Corporation Tax Calculator 2025/26

What is the corporation tax rate for 2025/26?

The main corporation tax rate for 2025/26 is 25% for companies with taxable profits above £250,000. Companies with profits of £50,000 or below pay the small profits rate of 19%. Companies with profits between £50,000 and £250,000 pay the main rate of 25% but receive marginal relief, which brings their effective rate to somewhere between 19% and 25%. The marginal rate in this band is effectively 26.5%.

How does marginal relief work?

Marginal relief reduces your corporation tax bill when taxable profits fall between £50,000 and £250,000. The relief is calculated using the formula: (upper limit minus profits) multiplied by profits divided by profits, multiplied by the marginal relief fraction of 3/200. In practice, this means your effective tax rate gradually increases from 19% at £50,000 to 25% at £250,000. At £100,000 of profits, your effective rate is approximately 21.5%. At £150,000, it is approximately 23.5%.

How do associated companies affect the thresholds?

The £50,000 and £250,000 thresholds are divided equally between associated companies. If you have one associated company, the lower limit drops to £25,000 and the upper limit to £125,000. Two associated companies reduce them to approximately £16,667 and £83,333. Associated companies include any companies controlled by the same person or group, including companies controlled by your close relatives. Dormant companies that have not traded and have no investments are excluded from the count.

What counts as taxable profit?

Taxable profit is your company's total income minus allowable business expenses, capital allowances, and any reliefs or losses brought forward. It includes trading profits, investment income, and chargeable gains. You can deduct ordinary business expenses such as salaries, rent, utilities, professional fees, and the cost of goods sold. Capital allowances replace depreciation for tax purposes, allowing you to claim tax relief on qualifying capital expenditure.

When do I need to pay corporation tax?

Corporation tax is due 9 months and 1 day after the end of your accounting period. For example, if your accounting period ends on 31 March 2026, your corporation tax payment is due by 1 January 2027. Large companies (those paying more than £1.5 million in tax) must make quarterly instalment payments during the accounting period. Your Company Tax Return (CT600) must be filed within 12 months of the end of the accounting period.

Can I carry forward losses to reduce future corporation tax?

Yes. Trading losses can be carried forward indefinitely and set against future trading profits. Since April 2017, losses can also be set against other types of profit in future periods, subject to a restriction: the first £5 million of profits can be fully covered by losses, but relief on profits above £5 million is limited to 50%. Losses can also be carried back one year to claim a refund of previously paid corporation tax.

What reliefs can reduce my corporation tax bill?

Several reliefs can reduce your tax bill. Research and Development (R&D) tax credits provide enhanced deductions or tax credits for qualifying R&D expenditure. The Annual Investment Allowance lets you deduct up to £1 million of qualifying capital expenditure in full. Patent Box relief reduces the rate to 10% on profits from patented inventions. Creative industry tax reliefs apply to film, TV, video games, and other qualifying activities. Group relief allows losses to be shared between group companies.