How it’s worked out
UK companies pay corporation tax on their taxable profits. If profits are £50,000 or less, the small profits rate of 19% applies. If they're £250,000 or more, the main rate of 25% applies to everything.
Between those two limits you pay the main rate of 25%, reduced by marginal relief. Marginal relief is (£250,000 − profit) × 3/200, so it shrinks as profit grows. The effect is a smooth climb in your effective rate from 19% to 25%, but each extra pound of profit in that band is taxed at 26.5%. That marginal rate is why some directors time pension contributions or equipment purchases to bring profit down.
The limits are divided by the number of associated companies and reduced for accounting periods shorter than 12 months. This calculator assumes a single company with a full-year accounting period.
Corporation tax is due 9 months and 1 day after the end of your accounting period, and the return (CT600) is due 12 months after it.
Questions
What are the corporation tax rates for 2026/27?
19% on profits up to £50,000, 25% on profits of £250,000 or more, and 25% minus marginal relief in between.
What is the marginal rate between £50,000 and £250,000?
26.5%. The main rate of 25% plus the 1.5% of marginal relief you lose on each extra pound.
Does salary reduce corporation tax?
Yes. Salaries, employer National Insurance and employer pension contributions are deductible business expenses.
These figures are estimates for guidance only and aren’t financial or tax advice. Speak to an accountant before making decisions.