by Asim Abbas
11 November 2026 
Corporation Tax rates and marginal relief explained
Corporation Tax rates and marginal relief explained
Corporation Tax is no longer a single flat rate. Since April 2023, companies pay between 19% and 25% depending on profits, with marginal relief in the middle.
- 19% on profits up to £50,000
- 25% on profits over £250,000
- Marginal relief means an effective 26.5% rate in between
- Limits are divided between associated companies
The rates are fixed for this Parliament, but the band in the middle catches many growing small businesses by surprise.
This guide explains the rates, how marginal relief works and how associated companies change the thresholds.
Corporation Tax rates
| Taxable profits | Rate |
|---|---|
| Up to £50,000 | 19% small profits rate |
| £50,001 to £250,000 | 25% less marginal relief |
| Over £250,000 | 25% main rate |
The government’s Corporate Tax Roadmap committed to capping the main rate at 25% for this Parliament.
How marginal relief works
Between £50,000 and £250,000, tax is worked out at 25% and then reduced by marginal relief. The result is that each extra pound of profit in this band is taxed at an effective 26.5%.
A company makes £100,000 of profit. Tax at 25% is £25,000. Marginal relief is 3/200 × (£250,000 − £100,000) = £2,250. Corporation Tax is £22,750, an average rate of 22.75%. The first £50,000 effectively costs £9,500 and the next £50,000 costs £13,250, which is 26.5%.
Corporation tax calculator
Includes marginal relief.
Associated companies
If you control more than one company, or companies are under common control, the £50,000 and £250,000 limits are divided between them. Two associated companies each get limits of £25,000 and £125,000. Dormant companies and passive holding companies are usually ignored. The limits are also cut for accounting periods shorter than 12 months.
Ways to reduce Corporation Tax
- Annual Investment Allowance: 100% relief on up to £1 million of plant and machinery
- Full expensing: for new main-rate plant and machinery
- Employer pension contributions: usually fully deductible
- Director salary: deductible, along with employer NI
- R&D relief: through the merged scheme or ERIS for loss-making R&D-intensive companies
- Timing: bringing forward purchases into a period at the marginal rate
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179Paying Corporation Tax
Most companies pay nine months and one day after the year end. Companies with profits over £1.5 million (divided between associated companies) pay quarterly instalments. The CT600 is due 12 months after the year end. See our full limited company deadlines guide.
Don’t forget the personal tax
Corporation Tax is only part of the picture. Taking profits as dividends adds personal tax at 10.75%, 35.75% or 39.35% in 2026/27. Our salary vs dividends guide and sole trader vs limited company comparison show the combined effect.
Read HMRC’s guidance on Corporation Tax rates, or ask our business tax planning team to review your year-end.
What should I do next?
Before the year end.
They divide the limits.
Capital allowances and pensions.
Frequently Asked Questions
What is the Corporation Tax rate for 2026?
19% on profits up to £50,000, 25% over £250,000, with marginal relief in between.
What is the effective marginal rate?
26.5% on profits between £50,000 and £250,000.
Do associated companies affect my rate?
Yes. The thresholds are divided by the number of associated companies.
When do I pay Corporation Tax?
Usually nine months and one day after your accounting year end.
Can I reduce my Corporation Tax legally?
Yes, through capital allowances, pension contributions, salary and other reliefs.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Ali Imran
I’m Ali Imran, an accountant at Wingate Accountants. I help sole traders, landlords and directors get their returns filed early and accurately, without the last-minute panic.
