UK Corporation Tax Marginal Relief (2026/27)
Corporation Tax marginal relief 2026/27: 19% to £50,000, 25% from £250,000, 26.5% marginal rate between, associated companies and worked figures.
CT by profit level (single company, no associates)
12-month accounting period, no associated companies, no dividends from non-group companies, so augmented profits equal taxable profits. Computed from the 2026/27 rates under sections 18A and 18B CTA 2010.
| Profit | CT rate band | Tax | Effective rate |
|---|---|---|---|
| £20,000 | 19% (small profits rate) | £3,800 | 19% |
| £50,000 | 19% (small profits rate) | £9,500 | 19% |
| £100,000 | 25% less marginal relief | £22,750 | 22.75% |
| £150,000 | 25% less marginal relief | £36,000 | 24% |
| £200,000 | 25% less marginal relief | £49,250 | 24.625% |
| £250,000 | 25% (main rate) | £62,500 | 25% |
| £300,000 | 25% (main rate) | £75,000 | 25% |
Related guides
- UK Corporation Tax Rates Guide - rate fundamentals.
- UK Director Pension Strategies 2026/27 - pension contribution for CT mitigation.
- UK R&D Tax Credit 2026/27 - credit application.
- UK AIA 2026/27 - £1m capital allowance.
- UK Full Expensing 2026/27 - 100% FYA on plant + machinery.
Frequently asked questions
What are the Corporation Tax rates?
For 2026/27: the small profits rate of 19% applies where augmented profits are £50,000 or less, and the main rate of 25% where they exceed £250,000. In between, the main rate applies less marginal relief, which works out at a marginal rate of 26.5% on each extra pound of profit in that band. The limits are for a 12-month accounting period, are reduced proportionately for shorter periods, and are divided between associated companies. Each accounting period stands alone; earlier years' profits do not count.
How does marginal relief work?
Section 18B CTA 2010: relief = F × (U - A) × N/A, where F is the marginal relief fraction (3/200), U the upper limit (£250,000), A augmented profits and N taxable total profits. Where there are no dividends from non-group companies, A = N and the relief is simply 3/200 × (£250,000 - profits). Worked example, profits £150,000: 25% gives £37,500; relief 3/200 × £100,000 = £1,500; Corporation Tax £36,000. The same figure comes from £50,000 at 19% (£9,500) plus £100,000 at 26.5% (£26,500).
What's the "associated companies" trap?
If your company has associated companies, the £50,000 and £250,000 limits are divided by the number of associated companies plus one (section 18D CTA 2010). With one associate each company gets £25,000 and £125,000; with three associates, £12,500 and £62,500. A company is associated with another if one controls the other or both are under the control of the same person or persons (section 18E); a company that did not carry on a trade or business in the period is ignored. Control can be attributed between connected people, so multi-company family structures need checking.
Why is the marginal relief band rate higher than the main rate?
Because the relief shrinks as profits rise. Each extra pound of profit in the band is taxed at 25% and also reduces marginal relief by 3/200 (1.5p), so the marginal rate is 26.5%. The average rate across all profits still never exceeds 25%: it rises from 19% at £50,000 to 25% at £250,000. That makes deductible spending, such as employer pension contributions, worth 26.5p per pound to a company in the band.
How can I reduce profits within the rules?
Genuine deductible costs reduce taxable profits: (a) employer pension contributions, deductible if wholly and exclusively for the trade; the individual's annual allowance (£60,000, subject to tapering and carry forward) still applies to them. (b) Capital allowances, including the Annual Investment Allowance of up to £1,000,000 on qualifying plant and machinery. (c) Director and staff salaries, which are deductible, with employer National Insurance at 15% above £5,000 a year. Separately, the R&D expenditure credit and the Patent Box change the tax on qualifying activity; see our R&D guide. Spending money only to save tax rarely makes sense: a pound spent saves at most 26.5p.
Should I time profits across accounting years?
Where profits swing either side of the limits, the timing of genuine income and expenditure can matter, because each accounting period is taxed on its own figures. Timing must follow the accounting rules that apply to the company; artificial shifting can be challenged by HMRC, including under the General Anti-Abuse Rule. A Corporation Tax accounting period cannot exceed 12 months, so a longer period of account is split into two accounting periods for tax.
How are losses + carry-forward handled?
A trading loss can be set against the company's total profits of the same accounting period and, if the claim requires, of the previous 12 months (section 37 CTA 2010). Unused trading losses carry forward without time limit. Carried-forward losses can be set against up to £5 million of profits a year (shared within a group) in full, and against only 50% of profits above that (section 269ZB), which affects only large companies.
What about Quarterly Instalment Payments?
A "large" company, with profits at an annual rate above £1.5 million (divided by the number of associated companies plus one), normally pays Corporation Tax in quarterly instalments, two of them before the end of the accounting period, instead of 9 months and 1 day after it. It is exempt for a period if its liability is under £10,000, or if its profits are no more than £10 million and it was not large in the previous 12 months. Companies with profits over £20 million follow the very large company rules, which bring payments earlier still (accounting periods beginning on or after 1 April 2019). Source: GOV.UK, Pay Corporation Tax if you're a large company.