UK Corporation Tax Structures
UK limited companies pay Corporation Tax on annual taxable profits. The tax rate is structured progressively based on profit size.
2026 Corporation Tax Rates
- Profits Up to £50,000: Taxed at the 19% Small Profits Rate.
- Profits Exceeding £250,000: Taxed at the 25% Main Rate.
What is Marginal Relief?
For companies with profits between £50,000 and £250,000, HMRC applies Marginal Relief. This provides a gradual transition between the 19% and 25% rates.
Under the marginal relief formula, profits within this middle band are taxed at an effective rate of 26.5%.
Action Plan: Optimize Business Expenses
- Leverage Allowable Expenses: Deduct business costs (equipment, pension, travel) from revenue to reduce net taxable profit below thresholds.
- Estimate Company Tax: Use our UK Corporation Tax Calculator to estimate company tax bills.
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