Corporation Tax payment deadline
You must pay Corporation Tax nine months and one day after the end of your accounting period.
Company Tax Return filing deadline
Your CT600 Company Tax Return must be filed within 12 months of the same year end. A full timeline is covered in how to pay Corporation Tax.
What other taxes do limited companies need to consider?
Corporation Tax is only one part of a limited company’s tax picture.
- VAT may apply once taxable turnover exceeds the threshold. See VAT registration for details.
- PAYE and National Insurance apply if you pay salaries.
- Dividends may trigger personal tax after Corporation Tax is paid. Learn more in tax on dividends in the UK.
How Sleek helps you manage Corporation Tax rates and compliance
Understanding Corporation Tax rates is only the first step. Accurate calculations, correct filings, and on-time payments are what keep your company compliant.
Sleek handles your Corporation Tax calculations, applies the correct rates and reliefs, and files your returns on time. That way, you avoid penalties and focus on growing your business instead of managing tax admin.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
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FAQs on 2026 Corporation Tax Rates
What is the current Corporation Tax rate in the UK?
The UK Corporation Tax rate depends on your company’s taxable profits. Companies with profits up to £50,000 pay 19%. Profits above £250,000 are taxed at 25%. If profits fall between these thresholds, marginal relief applies, creating an effective rate between 19% and 25%.
What are the Corporation Tax bands?
There are three Corporation Tax bands in the UK. The small profits band applies up to £50,000, the marginal relief band applies between £50,001 and £250,000, and the main rate applies above £250,000. These thresholds can be reduced if your company has associated companies.
How much is Corporation Tax for a limited company?
Most limited companies pay Corporation Tax at 19%, 25%, or an effective rate in between. The exact amount depends on taxable profit after expenses, allowances, and reliefs. Corporation Tax is charged on profit, not turnover, so costs and claims significantly affect the final bill.
How is Corporation Tax calculated?
Corporation Tax is calculated by starting with accounting profit, adding back disallowed expenses, subtracting allowances such as capital allowances, and then applying the correct tax rate. If profits fall between £50,000 and £250,000, marginal relief reduces the effective rate.
Do all companies pay the same Corporation Tax rate?
No. The rate depends on profit level and company type. Close Investment Holding Companies always pay the main rate of 25%. Companies with associated companies may reach higher rates sooner because profit thresholds are shared.
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Is the Corporation Tax rate likely to change?
Corporation Tax rates are set by government policy and can change in future Budgets. However, the current banded system has applied since April 2023. Companies should monitor Budget announcements and plan ahead rather than assuming rates will stay fixed.
Do I pay Corporation Tax if my company makes a loss?
No Corporation Tax is due if your company makes a loss, but you must still file a Company Tax Return. Losses can often be carried forward to reduce future Corporation Tax bills, which makes filing important even when no tax is payable.
