Corporation tax rates determine how much tax UK companies pay on their taxable profits. Unlike everyday business expenses or capital allowances, which reduce the amount of profit that gets taxed, corporation tax rates set the percentage of tax you pay on your remaining profits.
The UK uses different corporation tax rates depending on your profit level. Many companies pay the main rate on all taxable profits, while smaller companies with lower profits may qualify for a reduced small profits rate or marginal relief.
Understanding which corporation tax rate applies to your business and how to calculate it correctly helps you plan ahead, stay compliant, and make the most of any reliefs available to reduce your final tax bill.
Before you work out how much corporation tax to pay, it’s important to understand which corporation tax rate applies to your business. The rate you pay depends on your taxable profits and whether you qualify for the main rate, the small profits rate, or marginal relief.
Knowing how these rates and thresholds work helps you calculate your tax bill accurately and plan ahead. It also makes sure you claim any available reliefs or deductions correctly, so you don’t pay more tax than necessary.
Corporation tax rates are set for each Financial Year. A Financial Year runs from 1 April to the following 31 March.
If the accounting period of a company straddles the 31 March, the profits are apportioned on a time basis to each Financial Year.
The Northern Ireland Executive has committed to setting the rate of corporation tax at 12.5% when the Northern Ireland Executive demonstrates its finances are on a sustainable footing.
Year to 31.3.26:
| Rate | Profits band (£) | Rate (%) |
|---|---|---|
| Small profits rate | 0 - 50,000 | 19 |
| Marginal rate | 50,001 - 250,000 | 26.5 |
| Main rate | Over 250,000 | 25 |
| Marginal relief fraction | 3/200 |
Most UK companies and some organisations must pay tax at the applicable rates on their taxable profits. This includes:
Limited Companies
All UK limited companies must pay corporation tax on their profits from trading, investments, and chargeable gains. The rate depends on the company’s profit level and whether they qualify for the small profits rate or marginal relief.
Foreign Companies with a UK Branch
Overseas companies with a permanent establishment or branch in the UK must also pay UK corporation tax on profits earned here.
Clubs, Societies, and Associations
Unincorporated associations such as sports clubs, community groups, and some co-operatives may be liable for corporation tax and need to apply the correct rate when calculating what they owe.
Special Cases
Businesses that fall into special categories, such as charities with non-charitable trading profits, may have corporation tax liabilities too.
Exclusions to Note
Sole traders and partnerships don’t pay corporation tax. Instead, they pay Income Tax and National Insurance on their profits through Self-Assessment.
Paying these taxex means working out your company’s taxable profits, applying the correct rates, and paying HMRC by the deadline. Here’s how it works:
Limited Companies
If you run a limited company, you calculate your tax when you complete your Company Tax Return (CT600). You’ll work out your taxable profits, check which corporation tax rate applies main rate, small profits rate, or marginal relief and show how you’ve arrived at the final amount due.
Foreign Companies with UK Branches
If you run a foreign company with a UK branch or office, you also need to calculate UK taxable profits separately and apply the right corporation tax rate when completing your return.
To get your corporation tax right, you’ll need:
Keep Good Records – HMRC can check your figures at any time, so it’s important to keep detailed accounts, supporting documents, and any calculations for reliefs or marginal relief. Filing and paying on time helps you avoid penalties and interest charges.
What are corporation tax rates in the UK?
Corporation tax rates are the percentages UK companies pay on their taxable profits. Most companies pay the main rate, but smaller companies may qualify for a small profits rate or marginal relief.
Who pays corporation tax rates?
UK limited companies, foreign companies with a UK branch, and certain clubs, co-operatives, and associations must pay corporation tax at the applicable rate on their profits.
What is the main corporation tax rate?
The main corporation tax rate applies to companies with profits above a certain threshold. The government may change this rate from time to time, so it’s important to check the current rate for your accounting period.
What is the small profits rate for corporation tax?
Smaller companies with taxable profits under a certain limit may pay a lower corporation tax rate known as the small profits rate. This helps reduce the tax burden for smaller businesses.
What is marginal relief for corporation tax?
Marginal relief helps companies with profits between the small profits threshold and the main rate threshold. It gradually increases the effective tax rate so the jump from small profits rate to main rate isn’t immediate
How do I calculate which corporation tax rate applies?
To work out which corporation tax rate applies, calculate your company’s taxable profits, check the thresholds for the small profits rate and main rate, and apply marginal relief if your profits fall in between.
When do I pay corporation tax?
Corporation tax must usually be paid nine months and one day after the end of your company’s accounting period. The Company Tax Return (CT600) must be filed within 12 months of the period end.
Can I reduce my corporation tax rate or bill?
While you can’t change the rate itself, you can legally reduce your tax bill by claiming allowable expenses, capital allowances, R&D tax credits, and other reliefs that lower your taxable profits.
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