Corporation Tax Rates

Key facts

The main rate of Corporation Tax is 25% (from 1 April 2023).
The small profits rate is 19% for companies with profits up to £50,000.
Marginal relief applies to profits between £50,000 and £250,000, creating an effective rate between 19% and 25%.
Thresholds are divided by the number of associated companies plus one.

The 2025/26 Corporation Tax Rates

From 1 April 2023, the UK has a two-rate system for Corporation Tax. The rate a company pays depends on the level of its augmented profits (broadly, taxable profits plus any dividends received from non-group companies):^[1]

Augmented Profits	Rate	Name
£0 – £50,000	19%	Small profits rate
£50,001 – £250,000	19% – 25%	Marginal relief band
Over £250,000	25%	Main rate

Between April 2017 and March 2023, all companies paid a flat 19% rate regardless of profit level. The reintroduction of a small profits rate in April 2023 means company size matters again.

How Marginal Relief Works

Companies with profits between £50,000 and £250,000 do not simply pay 25%. Instead, they benefit from marginal relief, which reduces the tax bill so the effective rate tapers smoothly from 19% to 25%.^[2]

The formula is:

Marginal relief = (Upper limit − Augmented profits) × Taxable profits ÷ Augmented profits × Fraction (3/200)

This fraction (3/200 = 1.5%) means the effective marginal rate on profits within the band is approximately 26.5%. In practice, most accounting software, including GoFile’s CT600 tool, calculates this automatically.

Worked Example

A standalone company with taxable profits of £100,000 and no dividends received:

Step	Calculation	Amount
CT at main rate	£100,000 × 25%	£25,000
Less: marginal relief	(£250,000 − £100,000) × 3/200	−£2,250
CT payable		£22,750
Effective rate	£22,750 ÷ £100,000	22.75%

Associated Companies & the Thresholds

The £50,000 and £250,000 thresholds must be divided equally among all associated companies. Two companies are associated if one controls the other, or both are under common control.^[3]

For example, if a person controls three companies, each company’s thresholds become:

Lower limit: £50,000 ÷ 3 = £16,667
Upper limit: £250,000 ÷ 3 = £83,333

This prevents business owners from splitting profits across multiple companies solely to benefit from the small profits rate.

Dormant companies that have not carried on a trade and have no income are generally ignored when counting associated companies for threshold purposes.^[3]

Short Accounting Periods

If a company’s accounting period is less than 12 months, the thresholds are reduced proportionally. For a 6-month period, the lower limit drops to £25,000 and the upper limit to £125,000.^[1]

Recent Rate History

Period	Main Rate	Small Profits Rate
From 1 April 2023	25%	19% (profits ≤ £50,000)
1 April 2017 – 31 March 2023	19%	N/A (single rate)
1 April 2015 – 31 March 2017	20%	N/A (single rate)
1 April 2014 – 31 March 2015	21%	20% (profits ≤ £300,000)

Frequently Asked Questions

What is the current Corporation Tax rate in the UK?

The main rate is 25% for companies with profits over £250,000. A small profits rate of 19% applies to companies with profits of £50,000 or less. Marginal relief tapers the effective rate between 19% and 25% for profits in between.

What is marginal relief for Corporation Tax?

Marginal relief reduces the tax bill for companies with profits between £50,000 and £250,000, so the effective rate tapers smoothly from 19% to 25%. The marginal rate on profits within this band is approximately 26.5%.

How do associated companies affect Corporation Tax rates?

The £50,000 and £250,000 thresholds are divided equally among all associated companies. For example, three associated companies would each have thresholds of £16,667 and £83,333 respectively.

Are Corporation Tax thresholds reduced for short accounting periods?

Yes. If the accounting period is less than 12 months, the thresholds are reduced proportionally. A 6-month period would halve both the lower limit to £25,000 and the upper limit to £125,000.

Sources

Corporation Tax rates and allowances — GOV.UK
Corporation Tax: marginal relief — GOV.UK
Associated companies — HMRC
Corporation Tax — GOV.UK