UK Corporation Tax 2026: Rates, Marginal Relief and Deadlines

UK corporation tax has a main rate of 25% on profits above £250,000 and a small profits rate of 19% on profits up to £50,000. Profits between those two limits are taxed at 25% and then reduced by marginal relief, producing an effective rate that rises smoothly from 19% toward 25%. Corporation tax is payable 9 months and 1 day after your accounting period ends, and the CT600 return is due 12 months after it ends.

Last reviewed: August 2026. Rates and thresholds are set by the UK government and can change at a Budget. Confirm current figures on GOV.UK before relying on them.

UK corporation tax rates and thresholds

The £50,000 lower limit and £250,000 upper limit are reduced proportionately if your accounting period is shorter than 12 months, and divided by the number of associated companies (see below).

Ring fence profits (oil and gas extraction) and close investment holding companies follow different rules; a close investment holding company pays the main rate regardless of profit level.

Who pays UK corporation tax?

• UK resident limited companies, on their worldwide profits.
• Non-resident companies with a UK permanent establishment, on the profits attributable to that establishment. Non-resident landlords with UK property income are also within the charge.
• Unincorporated associations such as clubs, societies and co-operatives.

Sole traders and ordinary partnerships pay income tax instead, not corporation tax. If you are still deciding on a structure, our UK limited company formation guide sets out what incorporation involves.

The small profits rate: who qualifies

The small profits rate of 19% applies where taxable profits do not exceed £50,000. To use it your company must be UK resident and must not be a close investment holding company. A shorter accounting period scales the limit down: a six-month period has a £25,000 lower limit.

How marginal relief works

Marginal relief stops profits jumping straight from 19% to 25% at £50,001. You calculate tax at the main rate on all profits, then deduct the relief.

The HMRC formula is:

Marginal relief = (Upper limit − Augmented profits) × (Taxable profits ÷ Augmented profits) × marginal relief fraction

For companies with no exempt distributions from non-group companies, augmented profits equal taxable profits, so the middle term is 1 and the calculation simplifies to (£250,000 − profits) × the marginal relief fraction (3/200 for the standard main rate).

Worked examples

Take the £100,000 example: relief is (£250,000 − £100,000) × 3/200 = £2,250, so £25,000 − £2,250 = £22,750. HMRC publishes a marginal relief calculator you can use to check your own figures.

Note the marginal band carries an effective marginal rate of 26.5% on each extra pound earned between the limits, which is why timing income and allowable expenses around the year end matters.

Associated companies: the rule that catches people out

Both limits are divided by the number of associated companies plus your own company. Two companies under common control means each has a £25,000 lower limit and a £125,000 upper limit.

Companies are associated when one controls the other, or both are under the control of the same person or persons, with attribution rules that can pull in companies owned by close relatives or business partners. Dormant companies are generally excluded. Because control tests are wider than most owners expect, review the position before assuming you are on the small profits rate. HMRC sets out the tests in its Company Taxation Manual.

Deadlines: filing and payment

Payment is due before the return. Missing the filing date triggers automatic penalties that escalate the longer the return is outstanding, and unpaid tax accrues interest from the due date.

What the CT600 actually involves

The Company Tax Return is not just the CT600 form. A complete submission includes:

• The CT600 form and any supplementary pages (for example CT600A for loans to participators, CT600L for R&D claims).
• Statutory accounts in iXBRL format.
• A tax computation in iXBRL reconciling accounting profit to taxable profit, adjusting for disallowable items such as client entertaining, depreciation (replaced by capital allowances), and fines.

Returns must be filed online. Small companies can often use the HMRC and Companies House joint filing service to submit accounts to both bodies at once. You must file even if you made a loss or owe nothing, unless HMRC has confirmed the company is dormant for corporation tax.

Deductible expenses and allowances

You can deduct costs incurred wholly and exclusively for the business: premises costs, staff salaries and employer National Insurance, business insurance, professional fees, and capital allowances on qualifying equipment. You cannot deduct client entertaining, most capital expenditure outside the allowance regime, or fines and penalties. Capital allowances, including the annual investment allowance and full expensing where it applies, are claimed on the return rather than through the accounts.

If you cannot pay on time

Contact HMRC before the due date rather than after. HMRC can agree a Time to Pay arrangement that spreads the liability over an agreed period; interest still runs, but it usually prevents enforcement action. Our tax resolution service covers HMRC debt negotiation and penalty positions.

2026 UK corporation tax compliance checklist

1. Confirm your accounting period dates with Companies House and HMRC.
2. Calculate taxable profit, adjusting for non-deductible expenses and capital allowances.
3. Identify every associated company and adjust your limits accordingly.
4. Apply marginal relief if profits fall between the adjusted lower and upper limits.
5. Pay the tax within 9 months and 1 day of the year end.
6. File the CT600 with iXBRL accounts and computations within 12 months.
7. Keep your confirmation statement and Companies House filings up to date, since a struck-off company creates far bigger problems than a late return.