Corporation tax calculator

Corporation tax is 19% on profits up to £50,000 and 25% above £250,000. In between, the main rate applies with marginal relief deducted, so the effective rate climbs gradually — and the marginal rate on each extra pound in that band is 26.5%, higher than either headline rate.

Two headline rates and a band in the middle where neither applies cleanly. Enter your profit and see what the company actually pays — and, more usefully, what the next pound of profit costs.

How the calculation works

Corporation tax is charged on the company's taxable profit — turnover less allowable costs, after adjustments that rarely match the profit in your accounts exactly.

Once you have that figure, three cases:

• At or below £50,000: the small profits rate of 19% on the lot.
• At or above £250,000: the main rate of 25% on the lot — not just on the excess.
• In between: the main rate is charged, then marginal relief is deducted — 3/200 of the difference between the upper limit and your profit.

The 26.5% band

Marginal relief shrinks as profit rises, so each extra pound is taxed at the main rate and costs you a slice of relief. The combined effect is a marginal rate of 26.5% — higher than the 25% top rate that band sits below.

This is the single most useful thing on the page. A company with £120,000 of profit that makes a £20,000 employer pension contribution does not save 25% of it — it saves 26.5%. Decisions about bonuses, pension contributions and the timing of capital purchases are worth materially more inside this band than outside it.

Associated companies

Both limits are divided by the number of associated companies — broadly, companies under the same control. Two companies and the small profits rate stops at £25,000 each; three and it stops at roughly £16,667. A dormant company left over from an old venture, or a separate company holding a property, counts. So does a company controlled by an associate in some circumstances.

Both limits are divided between associated companies, and pro-rated for accounting periods shorter than 12 months.

Paying it: the deadline people miss

Corporation tax is due 9 months and 1 day after the end of the accounting period. The company tax return — the CT600 — is not due until 12 months after the end of the accounting period.

Payment comes first, and by a clear three months. Directors who diary the filing date and treat it as the money date find interest already running by the time the return is prepared. If cash is the problem rather than the figure, an instalment arrangement is usually available — but it has to be asked for.

What reduces the profit this is calculated on

Not the tax — the profit. That distinction matters, because everything below works by reducing the figure the rate is applied to:

• Director's salary — a deductible expense for the company, though it brings its own personal tax and National Insurance.
• Employer pension contributions — generally deductible when paid, and untouched by National Insurance.
• Capital allowances on equipment, vehicles and fit-out.
• Genuine business costs that are being paid personally and never claimed — a common and entirely avoidable loss.
• Losses brought forward from earlier periods.

Dividends are not on this list, and it is the most common misunderstanding we correct: they are paid out of profitafter corporation tax, so they do not reduce it. What they change is the tax you personally pay.

Figures are for the tax year shown and change every April. They are general information, not advice — we check the current position for your circumstances before anything is filed.

Reviewed 19 October 2026.

Part of our work on company and director tax — if you want someone to take it off your hands, start with our how to pay yourself from a limited company page.