Corporation Tax rates and marginal relief (2025/26)
In short: For the financial years from 1 April 2023 to 31 March 2027 (FY2023–FY2026), UK Corporation Tax is charged at 19% on profits up to £50,000 (the small profits rate), 25% on profits over £250,000 (the main rate), and at a tapered effective rate in between thanks to marginal relief (GOV.UK). The two thresholds are shared between associated companies and reduced for accounting periods shorter than 12 months.
Taxley works all of this out for you — the rate, marginal relief, associated-company and short-period adjustments — when you prepare your CT600, so you can sense-check the numbers below against your own return.
What are the current UK Corporation Tax rates?
The rates below apply to every financial year from 1 April 2023 onwards (FY2023, FY2024, FY2025 and FY2026 all use the same figures — always confirm the current position on GOV.UK before filing).
| Taxable profits | Rate | Notes |
|---|---|---|
| Up to £50,000 | 19% | Small profits rate |
| £50,000 – £250,000 | ~26.5% effective on the slice in this band | Main rate, reduced by marginal relief |
| Over £250,000 | 25% | Main rate |
The £50,000 and £250,000 figures are the lower and upper limits. They assume a single, standalone company with a 12-month accounting period — both are adjusted in the situations described further down.
What is the small profits rate?
The small profits rate is 19% and applies when your company's profits are £50,000 or less. Most micro and small limited companies fall here and simply pay 19% on their taxable total profits.
A small number of company types — notably "close investment-holding companies" — are not entitled to the small profits rate and pay the 25% main rate regardless of profit level.
How does marginal relief work?
When profits fall between £50,000 and £250,000, you start from the 25% main rate and then subtract marginal relief, which gently tapers the effective rate up from 19% towards 25%. The effect is a marginal rate of about 26.5% on each pound of profit inside the band. HMRC publishes an official Marginal Relief calculator you can check your figure against.
The formula HMRC uses is:
Marginal relief = (Upper limit − Augmented profits)
× (Taxable total profits ÷ Augmented profits)
× (3 ÷ 200)
- Taxable total profits (TTP) is the profit you're taxed on.
- Augmented profits is TTP plus certain exempt distributions (dividends) from non-group companies. For most small companies with no such income, augmented profits = TTP.
- 3 ÷ 200 is the marginal relief fraction for these years.
How is marginal relief calculated? A worked example
A standalone company with a 12-month period, £100,000 of taxable profit and no exempt distributions (so augmented profits also = £100,000):
- Tax at the main rate: £100,000 × 25% = £25,000
- Marginal relief: (£250,000 − £100,000) × (£100,000 ÷ £100,000) × 3/200 = £150,000 × 0.015 = £2,250
- Corporation Tax due: £25,000 − £2,250 = £22,750
That's an effective rate of 22.75% — between the 19% and 25% headline rates, exactly as marginal relief intends.
How do associated companies change the limits?
If your company has one or more associated companies (broadly, companies under common control), the £50,000 and £250,000 limits are divided by the total number of associated companies, including your own.
For example, with one associated company the limits halve to £25,000 and £125,000. This can push a company into marginal relief — or onto the full 25% rate — much sooner, so it's important to count associations correctly.
What about short accounting periods?
The limits are proportionately reduced for accounting periods of less than 12 months. A 6-month period, for instance, uses limits of £25,000 and £125,000. Where a long period of account is split into two Corporation Tax accounting periods, each period gets its own apportioned limits — see our Corporation Tax deadlines guide on how a long first period splits into two returns.
Frequently asked questions
Did Corporation Tax rates change in April 2025?
No. The rates and thresholds that took effect on 1 April 2023 — 19% small profits rate, 25% main rate, and marginal relief between £50,000 and £250,000 — continued unchanged for the financial years starting in April 2024 and April 2025.
What is the effective Corporation Tax rate between £50,000 and £250,000?
Each additional pound of profit in that band is effectively taxed at about 26.5%, because the benefit of the 19% rate is gradually withdrawn as profits rise.
What is the marginal relief fraction?
It is 3/200 for every financial year from 1 April 2023 onwards (FY2023 through FY2026).
Do all companies get the small profits rate?
No. Close investment-holding companies are excluded and pay the 25% main rate on all profits. Most ordinary trading and service companies do qualify.
Taxley applies the main rate, small profits rate and marginal relief automatically — including associated-company and short-period adjustments, apportioned across financial years — when it prepares your CT600. Figures should still be checked by a qualified adviser before filing.
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