Corporation Tax Calculator UK – Calculate CT 2025/26

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Corporation Tax Calculator 2025/26

Calculate your company’s corporation tax liability for the 2025/26 financial year. Enter your taxable profits below to get an instant calculation including marginal relief where applicable.

Leave as 0 if you have no associated companies

Your Corporation Tax Calculation

Taxable Profits: £0.00
Applicable Rate: 0%
Tax Before Relief: £0.00
Corporation Tax Payable: £0.00
Effective Tax Rate: 0%

How Corporation Tax Works in the UK

Corporation tax is charged on the profits your limited company makes. From 1 April 2023, the UK operates a tiered system designed to support smaller businesses whilst generating revenue from larger enterprises.

Profit Band Tax Rate Rate Name
£0 – £50,000 19% Small Profits Rate
£50,001 – £250,000 19% – 25% Marginal Relief applies
Over £250,000 25% Main Rate
What counts as taxable profits? Your taxable profits aren’t simply your turnover. They’re calculated by taking your total income and subtracting allowable business expenses, capital allowances, and any losses brought forward from previous years.

What is Marginal Relief?

Marginal relief prevents a sharp jump from 19% to 25% taxation. If your profits sit between £50,000 and £250,000, you’ll benefit from a gradual increase in your effective tax rate rather than immediately paying the full 25%.

The Marginal Relief Formula

Marginal Relief = (Upper Limit – Augmented Profits) × Profits / Augmented Profits × 3/200

Where:

  • Upper Limit = £250,000 (or adjusted for associated companies)
  • Augmented Profits = Taxable profits + dividends received from non-group companies
  • Profits = Your taxable total profits
Associated Companies Impact: If your company has associated companies, the £50,000 and £250,000 thresholds are divided by the total number of associated companies plus one. For example, with one associated company, your lower threshold becomes £25,000 and upper threshold becomes £125,000.

Step-by-Step Guide

Getting Started

Before using the calculator, you’ll need to know your company’s taxable total profits. This figure comes from your annual accounts and represents profit after all allowable deductions.

What You’ll Need

  • Your company’s taxable profits for the accounting period
  • The number of associated companies (if any)
  • Dividends received from non-group companies (for marginal relief calculation)

Making the Calculation

  1. Enter your taxable total profits in pounds
  2. Add the number of associated companies (leave as 0 if none)
  3. Click the calculate button to see your tax liability
  4. Review the breakdown showing which rate applies and any marginal relief

After Calculating

Once you’ve got your corporation tax figure, you’ll need to file a Company Tax Return (CT600) with HMRC. Payment is typically due nine months and one day after your accounting period ends, whilst the CT600 must be filed within 12 months.

Common Scenarios Explained

Scenario 1: Small Business (Profits £35,000)

A company with £35,000 taxable profits pays corporation tax at 19%. That’s £6,650 in tax, with an effective rate of 19%. Simple and straightforward.

Scenario 2: Mid-Sized Business (Profits £150,000)

With profits of £150,000, the company initially faces 25% tax (£37,500), but marginal relief kicks in. The relief reduces the bill significantly, resulting in an effective rate around 22.5% instead of the full 25%.

Scenario 3: Larger Business (Profits £400,000)

Companies with profits above £250,000 pay the full 25% rate with no marginal relief. At £400,000 profits, the corporation tax bill would be £100,000.

Scenario 4: Business with Associated Companies

A company with £60,000 profits and one associated company sees its thresholds halved. The upper limit becomes £125,000 and lower limit £25,000. Since £60,000 falls in the marginal relief band, the effective rate will be higher than 19% but still below 25%.

Frequently Asked Questions

When is corporation tax due?
Your corporation tax payment is due nine months and one day after the end of your accounting period. For example, if your accounting period ends on 31 March 2025, payment is due by 1 January 2026. Large companies may need to pay in quarterly instalments.
What happens if profits fluctuate across the £50,000 or £250,000 thresholds?
Marginal relief smooths this transition. Rather than facing a sudden jump in tax rates, your effective rate gradually increases as profits rise through the £50,000 to £250,000 band. This prevents a situation where earning an extra £1 triggers a disproportionate tax increase.
Can I reduce my corporation tax liability?
Yes, through legitimate means like claiming capital allowances on equipment purchases, using the Annual Investment Allowance, carrying forward losses from previous years, claiming R&D tax credits if applicable, and maximising allowable business expenses. Always work with a qualified accountant to optimise your position.
What counts as an associated company?
Two companies are associated if one controls the other, or both are controlled by the same person or group of persons. Control typically means owning more than 50% of shares or voting rights. This affects your corporation tax thresholds, as they must be divided among associated companies.
Do I pay corporation tax if my company makes a loss?
No, there’s no corporation tax due if your company makes a loss. However, you should still file your Company Tax Return. Losses can be carried forward to offset against future profits, or in some cases carried back to previous periods, providing valuable tax relief when you return to profitability.
How does this differ from income tax?
Corporation tax is paid by limited companies on their profits, whilst income tax is paid by individuals on their earnings. As a company director, you might pay income tax on your salary and dividends, whilst the company separately pays corporation tax on its profits. They’re completely different taxes serving different purposes.
What if my accounting period straddles the rate change date?
If your accounting period crosses 1 April (when rates can change), you’ll need to apportion your profits between the two periods and apply the relevant rates to each portion. Most accounting software handles this automatically, but it’s worth checking with your accountant to confirm accuracy.

Rate Comparison: Past and Present

Tax Year Small Rate Main Rate Lower Threshold Upper Threshold
2025/26 19% 25% £50,000 £250,000
2024/25 19% 25% £50,000 £250,000
2023/24 19% 25% £50,000 £250,000
2022/23 19% 19% N/A N/A

The tiered system was reintroduced in April 2023 after operating a flat 19% rate. This change aimed to increase revenue from larger corporations whilst maintaining support for smaller businesses through the lower 19% rate.

Common Mistakes to Avoid

Confusing Turnover with Taxable Profits

Your turnover is the total income before expenses. Corporation tax is charged on taxable profits after deducting allowable expenses. Many new business owners confuse these figures, leading to significant miscalculations.

Forgetting About Associated Companies

If you or your business partners control multiple companies, you must account for associated companies when calculating thresholds. Failing to do so can result in underpaying tax and facing penalties from HMRC.

Missing the Payment Deadline

Corporation tax is due nine months and one day after your accounting period ends, not after your year-end. Missing this deadline triggers interest charges and potential penalties. Set reminders well in advance.

Not Claiming Available Reliefs

Many businesses fail to claim capital allowances, R&D tax credits, or other reliefs they’re entitled to. This means paying more tax than necessary. Review all available reliefs annually with your accountant.

Ignoring Estimated Payments

Companies with profits exceeding £1.5 million must pay corporation tax in quarterly instalments. Waiting until the standard due date when you exceed this threshold results in immediate penalties and interest.

References

  1. HM Revenue & Customs. (2025). Corporation Tax rates and allowances. GOV.UK. Available at: https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax
  2. HM Revenue & Customs. (2023). Marginal Relief for Corporation Tax. GOV.UK. Available at: https://www.gov.uk/guidance/corporation-tax-marginal-relief
  3. PricewaterhouseCoopers. (2025). United Kingdom – Corporate – Taxes on corporate income. Tax Summaries. Available at: https://taxsummaries.pwc.com/united-kingdom/corporate/taxes-on-corporate-income
  4. Institute of Chartered Accountants in England and Wales. (2025). Corporation Tax Guidance. ICAEW Technical Resources.

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