Corporation Tax rates and marginal relief, with worked examples

• Small profits rate, 19%

  for a company whose profits are £50,000 or less.

• Main rate, 25%

  for a company whose profits are more than £250,000.

• Marginal relief

  for profits between £50,000 and £250,000, the company pays the main rate, less marginal relief, so the tax rises gradually between the two.

A company pays Corporation Tax at the rates that applied in its accounting period. GOV.UK says a single rate applied to all companies from 1 April 2015 to 31 March 2023, so the two rates and the sliding scale only matter for periods that fall after that. There are separate rates for the ring-fenced profits of companies involved in oil rights or extraction, which this guide does not cover.

The rates and limits on this page are the ones GOV.UK showed as current on the day this guide was checked, which is printed under Sources. Check GOV.UK for the period you are filing.

The £50,000 and £250,000 limits are not fixed for every company. GOV.UK says they are reduced proportionately for short accounting periods, and by the number of associated companies.

• A short period: the limits are scaled by the days in the period over 365 (366 for a 366-day period). A period of six months has about half of each limit.
• Associated companies: the limits are divided by one plus the number of associated companies, so a company with one associated company has half of each limit. Whether another company is associated with it can change from one year to the next, and it is for the directors, with their accountant, to decide.
• A period in two financial years: the profit is shared between the two financial years by days, and each part is taxed at that year's rates. GOV.UK's example is 1 January to 31 December 2023, which has 90 days in the financial year starting on 1 April 2022 and 275 days in the one starting on 1 April 2023.
• Distributions received: the profit that is compared with the limits is the company's 'augmented profits', which are its taxable total profits plus certain exempt distributions it received, such as dividends from other UK companies. Those dividends are not taxed, but they can change the rate.
• A close investment-holding company: a close company that does not exist wholly or mainly for permitted purposes is one. Letting land to people connected with the company is not a commercial letting for this test. Such a company pays the main rate, with no small profits rate and no marginal relief.

Between the two limits a company pays the main rate on all its profit and then takes off marginal relief. The relief is the amount by which the upper limit exceeds the profit, multiplied by 3/200 (which is 1.5%).

In short: tax = 25% of the profit, less (upper limit − profit) × 3/200.

This service follows HMRC's own validation rules for the return, which also scale the relief when some of the profit is exempt distributions. For a company without any, the sum above is the whole of it.

Each example is a company with a 12-month accounting period from 1 April 2025 to 31 March 2026, unless it says otherwise.

1. 1

   A profit of £40,000

   The profit is below £50,000, so the small profits rate applies: 19% of £40,000 is £7,600.

2. 2

   A profit of £100,000, no associated companies

   At the main rate the tax is £25,000. Marginal relief is (£250,000 − £100,000) × 3/200, which is £2,250. The tax is £22,750, which is 22.75% of the profit.

3. 3

   A profit of £150,000, no associated companies

   At the main rate the tax is £37,500. Marginal relief is (£250,000 − £150,000) × 3/200, which is £1,500. The tax is £36,000, which is 24% of the profit.

4. 4

   A profit of £100,000, one associated company

   The limits are halved, to £25,000 and £125,000. At the main rate the tax is £25,000. Marginal relief is (£125,000 − £100,000) × 3/200, which is £375. The tax is £24,625, which is about 24.6% of the profit.

5. 5

   A profit of £30,000, six months to 30 September 2025

   The period has 183 days, so the limits become £25,068.49 and £125,342.47. The profit is above the lower limit. At the main rate the tax is £7,500. Marginal relief is (£125,342.47 − £30,000) × 3/200, which is £1,430.14. The tax is £6,069.86.

The Corporation Tax calculator works out the same sums for the period, profit and associated companies you enter. The Company Tax Return itself takes whole pounds.

This service keeps the rates in a table by financial year. It splits a period that runs across two financial years by days, scales the limits for a short period and for associated companies, and works out marginal relief the way HMRC's own validation rules do. The owner confirms the facts the books cannot show, such as the associated companies and whether the company is a close investment-holding company, for each period.

The table for a year after the last one checked assumes that year's rates are unchanged, and the computation says so. It has to be checked against GOV.UK at the start of each financial year.

A qualified accountant has not reviewed the calculations. Treat the output as a working draft for you or your accountant to check.