Information checked against official UK sources on 7 July 2026. This article is general information, not personalised tax advice.
Direct answer: If your company has £90,000 of taxable profits, it is not simply taxed at 19% or 25%. For a standard 12-month period with no associated companies, a UK non-ring-fence company normally starts at 25% and receives Marginal Relief, creating a lower effective rate. Companies at £50,000 or below normally pay 19%; above £250,000, 25% applies.
A director looking at a £90,000 year end profit can easily land on the wrong answer by treating Corporation Tax like a simple set of bands. The first question is not “Which headline rate do I choose?” It is “What are my company’s taxable total profits, and do the limits change for my accounting period or associated companies?”
That difference matters. A draft profit in the annual accounts may be adjusted for tax before the final Corporation Tax computation is prepared. Get the taxable-profit figure or the company structure wrong, and an otherwise sensible forecast can be misleading. This guide to Corporation tax rates UK 2026 sets out the practical route from profit estimate to a more reliable tax number.
What are the Corporation Tax rates in the UK for 2026?
For ordinary UK companies with non-ring-fence profits, the small profits rate is 19% where qualifying profits are £50,000 or less. The main rate is 25% above £250,000. Between those points, eligible companies calculate tax at 25% and deduct Marginal Relief, so the effective rate increases gradually rather than jumping overnight.
Tax is charged by reference to the rates that apply in the company’s Corporation Tax accounting period. The £50,000 and £250,000 limits are not fixed for every company: shorten the accounting period or have associated companies and the limits are reduced.
Key figures at a glance
| Taxable-profit position | Likely Corporation Tax treatment | Key conditions |
| £50,000 or less | 19% small profits rate | Assumes a 12-month period and no associated companies; other eligibility rules can matter. |
| Over £50,000 to £250,000 | 25% less Marginal Relief | Relief is not automatic in every case. The limits can be reduced and augmented profits can be relevant. |
| Over £250,000 | 25% main rate | The £250,000 limit can be lower for short periods or associated companies. |
| Ring-fence oil and gas profits, banking companies or large/very large payment cases | Do not use this table as a full calculation | These can have separate rates, surcharges or payment regimes. |
Scope check: This article is designed for typical limited companies with non-ring-fence profits. Ring-fence oil and gas profits have their own rate structure; banking companies can be within the Bank Surcharge regime; and companies with annualised profits above the large-company threshold can be required to pay by instalments. Companies with non-UK residence, close investment holding company status, complex distributions or connected-party arrangements should not rely on the generic examples below.
Source note — 2026 rates, limits, rate-period treatment and ring-fence exception: GOV.UK Corporation Tax rates and allowances; GOV.UK Corporation Tax rates, expenses and reliefs. Large-company instalments: HMRC guidance on paying Corporation Tax in instalments.
How Corporation tax rates UK 2026 work in practice
It helps to think of the three-rate system as a calculation sequence rather than three independent tax choices.
At £50,000 or below: a qualifying company uses the 19% small profits rate. Under the simple assumptions used in this article, £40,000 of taxable profits produces £7,600 of Corporation Tax.
Between £50,000 and £250,000: the calculation normally begins at 25% on taxable total profits. Marginal Relief is then deducted where the conditions are met. This prevents a cliff edge at £50,000, but it does not mean every pound above that figure is taxed at a flat 25%.
Above £250,000: the main rate is 25%. At exactly £250,000 under the standard assumptions, Marginal Relief reduces to nil and the result is £62,500.
For a company in the middle band, the two profit measures matter. Taxable total profits are used to calculate the Corporation Tax charge. Augmented profits are used to test the relief limit and can include certain distributions. That is why a company with income outside its normal trading activity can need a more careful computation, even where the profit in the accounts looks straightforward.
Marginal Relief is not available to every company. HMRC states that non-UK resident companies, close investment holding companies and companies whose relevant profits exceed the upper limit cannot claim it. A company that has received distributions should not assume that its headline taxable-profit number tells the whole story.
Source note — Marginal Relief eligibility, reduced limits and exclusions: HMRC/GOV.UK Marginal Relief guidance.
Worked Corporation Tax examples
Assumptions for every illustration below: a 12-month Corporation Tax accounting period falling wholly within the financial year beginning 1 April 2026; a UK company with non-ring-fence profits; no associated companies; no losses, qualifying charitable donations, distributions, tax credits or additional reliefs; and taxable total profits equal augmented profits. These are illustrations, not a tax computation for a real company.
| Taxable profits | Calculation | Illustrative Corporation Tax | Effective rate |
| £40,000 | £40,000 × 19% | £7,600 | 19.00% |
| £90,000 | £90,000 × 25%, less £2,400 Marginal Relief | £20,100 | 22.33% |
| £250,000 | £250,000 × 25%; Marginal Relief is £0 | £62,500 | 25.00% |
| £300,000 | £300,000 × 25% | £75,000 | 25.00% |
Why the £90,000 example is taxed at £20,100
Under the stated assumptions, the relief formula is:
Marginal Relief = F × (U − A) × (N ÷ A)
Where:
- F is the standard fraction: 3/200, or 0.015
- U is the upper limit: £250,000
- A is augmented profits: £90,000
- N is taxable total profits: £90,000
So:
0.015 × (£250,000 − £90,000) × (£90,000 ÷ £90,000) = £2,400
The main-rate tax is £22,500 (£90,000 × 25%). Deducting £2,400 relief produces £20,100. The effective rate is therefore 22.33%.
