Corporation Tax Calculator (2025/26)
UK corporation tax changed significantly from April 2023. The rate is no longer flat — profits up to £50,000 pay 19% (small profits rate), profits above £250,000 pay 25% (main rate), and profits in between attract Marginal Relief that gradually increases the effective rate from 19% to 25%. This corporation tax calculator applies 2025/26 rates, handles Marginal Relief automatically, and allows you to account for associated companies — which reduce the thresholds proportionally.
Associated companies reduce the thresholds. 0 = standalone company. Each associated company divides the limits by (1 + n).
2025/26 rates. England, Scotland, Wales, Northern Ireland — corporation tax is UK-wide. Taxable profit may differ from accounting profit after allowances, reliefs, and adjustments. Consult your accountant.
Corporation tax rates for 2025/26
UK corporation tax operates on a two-rate system introduced in 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%. Between these thresholds, marginal relief applies — a tapering mechanism that gradually increases the effective rate so there is no cliff edge at the boundary.
The marginal relief formula is: (3/200) × (£250,000 − taxable profit). This is subtracted from the tax calculated at the main rate. For example, a company with £150,000 profit pays £37,500 at the main rate minus £1,500 marginal relief = £36,000 (effective rate: 24%). The effective rate within the marginal band ranges from 19% at £50,000 to 25% at £250,000, increasing smoothly.
What counts as taxable profit
Taxable profit is not the same as revenue. It is the amount remaining after all allowable deductions have been subtracted. Key deductions include director and employee salaries (including your own salary if you are a director of your limited company), employer National Insurance contributions, employer pension contributions, rent, accountancy fees, business insurance, software costs, marketing expenditure, and business travel. The full guide to calculating company profit explains what is and is not allowable.
Capital expenditure (equipment, vehicles, computer hardware) is not deducted as a normal expense — instead, you claim capital allowances. The Annual Investment Allowance (AIA) lets you deduct up to £1 million of qualifying capital expenditure in full in the year of purchase, which can significantly reduce your taxable profit if you time purchases strategically.
Associated companies and threshold reduction
If you control more than one company, the £50,000 and £250,000 thresholds are divided by the number of associated companies. Two companies means each threshold is halved: the small profits rate applies only up to £25,000 per company, and the marginal relief band runs to £125,000. This is a critical consideration for contractors or business owners running multiple limited companies — the effective tax rate on each company's profits increases even though the absolute profit may be modest. Enter the number of associated companies in the calculator above to see the adjusted thresholds.
Payment deadlines
Corporation tax is due nine months and one day after the end of your company's accounting period. For a company with a 31 March year-end, the tax payment deadline is 1 January of the following year. The Company Tax Return (CT600) must be filed within 12 months of the accounting period end. Late payment attracts interest at the HMRC rate (currently around 7.25%), and late filing triggers automatic penalties starting at £100.
Large companies — those with profits exceeding £1.5 million — must pay corporation tax in quarterly instalments during the accounting period, not after it ends. This is a substantially different cash flow requirement and catches many growing companies by surprise when they cross the threshold for the first time.
Salary versus dividends
For owner-managed companies, the split between salary and dividends is the most significant tax planning decision. A director's salary is deducted before corporation tax is calculated — reducing the company's tax bill. However, salary attracts income tax and National Insurance on the personal side. Dividends are paid from post-tax profits and attract dividend tax at lower rates (8.75% basic, 33.75% higher), but do not reduce the company's corporation tax liability. The optimal strategy for most single-director companies in 2025/26 is to pay a salary at the NI primary threshold (£12,570) and extract remaining profits as dividends. The IR35 Calculator models this full picture for contractors.