UK corporation tax calculator 2026 to 2027

There are two rates and a band between them where neither applies cleanly.

Between the limits you do not pay a blended rate. You calculate tax at the main rate on the whole profit, then deduct marginal relief.

Tax = (profit x 25%) - ((£250,000 - profit) x 3/200)

The consequence is the number most founders have never seen: each additional pound of profit inside the band is taxed at 26.5%, higher than the 25% headline main rate. Marginal relief is being withdrawn as profit rises, and the withdrawal is itself a tax.

That matters for any decision at the margin. If you are weighing whether to spend a pound before the year end or retain it, the rate that applies is 26.5%, not 25% and certainly not 19%.

A company with £100,000 of profit, one company, a full 12 month period.

• Main rate first: £100,000 x 25% = £25,000
• Marginal relief: (£250,000 - £100,000) x 3/200 = £2,250
• Corporation tax due: £22,750
• Effective rate on the whole profit: 22.75%

Now earn one more pound of profit. The tax bill rises by 26.5p, not by the 25p the headline rate suggests. So the effective rate on the whole profit is 22.75%, but the rate on the decision in front of you is 26.5%. Those are different questions, and confusing them leads to genuinely wrong choices about when to spend.

Source: GOV.UK: rates and allowances for corporation tax, checked 2026-08-08.

The £50,000 and £250,000 limits are divided by the number of associated companies.

Two associated companies means the small profits rate applies only up to £25,000 each, and the main rate bites from £125,000. Three companies divides them again.

Companies are associated if one controls the other, or both are under the control of the same person or connected persons. This catches founders with a personal holding company, a dormant company they forgot about, or a second venture, and it catches them retrospectively. A dormant company genuinely dormant throughout the period is normally ignored, but "not trading much" is not the same as dormant.

The limits are also reduced proportionately for accounting periods shorter than 12 months, which routinely affects a company in its first or final period.

• Profit here means taxable profit, not accounting profit. Depreciation is added back, capital allowances are deducted, and entertaining is disallowed. The number in your accounts is rarely the number the tax is calculated on.
• The limits are tested against augmented profits, which include certain distributions received from companies outside your group, not just your trading profit.
• Capital allowances can change the answer completely. Full expensing on qualifying plant and machinery, and the Annual Investment Allowance, can move a company from the main rate into marginal relief in a single purchase.
• Losses carried forward or back are not modelled here and are often the largest single adjustment for an early-stage company.
• R&D relief is not included. For a company doing qualifying development it is usually worth more than everything else on this page combined.
• Companies with profits over £1.5m pay by quarterly instalments, so the payment date on our filing deadlines tool does not apply to them.