The result changes if the assumptions change. For example, associated companies reduce the limits, a short period reduces them by time apportionment, and certain distributions can alter augmented profits. The calculation is not a shortcut for companies with special tax positions.
Source note — HMRC sets out the Marginal Relief formula as F × (U − A) × (N ÷ A), with the 2026 standard fraction of 3/200.
Why associated companies can change your Corporation Tax band
Associated-company rules are one of the most frequent reasons a director’s first tax estimate proves too low. They do not only apply to a formal group with a holding company. Broadly, companies are associated when one controls the other, or where both are controlled by the same person or persons. HMRC’s detailed control rules can involve indirect ownership and connected interests, so the analysis can be more involved than a simple holding-company check.
Plain-English example: three other associated companies
Assume Company A has three other associated companies throughout a 12-month accounting period. The standard limits are divided by four: the three associates plus Company A itself.
| Threshold | Standard limit | Divided by 4 | Company A’s adjusted limit |
| Lower limit | £50,000 | 4 | £12,500 |
| Upper limit | £250,000 | 4 | £62,500 |
In that situation, a £90,000 taxable-profit forecast is above the adjusted £62,500 upper limit. Company A would therefore be outside the usual Marginal Relief range and, subject to the wider facts, would calculate at 25%, not by using the standalone-company £50,000 to £250,000 limits.
A company that is associated for only part of an accounting period can still count. HMRC generally disregards an associated company that has carried on no trade or business at any point in the relevant period, but this is not a reason to make assumptions about dormant or newly formed entities. Confirm the facts before relying on a threshold.
Source note — HMRC says three other associated companies divide the limits by four; it also explains the control test and the treatment of inactive associated companies.
What counts as taxable profits?
Turnover is a starting-point income measure. It tells you little on its own about the company’s Corporation Tax position.
Accounting profit is the profit shown in the annual accounts after applying accounting standards. It is essential for financial reporting, but it is not automatically the taxable figure.
Taxable profits are the profits calculated for the Company Tax Return after tax adjustments. HMRC explicitly notes that the Corporation Tax profit or loss can differ from the figure in annual accounts. Common reasons include disallowable or non-business costs, capital allowance claims instead of accounting depreciation, chargeable gains, taxable investment income and the use of losses or other reliefs.
For a practical year-end process, directors should avoid asking only “What did we make?” A better sequence is: reconcile bookkeeping, finalise the accounts, identify tax adjustments, calculate taxable total profits, then assess the rate band and reliefs. This is also why an expense recorded in the ledger is not automatically a Corporation Tax deduction, and why a cash purchase of equipment does not necessarily create an immediate deduction on the same basis as an ordinary running cost.
A Company Tax Return is supported by accounts and tax computations showing how the tax figures are calculated from the accounts. Where figures are estimated or complex adjustments are required, leave enough time for review rather than treating the return as a form-filling exercise.
Source note — HMRC distinguishes Corporation Tax profit from annual accounts profit and requires computations to show how tax figures are derived. Capital allowances can deduct qualifying asset expenditure from profits, subject to the applicable rules.
Corporation Tax deadlines UK companies should not miss
The tax payment date can arrive before the Company Tax Return filing date. That catches companies that wait to finalise everything until close to the return deadline. Keep the three dates separate, especially where the company has changed its year end or is filing first accounts.
| Obligation | Usual deadline for a private limited company | Practical reminder |
| Pay normal Corporation Tax liability to HMRC | 9 months and 1 day after the Corporation Tax accounting period ends | Payment is usually due before the tax return is filed. |
| File Company Tax Return with HMRC | 12 months after the Corporation Tax accounting period ends | Accounts and computations are normally part of the filing package. |
| File annual accounts with Companies House | 9 months after the financial year ends | First accounts commonly have a different deadline: 21 months after the date registered with Companies House. |
A Corporation Tax accounting period normally follows the company’s financial year, but cannot be longer than 12 months. A first or extended set of accounts can therefore require more than one Company Tax Return and more than one payment date.
The normal payment deadline does not apply as a one-size-fits-all rule. Companies with profits at an annual rate above £1.5 million normally pay electronically in quarterly instalments; the threshold is reduced for associated companies. Very large companies have a separate earlier instalment regime. Do not use the table above without checking these rules where a company is growing rapidly or part of a group.
Source note — HMRC and Companies House deadline guidance confirms the 9-month-and-1-day payment deadline, 12-month return deadline, 9-month private-company accounts deadline and different instalment regime for large companies.
