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What rate of Corporation Tax does my company pay?

19%, 25% or in between.

For a 12-month period with no associated company, profit up to £50,000 pays 19% and profit over £250,000 pays 25%. In between, you pay 25% less marginal relief, so the rate rises gradually.

Published

At a glance

Rates now
For the year starting 1 April 2026: 19% and 25%
Which rate you pay
Depends on your profit for the , plus certain received, tested against £50,000 and £250,000
What cuts the limits
An accounting period shorter than 12 months, or
Next year
The same rates are already set by law for the year starting 1 April 2027
No 19% rate or marginal relief
A company that is not , or a

Sources

This entry is general information for directors of UK private limited companies, not advice about a particular company.

What to do

  1. Find your accounting period. It is usually the year your accounts cover.

  2. Find the profit to test. This is your plus certain , such as dividends, your company received from other companies.

  3. Find your limits. They are £50,000 and £250,000 for 12 months. Cut them for a shorter period. Divide them if you have .

  4. Compare and apply the rate. Up to the , 19%. Over the , 25%. In between, 25% less marginal relief. A company that is not UK resident, or only holds investments, gets neither 19% nor marginal relief.

  5. Check your figure. HMRC's online calculator gives an indication of your tax and .

Sources

How it works

Two rates, with a sliding scale between them

For the year starting 1 April 2026, the is 19% and the is 25%. Which one you pay depends on your profit and two limits.

  • Profit for 12 months, no associated company

    £50,000 or less

    What you pay
    19% on all of it

  • Profit for 12 months, no associated company

    Over £50,000, up to £250,000

    What you pay
    25%, less marginal relief

  • Profit for 12 months, no associated company

    Over £250,000

    What you pay
    25% on all of it

Sources

The table is for a that commercially, not one that only holds investments. The profit is the profit tested, explained below.

Why two rates? The main rate went up on 1 April 2023. A lower rate came back on the same day, so that companies with smaller profits pay less. Before then, a single main rate applied: 19% for the year starting 1 April 2022.

makes the rate rise gradually between the limits, not in one jump. If you received no dividends or other , each extra £1 of profit in that band costs 26.5p in tax.

For example

Bramley Studio Ltd's taxable profit for 2026 is £27,500, under £50,000. It has no associated company and received no dividends or other distributions.

Tax at 19%
£27,500 × 19%
£5,225

If instead

Say its profit is £300,000 instead. That is over £250,000.

Tax at 25%
£300,000 × 25%
£75,000

Sources

The detail The exact rule

The small profits rate is charged on a company's of an (other than ring fence profits) if the company is UK resident in the period, is not a close investment-holding company in the period, and its augmented profits do not exceed the lower limit (Corporation Tax Act 2010, section 18A). The rate is set by Parliament for the financial year. The lower limit is £50,000 and the upper limit £250,000 where the company has no associated company in the accounting period (section 18D).

Where profits exceed the , all the taxable total profits are charged at the main rate. Where they fall between the limits, they are charged at the main rate and the tax is reduced by marginal relief (CTM03905). Section 18B gives marginal relief only if the company is UK resident, is not a , and has no ring fence profits in its augmented profits.

Finance Act 2025, section 13 sets the main rate for the 2026 at 25%. Section 14 sets the small profits rate at 19% and the at 3/200ths. Finance Act 2026, sections 11 and 12, set 25%, 19% and 3/200ths for the financial year 2027. That Act received Royal Assent on 18 March 2026. The limits are in the Corporation Tax Act 2010, not in either Finance Act.

Sources

The rates are set for years that start on 1 April

Corporation Tax rates are set for a "financial year". It runs from 1 April to 31 March, and is named after the year it starts in. So the financial year 2026 runs from 1 April 2026 to 31 March 2027.

Your tax is worked out for your own accounting period, though. If that period crosses 1 April, your profit is shared between the two financial years by days. Each part uses its own year's rate.

  • Year starting

    1 April 2025

    Small profits rate
    19%
    Main rate
    25%
    Limits
    £50,000 and £250,000

  • Year starting

    1 April 2026

    Small profits rate
    19%
    Main rate
    25%
    Limits
    £50,000 and £250,000

  • Year starting

    1 April 2027

    Small profits rate
    19%
    Main rate
    25%
    Limits
    £50,000 and £250,000

Sources

The rates, the limits and the marginal relief fraction of 3/200 are the same in all three years. So, on our working, sharing your profit between two of them does not change your tax.

For example

Bramley Studio Ltd's accounting period is 1 January to 31 December 2026.

