Corporation Tax Rates 2026/27: 19%, 25% and Marginal Relief Worked Out

For the 2026/27 financial year, corporation tax is 19% on taxable profits up to £50,000 (the small profits rate) and 25% on profits of £250,000 or more (the main rate). Between those two figures you pay the 25% main rate and then deduct marginal relief, which produces an effective rate somewhere between 19% and 25% — and a marginal rate of 26.5% on every extra pound earned in that band.

So the honest answer to "is corporation tax still 19%?" is: only if your profits are £50,000 or less and you have no associated companies. Corporation tax is a UK-wide tax, so the rates are identical in Scotland, Wales and Northern Ireland.

Key points

• Small profits rate: 19% on taxable profits up to £50,000.
• Main rate: 25% on taxable profits of £250,000 or more.
• In between, marginal relief applies, using the fraction 0.015 (3/200).
• The effective marginal rate on profits between £50,000 and £250,000 is 26.5%.
• Associated companies divide both the £50,000 and £250,000 limits between them.

The two corporation tax rates for 2026/27

There is one tax with two rates and a sliding scale between them. Everything turns on your company's taxable total profits for the accounting period — trading profits after allowable expenses and capital allowances, plus property income, interest and chargeable gains.

Two important exceptions. A close investment-holding company — broadly a close company that does not exist mainly to trade or to let property commercially — pays the 25% main rate on all its profits and cannot use the small profits rate or marginal relief. Companies with ring-fence profits from oil and gas extraction sit under a separate rate structure entirely.

Marginal relief worked out

Marginal relief stops the tax bill jumping by thousands the moment profits pass £50,000. The statutory formula is:

Marginal relief = F × (U − A) × (N ÷ A)

• F is the marginal relief fraction: 0.015
• U is the upper limit: £250,000
• A is augmented profits (taxable profits plus exempt distributions from non-group companies)
• N is taxable total profits

For most small companies there are no such distributions, so A and N are the same number and the last part of the formula (N ÷ A) equals 1. That simplifies things to: 0.015 × (£250,000 − profits).

Worked example: £100,000 of profit

A trading company with a 12-month accounting period, no associated companies and taxable profits of £100,000:

1. Tax at the main rate: £100,000 × 25% = £25,000
2. Marginal relief: 0.015 × (£250,000 − £100,000) = 0.015 × £150,000 = £2,250
3. Corporation tax due: £25,000 − £2,250 = £22,750
4. Effective rate: £22,750 ÷ £100,000 = 22.75%

Effective rates across the marginal band

The hidden 26.5% marginal rate

Look at the step from £50,000 to £75,000 in the table: the bill rises from £9,500 to £16,125, an increase of £6,625 on £25,000 of extra profit. That is a marginal rate of 26.5% — higher than the headline main rate. It applies to every pound of profit between £50,000 and £250,000, because marginal relief is being withdrawn at the same time as tax is being charged.

This matters for planning. A deductible cost of £1,000 incurred by a company in the marginal band saves £265 of corporation tax, compared with £190 for a company under £50,000 and £250 for one above £250,000.

Associated companies shrink the thresholds

The £50,000 and £250,000 limits are divided by the number of associated companies, counting the company itself. Two companies are associated if one controls the other, or if both are under the control of the same person or persons. Dormant companies are generally ignored, as are genuinely passive holding companies.

With one associate, the limits become £25,000 and £125,000. With three companies in the group, they fall to £16,666 and £83,333 each.

Example. A director owns two trading companies. Company A makes £60,000 of profit. On its own it would pay 25% less marginal relief of 0.015 × (£250,000 − £60,000) = £2,850, giving £12,150. But with one associated company the upper limit is £125,000, so relief is 0.015 × (£125,000 − £60,000) = £975, and the bill is £15,000 − £975 = £14,025 — an effective rate of 23.38% instead of 20.25%.

Short accounting periods

Both limits are also pro-rated for accounting periods shorter than 12 months. A nine-month period gives limits of £37,500 and £187,500 (9/12 of each), and the marginal relief calculation uses those reduced figures.

Payment and filing dates

Corporation tax has an unusual quirk: you pay before you file. For a company that is not "large", the tax is due nine months and one day after the end of the accounting period, while the CT600 return is not due until 12 months after the period end.

So a company with a 31 March 2027 year end must pay by 1 January 2028 and file by 31 March 2028. HMRC charges interest on tax paid late, and there are separate penalties for filing the return late.

Companies with profits above £1.5 million pay by quarterly instalments instead, and those above £20 million pay on an accelerated instalment timetable. Both thresholds are divided between associated companies.

You can pay by bank transfer, Direct Debit or card through the GOV.UK pay corporation tax service, and our guide on how to pay corporation tax walks through the reference number, timings and what happens if you pay the wrong period.

Reducing the bill legitimately

Corporation tax is charged on profit, so the levers are the ones that reduce taxable profit or move it out of the marginal band:

• Capital allowances. The Annual Investment Allowance covers £1,000,000 of qualifying plant, machinery, tools and vans at 100%. Full expensing gives companies an unlimited 100% first-year deduction on new and unused main-rate plant and machinery. Anything outside those gets writing-down allowances at 18% (main pool) or 6% (special rate pool).
• Employer pension contributions. Contributions paid by the company for directors and staff are normally deductible in the period paid, with no employer National Insurance.
• Director salary. Salary and the employer NI on it are deductible; dividends are not. Employer NI is 15% above the £5,000 secondary threshold, which changes the sums — the salary versus dividends decision tool compares the combined company and personal cost.
• Loss relief. Trading losses can usually be set against other profits of the same period, carried back 12 months, or carried forward.
• Timing. Where a cost is genuinely commercial and the accounting treatment supports it, bringing it into a period where profits sit in the 26.5% marginal band is worth more than the same cost in a 19% period.

Research and development relief, patent box and creative industry reliefs can go much further for eligible companies, but the qualifying rules are detailed and worth checking before assuming a claim.

What to do next

Put your figures through the corporation tax calculator to see your rate, the marginal relief deduction and the exact amount due, including the effect of associated companies and short periods. If you are a director deciding how to take money out of the company, compare the options with the director extraction decision tool, then check the mechanics in the guide to how to pay corporation tax.