Common Corporation Tax planning points to discuss with your accountant
Sound tax planning is usually less about chasing a headline rate and more about keeping evidence, timing and forecasts aligned.
Keep records that can support the tax computation. Bookkeeping that separates business and personal spending, captures invoices and receipts, records recurring subscriptions such as a software licence, and reconciles bank, payroll and sales records makes the year-end tax adjustments easier to defend and explain. The benefit is clarity, not a promise that every cost will be allowable.
Review capital expenditure before the year end. Qualifying plant and machinery may be eligible for capital allowances, which are a tax relief mechanism separate from accounting depreciation. Assess the commercial need first, then the tax treatment. Buying an unsuitable asset simply to create a deduction is rarely good business.
Classify expenses carefully. The question is not whether the company paid for something, but whether it is an allowable business cost for Corporation Tax and how it should be treated. Capital items, mixed-use costs, director-related expenditure and finance arrangements often need specific review.
Use losses deliberately, not automatically. A trading loss may potentially be set against other profits or gains in the same period, carried back or carried forward, subject to conditions and claims. Group positions and carried-forward loss restrictions can change the best route.
Forecast taxable profits, not turnover. A running profit forecast that includes anticipated tax adjustments, planned capital expenditure and group changes is more useful than a simple sales target. A quarterly review programme can help optimise cash-flow planning and allow directors to reserve cash for the payment date, rather than being surprised by a tax figure after the year end.
These are planning conversations, not universal deductions. The right treatment depends on the company’s activities, documents, accounting period, group profile and claims available.
Source note — HMRC confirms that capital allowances may reduce qualifying expenditure from profits and that trading-loss relief can be available in the same period, carried back or carried forward, subject to rules.
How Bloom Financials can help
A clean Corporation Tax process relies on the same information needed for good business decisions: reliable bookkeeping, clear annual accounts and a current profit forecast. Bloom Financials can support limited companies with bookkeeping, annual accounts, Corporation Tax calculations, tax-planning discussions and statutory-compliance tasks, helping directors understand what needs to be prepared and when.
For a starting point on the rate structure, see Corporation tax rates UK 2026. For a company-specific position, the practical work is to review the records, accounting period, taxable-profit adjustments, associated companies and relevant claims together rather than relying on a generic online estimate.
Frequently asked questions
Is a £90,000 company profit taxed at 19% or 25%?
Not automatically either headline rate. Under the worked-example assumptions—12 months, no associated companies, no relevant distributions, reliefs or losses—£90,000 of taxable total profits gives £20,100 Corporation Tax after Marginal Relief, an effective rate of 22.33%. A £90,000 accounting profit may produce a different tax result after adjustments.
Does the 25% rate apply to every pound once profits exceed £50,000?
No. Eligible companies between the lower and upper limits calculate Corporation Tax at 25% and then deduct Marginal Relief. This creates a gradual rise in the effective rate. It is not a standard personal-tax-style band calculation, and the relevant limits can be lower for short accounting periods or associated companies.
How are associated companies counted for Corporation Tax?
The key issue is control. Companies may be associated where one controls the other or the same person or persons control both. The rules can apply beyond a straightforward holding-company group, and entities associated for only part of the period can still matter. Check ownership and control before using the standalone thresholds.
Is my profit in the annual accounts the same as taxable profits?
Usually not exactly. Annual accounts follow accounting standards, whereas the Corporation Tax calculation applies tax adjustments. Capital allowances, disallowable expenditure, losses, chargeable gains, investment income and reliefs can all change the figure. Use the completed tax computation, rather than the profit-and-loss account alone, for the rate-band decision.
When is Corporation Tax due after the year end?
For most companies, payment is due 9 months and 1 day after the end of the Corporation Tax accounting period. The Company Tax Return is normally due 12 months after that period. Large and very large companies can have instalment-payment obligations, so confirm the payment regime early rather than using the normal deadline by default.
Can I buy equipment just before the year end to reduce Corporation Tax?
Potentially, qualifying equipment can attract capital allowances, but the tax result depends on the asset, timing, use and available allowance. It is not the same as deducting every purchase from profits immediately. Make the purchase because it serves the organisation commercially, then check the tax treatment and evidence.
Source note — FAQs on rate thresholds, relief, accounts versus taxable profits, deadlines and capital allowances are based on the official sources cited in the relevant sections above.
Conclusion
For most UK limited companies with non-ring-fence profits, the 2026 structure is 19% at £50,000 or below, a 25% calculation reduced by Marginal Relief in the middle range, and 25% above £250,000. The key is not merely knowing the headlines; it is calculating taxable profits accurately, applying any reduced thresholds and planning for the correct payment date.
Corporation tax rates UK 2026 are easier to manage when bookkeeping, annual accounts, tax computations and forecasts are treated as one connected process. For support before your next year end, contact Bloom Financials to discuss a practical Corporation Tax and compliance review.
