Corporation Tax UK: A Small Company Guide for 2026/27
Quick answer
UK Corporation Tax is 19% on profits up to GBP 50,000 and 25% on profits over GBP 250,000. In between, Marginal Relief tapers the bill, so each pound of profit in the GBP 50,000 to GBP 250,000 band is taxed at an effective 26.5%, higher than the 25% headline.
Corporation Tax rates and effective rates (2026/27)
| Profit band | Headline rate | Effective marginal rate |
|---|---|---|
| Up to GBP 50,000 (small profits rate) | 19% | 19% |
| GBP 50,000 to GBP 250,000 (Marginal Relief) | 25% less Marginal Relief | About 26.5% on each pound in the band |
| Over GBP 250,000 (main rate) | 25% | 25% |
| Marginal Relief fraction | 3/200 | Applied to (upper limit less profits) |
| Register with HMRC | Within 3 months of starting to trade | Failure-to-notify penalty if late |
| Pay Corporation Tax | 9 months and 1 day after the accounting period ends | Interest charged on late payment |
| File the CT600 return | 12 months after the accounting period ends | Penalties from GBP 100 for late filing |
| Associated companies | The GBP 50,000 and GBP 250,000 limits are divided by the number of associated companies | More companies pull you into the higher rate sooner |
Step by step
- 1
Register for Corporation Tax in time
Tell HMRC your company is active within 3 months of starting to trade. You usually set this up alongside registering the company at Companies House. Register even if you make a loss or owe nothing, because you still have to file a return.
- 2
Work out your taxable profits
Add up trading profits, investment income and chargeable gains for the accounting period. Companies get no Personal Allowance, so there is no tax-free band the way there is for an individual.
- 3
Apply the right rate and Marginal Relief
Use 19% up to GBP 50,000 and 25% over GBP 250,000. In between, calculate the 25% charge then deduct Marginal Relief using the 3/200 fraction. Divide the GBP 50,000 and GBP 250,000 limits by the number of associated companies first.
- 4
Pay by 9 months and 1 day
Pay your Corporation Tax 9 months and 1 day after the end of your accounting period. HMRC charges interest on late payment, so work out the figure early rather than waiting for the filing deadline.
- 5
File the CT600 within 12 months
Submit your Company Tax Return (CT600) to HMRC within 12 months of the end of the accounting period. Late filing brings penalties starting at GBP 100, even if there is no tax to pay.
Corporation Tax is the tax a limited company pays on its profits, and almost everyone gets the rate wrong. The headlines say 19% or 25%, as if it is a flat cliff. It is not. Between GBP 50,000 and GBP 250,000 of profit there is a Marginal Relief band where each extra pound of profit is taxed at an effective 26.5%, higher than the 25% main rate, and it is exactly the band a growing small company lands in. The table above is the detail at a glance; the steps are the process.
Two deadlines trip up directors more than anything else. You pay Corporation Tax 9 months and 1 day after your accounting period ends, but you file the CT600 return up to 12 months after it ends. The bill is due before the paperwork, so leaving the maths until filing time means the payment deadline has already passed. Register within 3 months of starting to trade, file and pay on those two dates, and the admin side stays clean.
A worked example makes the band concrete. Take a one-person company with GBP 60,000 of taxable profit. Tax at the 25% main rate is GBP 15,000. Marginal Relief is (GBP 250,000 less GBP 60,000) times 3/200, which is GBP 190,000 times 0.015, or GBP 2,850. So the bill is GBP 15,000 less GBP 2,850, which is GBP 12,150, an effective rate of about 20.25% overall. But the extra GBP 10,000 of profit above GBP 50,000 cost GBP 2,650 in tax (GBP 12,150 less the GBP 9,500 a GBP 50,000 profit would owe at 19%), which is the 26.5% marginal sting in action. Watch the associated companies rule too: if you run more than one company, the GBP 50,000 and GBP 250,000 limits are split between them, pulling you into the higher rate sooner.
If you are still deciding how to operate, weigh it up in limited company vs sole trader and the broader self-employed tax guide. Once incorporated, how you draw the money matters as much as the Corporation Tax itself, because dividends come out of post-tax profit: salary vs dividends covers that next step.
Figures are for the 2026/27 tax year and are taken from gov.uk; tax rules, rates and thresholds can change. This is general information, not financial or tax advice.
Frequently asked questions
Who pays 25% Corporation Tax?
Companies with taxable profits over GBP 250,000 pay the full 25% main rate. Companies with profits between GBP 50,000 and GBP 250,000 start from 25% but get Marginal Relief, so their effective rate is lower than 25% overall, while each extra pound in the band is taxed at about 26.5%.
Is Corporation Tax still 19%?
Yes, but only for small companies. The 19% small profits rate still applies to taxable profits up to GBP 50,000. Above that the main rate of 25% applies, with Marginal Relief tapering the bill on profits between GBP 50,000 and GBP 250,000.
What is the Corporation Tax rate for 2026/27?
For the 2026/27 tax year, Corporation Tax is 19% on profits up to GBP 50,000 and 25% on profits over GBP 250,000. Marginal Relief applies in between, using the standard fraction of 3/200, which produces an effective marginal rate of about 26.5% inside that band.
What is the 26.5% Corporation Tax trap?
Between GBP 50,000 and GBP 250,000 of profit, Marginal Relief means every additional pound of profit is taxed at an effective 26.5%, higher than the 25% headline rate. It is the bit that ambushes growing companies, because there is no single advertised rate for this band.
When do I have to pay Corporation Tax?
You must pay Corporation Tax 9 months and 1 day after the end of your accounting period, but you file the CT600 return up to 12 months after the period ends. That means the bill is due before the return is, which catches out directors who wait until filing to find out what they owe.
Sources
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General information, not financial advice. Tax rules and figures can change; check the current position on gov.uk before acting.