In the year starting 1 April 2025
1 January to 31 March 2026
90 days
In the year starting 1 April 2026
1 April to 31 December 2026
275 days

Both parts pay 19%, so its tax is 19% of the whole £27,500.

Sources

The profit tested includes some dividends you receive

The profit tested against the limits is called your . It is your taxable profit plus certain distributions, such as dividends, your company received from other companies.

The rate itself is charged on your taxable profit only. So these distributions can move you over a limit, without being taxed at that rate themselves.

For example

Say Bramley Studio Ltd also received a £25,000 dividend of a kind that counts, from a company outside its group.

Taxable profit
£27,500
Dividend received
£25,000
Profit tested against the limits
£52,500

That is over £50,000, so marginal relief applies instead of 19%.

Sources

The detail Which distributions count

Augmented profits are taxable total profits plus any received by the company that are not excluded (Corporation Tax Act 2010, section 18L). A distribution is excluded if it comes from a of the company, or of a company of which the company is itself a 51% subsidiary, or from a trading company or relevant holding company that is a quasi-subsidiary of the company. HMRC's manual says exempt distributions of a qualifying kind include dividends, distributions of assets, amounts treated as a distribution on the transfer of assets or liabilities, and bonus issues following a repayment of share capital. They are not excluded if the income is from companies that are not in the same group (CTM03915).

Sources

Some things cut your limits

The limits of £50,000 and £250,000 are for a 12-month accounting period. For a shorter period, both are cut in proportion.

If your company has , both limits are divided by the number of companies, counting yours. For example, with three associated companies, you divide by 4. The limits become £12,500 and £62,500.

For example

In HMRC's example, a company has a 9-month accounting period.

Lower limit
£50,000 × 9/12
£37,500
Upper limit
£250,000 × 9/12
£187,500

HMRC says the exact sum should use days, not months.

Sources

A company that only holds investments pays 25% on everything

A close investment-holding company pays the main rate on all its profit. It gets no 19% rate and no marginal relief.

HMRC says a that only holds investments, such as a bank deposit account, is one. A company that exists wholly or mainly to trade commercially, or to let land to unconnected people, is not.

Sources

The detail Close investment-holding companies

Section 18N treats every close company as a close investment-holding company in an accounting period unless, throughout the period, it exists wholly or mainly for one or more permitted purposes. These include carrying on a trade on a commercial basis and investing in land that is, or is intended to be, let commercially. Section 18N says there is an exception to this rule in its subsection (5). HMRC's manual adds acting as a holding or service company within a that exists wholly or mainly to trade or invest in land for unconnected letting (CTM03951).

Sources

Consequences

If you get it wrong

Your company works out its own tax bill in its . The return includes a declaration that it is correct and complete, to the best of the knowledge of the person making it.

HMRC may charge interest if tax is not paid on time.

Sources

Less common situations

Your company stops trading part-way through a year. Its ends when it stops . That period is shorter than 12 months, so its limits are cut in proportion.

Your period crosses 1 April and the limits change. The two parts are then treated as separate periods, each tested against its own share of the limits. This does not apply while the limits stay the same.

Your company is not UK resident. It cannot use the or .

Sources

Worked example: Bramley Studio Ltd

Bramley Studio's is 1 January to 31 December 2026. For this example, it is , trades commercially, has no associated company and received no dividends or other distributions.

Profit for Corporation Tax can differ from the profit in your accounts. is added back, and are taken off instead. For Bramley both are £1,800, so its taxable profit is also £27,500.

Sources

Which rate applies

  • Taxable profit

    £27,500.00

    £27,500 + £1,800 depreciation − £1,800 capital allowances

  • Profit tested against the limits

    £27,500.00

    No dividends or other distributions received, so the same as taxable profit

  • Lower limit

    £50,000.00

    12 months, no associated company

  • Rate

    19%

    £27,500 is not over £50,000

Sources

Corporation Tax for 2026

  • 1 January to 31 March 2026

    £1,288.36

    £27,500 × 90/365 = £6,780.82, at 19%. Year starting 1 April 2025

  • 1 April to 31 December 2026

    £3,936.64

    £27,500 × 275/365 = £20,719.18, at 19%. Year starting 1 April 2026

  • Tax to pay

    £5,225.00

    The same as £27,500 × 19%, because the rate is 19% in both years

Sources

Not covered here

How is worked out, and of oil and gas companies. Also the 20% special rate for unit trusts and open-ended investment companies. See how marginal relief works, owning another company and a period that crosses 1 April.

Sources

Where this comes from

64 official sources. Open a group to see them.

The law 26 sources
HMRC 21 sources
GOV.UK 15 sources
FRC 2 sources

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