Corporation Tax Calculator

How UK Corporation Tax works

Corporation Tax is the single national tax on the profits of UK limited companies, charged and collected by HM Revenue & Customs (HMRC). Unlike Germany or Switzerland, the UK has no local, municipal or trade corporate income tax — there is no Gewerbesteuer, no canton rate and no regional add-on. Your company premises may pay Business Rates, but that is a separate property levy and forms no part of the Corporation Tax computation.

For the financial year beginning 1 April 2026 (FY2026, commonly marketed as 2026/27) there are two headline rates and a taper between them. Profits up to £50,000 are taxed at the 19% small profits rate. Profits above £250,000 are taxed at the 25% main rate. Profits between £50,000 and £250,000 are charged at 25% and then reduced by Marginal Relief, which smooths the step between the two rates. The figure tested against those limits is your augmented profits — taxable total profits plus certain exempt distributions from non-group companies.

Corporation Tax rates and thresholds (FY2026)

These rates and limits apply to the financial year 1 April 2026 to 31 March 2027 and are unchanged since FY2023 — the Autumn Budget 2025 announced no changes. The standard Marginal Relief fraction of 3/200 has applied for FY2024, FY2025 and FY2026 alike, which is why our year selector can offer 2023 through 2026 with confidence.

Marginal Relief explained

Marginal Relief is not a separate tax or a middle rate — it is a deduction that tapers the jump from 19% to 25%. HMRC sets it out with the formula F × (U − A) × (N ÷ A), where F is the standard fraction 3/200 (0.015, or 1.5%), U is the £250,000 upper limit, A is augmented profits and N is taxable total profits. You first charge 25% on the whole profit, then subtract this relief.

For a typical company with no non-group distributions, N equals A, so the formula collapses to a simple (£250,000 − profits) × 1.5%. The practical effect is that each additional £1 of profit inside the £50,000–£250,000 band is taxed at an effective marginal rate of 26.5%, higher than the 25% headline, because more profit means less relief. The blended rate on the whole profit, however, always sits between 19% and 25%.

Worked example: £100,000 profit

Take a standalone company with a full 12-month accounting period in FY2026 and £100,000 of taxable profit. That sits in the Marginal Relief band, so the calculation is:

• Tax at the main rate: 25% × £100,000 = £25,000
• Marginal Relief: (£250,000 − £100,000) × 1.5% = £2,250
• Corporation Tax due: £25,000 − £2,250 = £22,750

That is an effective rate of 22.75% — comfortably between the 19% and 25% headline rates, exactly as Marginal Relief intends.

Associated companies and short accounting periods

The £50,000 and £250,000 limits are not per company in isolation — they are divided by the number of associated companies plus one. One associate halves the limits to £25,000 and £125,000; two associates divide them by three, and so on. Companies under common control count as associated, so groups and connected businesses can fall into Marginal Relief or the full 25% rate far sooner than the headline limits suggest.

The limits are also pro-rated on a days basis for a short accounting period. A six-month period uses roughly £25,000 and £125,000; a three-month period roughly £12,500 and £62,500. And where an accounting period straddles two financial years, profits are apportioned across the 1 April boundary and each financial year’s own rate and limits are applied to its slice. For FY2023 to FY2026 those figures are identical, so straddling periods produce no rate change today — but the mechanism still matters, and our calculator handles it.

Deductions and reliefs

Corporation Tax is charged on profit after deductible costs and capital allowances. Key reliefs include:

• Full expensing and the Annual Investment Allowance — a 100% first-year deduction for qualifying main-rate plant and machinery (full expensing, now permanent), a 50% first-year allowance for special-rate assets, and the £1,000,000 AIA cap for most other capital spend.
• R&D relief — the merged RDEC scheme (an above-the-line expenditure credit), with enhanced support for R&D-intensive SMEs.
• Patent Box — an elective 10% effective rate on profits from patented inventions.
• Loss relief — trading losses can be carried back 12 months against total profits, or carried forward indefinitely. Carried-forward relief is capped at a £5,000,000 deductions allowance plus 50% of profits above it.

What most Corporation Tax calculators get wrong

Many popular calculators — including the long-standing market leader — quietly apply a single flat rate and handle the £50,000–£250,000 band incorrectly, either taxing it all at 25% or ignoring the 26.5% effective marginal rate. Others assume every company is a standalone with a tidy 12-month period. This tool computes Marginal Relief with the correct 3/200 fraction, divides the limits for associated companies, and pro-rates them for short and straddling accounting periods — the exact edge cases where real limited-company filings go wrong.

Payment and filing

For companies with profits up to £1.5m, Corporation Tax is payable nine months and one day after the end of the accounting period, and the CT600 return must be filed within 12 months of the period end. Companies with larger profits pay by quarterly instalments. Separately, very large groups with consolidated revenue of at least €750 million fall within Pillar Two, the 15% global minimum effective tax delivered through the Multinational Top-up Tax and Domestic Top-up Tax.

Related calculators

Running a limited company usually means paying yourself too. Model a director’s take-home with our UK salary calculator, check your personal bill with the UK income tax calculator, or compare corporate rates abroad with the German corporation tax calculator and the Swiss corporation tax calculator.

Last updated: July 2026. Rates valid for FY2026. This page is general guidance, not tax advice — always verify your figures with a qualified professional or with HMRC before filing.