UK corporation tax has had two rates since April 2023. Companies with taxable profits up to £50,000 pay the small profits rate of 19%. Companies with profits above £250,000 pay the main rate of 25%. In between, marginal relief tapers the rate so that every additional £1 of profit in the £50,000–£250,000 band is effectively taxed at 26.5%. The Treasury has confirmed the rates and thresholds will hold until at least the end of the current parliament. This calculator runs the marginal relief formula for you and produces an exact corporation tax figure for your profit, your accounting period and any associated companies.
How marginal relief actually works
The HMRC formula is:
Marginal relief = (Upper limit − Profits) Ã, (Profits / Profits) Ã, 3 / 200
Which simplifies to: (£250,000 − Profits) Ã, 3 / 200, then deducted from a notional 25% on the full profit.
A company with £100,000 of profit pays 25% Ã, £100,000 = £25,000 minus marginal relief of (£250,000 − £100,000) Ã, 3 / 200 = £2,250. Total corporation tax: £22,750. Effective rate: 22.75%.
A company with £200,000 of profit pays 25% Ã, £200,000 = £50,000 minus relief of (£250,000 − £200,000) Ã, 3 / 200 = £750. Total: £49,250. Effective rate: 24.625%.
The 26.5% effective marginal rate matters because it is what you actually pay on the next £1 of profit while you sit in the band. Earning more pushes more profit through the band at 26.5% rather than the headline 25%, which is why some companies are deliberately managed to stay below £50,000 (small profits territory) or to push hard above £250,000 quickly (main rate, no marginal drag).
Associated companies and the threshold split
The £50,000 and £250,000 limits are split between associated companies. Two associated companies share £25,000 and £125,000 limits each. Three associated companies share £16,666 and £83,333 limits each. Associated means under common control — broadly, more than 50% owned by the same person or group of people, with some attribution rules for spouses, civil partners and minor children.
This rule is the reason a single owner with three trading companies will often pay more total corporation tax than one consolidated company with the same combined profit. The calculator includes a field for the number of associated companies; entering 1 means just your company, entering 3 means yours plus two associates.
Short accounting periods
If your accounting period is less than 12 months, the £50,000 and £250,000 thresholds reduce proportionally. A 9-month period gets thresholds of £37,500 and £187,500. A 6-month period gets £25,000 and £125,000. Companies in their first or final year of trading often hit short-period rules; the calculator handles this automatically when you enter the period length.
When corporation tax is paid
Most companies pay corporation tax 9 months and 1 day after the end of their accounting period. A 31 March 2027 year-end produces a 1 January 2028 deadline. Larger companies whose taxable profits exceed £1.5 million (split between associated companies) pay in quarterly instalments instead, starting in the seventh month of the accounting period and finishing 3 months and 14 days after the year-end. Companies with profits over £20 million pay even sooner — quarterly instalments starting in the third month of the accounting period.
Reducing the bill: legitimate planning
Within the rules, the main levers for reducing a corporation tax bill are: increasing director salary up to its optimum (deductible expense), making employer pension contributions (deductible up to the £60,000 annual allowance per director, subject to wholly and exclusively rules), claiming Annual Investment Allowance on plant and machinery (100% first-year deduction up to £1 million), claiming R&D tax relief if eligible, and accelerating allowable expenses into the current period rather than deferring them. The calculator on this page does not model these reliefs separately; it works on the taxable profit figure you enter, after all deductions.
Key takeaways
- 2026/27 corporation tax rates: 19% to £50,000 of profit, 25% above £250,000, 26.5% effective marginal rate in between.
- Marginal relief uses the formula (£250,000 − Profits) Ã, 3 / 200 deducted from 25% on the full profit.
- The £50,000 and £250,000 thresholds split equally between associated companies and shrink proportionally for short accounting periods.
- Most companies pay corporation tax 9 months and 1 day after the year-end; companies with profits over £1.5 million (group-adjusted) pay in quarterly instalments.
- The single most efficient corporation tax planning move for a director is to set a tax-efficient salary at the optimum point, then make employer pension contributions if cash allows.
Frequently asked questions
Has the small profits rate of 19% been confirmed for future years? The Treasury has confirmed the small profits rate will remain at 19% and the main rate will be capped at 25% for the duration of the current parliament. The £50,000 and £250,000 thresholds are also held at current levels. No changes are expected in the immediate future.
What counts as an associated company? A company is associated with another if one controls the other, or both are under common control. Control means more than 50% of voting rights, share capital or rights to income or assets on winding up. Spouses, civil partners and minor children are sometimes attributed, particularly where there is “substantial commercial interdependence” between the companies. The associated companies rule replaced the prior “51% group” rule in April 2023.
Do losses reduce the corporation tax bill? Yes. Trading losses can be set against current-year total profits, carried back one year, or carried forward to future periods (subject to a £5 million plus 50% of profit limit on streamed losses). The calculator does not model loss claims; it calculates tax on the profit figure you enter.
When does my company have to pay quarterly instalments? A company has to pay corporation tax in quarterly instalments if its taxable profit exceeds £1.5 million in the current period (and didn’t fall below the threshold in the prior period). The £1.5 million threshold is split between associated companies. Above £20 million, an even earlier instalment regime applies.