Corporation Tax rates 2026/27: 19%, 25% and marginal relief
How much Corporation Tax your limited company pays, when it is due, and how to reduce it legally.
The short answer: For the financial year starting 1 April 2026, companies pay 19% on profits up to £50,000 and 25% on profits over £250,000. Between the two, marginal relief applies, so the rate rises gradually. The rates were not changed in the October 2026 Budget, and the government has committed to keeping the main rate at 25%.
Corporation Tax rates for 2026/27
| Taxable profit | Rate |
|---|---|
| Up to £50,000 | 19% (small profits rate) |
| £50,001 to £250,000 | 25% less marginal relief |
| Over £250,000 | 25% (main rate) |
Corporation Tax is charged on your company's taxable profit for its accounting period, not on its turnover. The financial year for Corporation Tax runs from 1 April to 31 March. If your company's year-end is different, its profit is split between the two financial years, but as the rates are the same for 2025 and 2026, this makes no difference this year.
How marginal relief works
If your profit is between £50,000 and £250,000, you first work out tax at 25%, then deduct marginal relief. The relief is 3/200 of the difference between £250,000 and your profit.
Example: £100,000 profit
| Step | Amount |
|---|---|
| Tax at 25% | £25,000 |
| Marginal relief: (£250,000 − £100,000) × 3/200 | −£2,250 |
| Corporation Tax to pay | £22,750 |
That is an average rate of 22.75%. Each extra pound of profit between £50,000 and £250,000 is effectively taxed at 26.5%, which is why tax planning matters most in this band.
How much Corporation Tax will my company pay?
| Taxable profit | Corporation Tax | Average rate |
|---|---|---|
| £30,000 | £5,700 | 19% |
| £50,000 | £9,500 | 19% |
| £75,000 | £16,125 | 21.5% |
| £100,000 | £22,750 | 22.75% |
| £150,000 | £36,000 | 24% |
| £250,000 | £62,500 | 25% |
These figures assume a 12-month accounting period and no associated companies.
Associated companies and short accounting periods
If you control more than one company, the £50,000 and £250,000 limits are shared between them. For example, with two associated companies, each has limits of £25,000 and £125,000. The limits are also reduced proportionally if an accounting period is shorter than 12 months, such as a company's first period.
When is Corporation Tax due?
- Payment: nine months and one day after the end of your accounting period. For a 31 March 2027 year-end, that is 1 January 2028.
- Company Tax Return (CT600): 12 months after the end of your accounting period.
- Large companies: companies with profits over £1.5 million pay in quarterly instalments during the year.
HMRC charges interest on late payments and penalties for late returns, so it pays to know your figure early.
Legal ways to reduce your Corporation Tax
- Claim every allowable expense. Including home office costs, phone, software, training, professional fees and business travel.
- Capital allowances. The Annual Investment Allowance lets you deduct up to £1 million a year spent on most equipment and machinery in full. New electric cars bought before 31 March 2027 qualify for a 100% first-year allowance.
- Employer pension contributions. These are usually deductible, with no Income Tax or National Insurance for you.
- Your salary. A director's salary and employer National Insurance reduce taxable profit.
- Timing. Planned spending made before your year-end reduces this year's profit rather than next year's.
- Research and development relief. Companies developing new products, processes or software may qualify.
Know your Corporation Tax before your year-end
Every Financial 247 client receives regular reports with their profit and estimated Corporation Tax, so we can plan pension contributions, purchases and dividends while there is still time.
Book a free strategy callFrequently asked questions
What is the Corporation Tax rate for 2026/27?
19% on profits up to £50,000, 25% on profits over £250,000, and 25% less marginal relief on profits in between.
How much Corporation Tax do I pay on £60,000 profit?
£12,150. Tax at 25% is £15,000, less marginal relief of £2,850 ((£250,000 − £60,000) × 3/200). That is an average rate of 20.25%.
When do I have to pay Corporation Tax?
Nine months and one day after the end of your company's accounting period. The tax return itself is due 12 months after the period ends.
Does my company pay Corporation Tax if it makes a loss?
No. A loss can usually be carried forward to reduce future profits, or carried back to the previous year to claim a refund of tax already paid.
Did the October 2026 Budget change Corporation Tax?
No. The 19% small profits rate and 25% main rate stay the same. The Budget did reduce the main writing-down allowance for capital allowances from 14% to 12% from April 2027.
Related guides
- Salary vs dividends 2026/27: how to pay yourself tax-efficiently
- Director's loan account explained: s455 tax and the rules for 2026/27
- Buying a car through your limited company in 2026/27
This guide is general information for the 2026/27 financial year and is not personal tax advice. Different rules apply to ring-fence profits from oil and gas and to some banks. Speak to an accountant about your company's position.
