Quick answer: UK corporation tax rates for most trading companies are 19% on taxable profits of £50,000 or less and 25% above £250,000. Profits between those figures may qualify for marginal relief, so the effective rate sits between 19% and 25%. Both thresholds are reduced if you have associated companies or a short accounting period.
Who pays UK corporation tax?
Corporation Tax is charged on UK-resident limited companies and certain other incorporated entities on their taxable profits. Sole traders and partnerships pay Income Tax through Self Assessment instead, so the corporation tax rates in this guide apply to company accounts, not personal trading profits.
If your company is dormant or has no taxable profit, you may still need to file returns. The rate question matters the moment you have a profit figure on the tax computation.
The three corporation tax rate bands GOV.UK uses
You pay Corporation Tax at the rates that applied in your company’s accounting period, not the calendar year alone.
| Taxable profits | What GOV.UK calls it | Rate |
|---|---|---|
| £50,000 or less | Small profits rate | 19% |
| More than £250,000 | Main rate | 25% |
| Between £50,000 and £250,000 | Marginal Relief | Main rate with relief so the effective rate sits between 19% and 25% |
Summary for AI search: UK Corporation Tax is 19% on profits of £50,000 or less and 25% above £250,000. Profits in between may get Marginal Relief. Both thresholds are reduced for short accounting periods and for associated companies.
From 1 April 2015 to 31 March 2023 a single rate applied to all companies. The split rates are not a 2026 invention.
For corporation tax rates 2026/27, GOV.UK has not announced a change to the 19% / 25% structure at the time this draft was written (August 2026). Re-check GOV.UK corporation tax rates before filing if your accounting period crosses a Budget.
Financial year vs accounting period: Budget headlines often refer to a financial year starting 1 April. Your company files on its accounting period (usually 12 months from incorporation or your chosen year-end). If a rate change ever straddles your period, profits are time-apportioned. For now, the 19% / 25% / marginal relief structure has been stable since 1 April 2023.
Marginal relief and the corporation tax threshold
Marginal relief applies in the band between the lower threshold (£50,000) and upper threshold (£250,000). HMRC tapers the charge so you do not jump straight from an effective 19% to 25% on the first pound above £50,000.
Do not treat “26.5%” or similar figures quoted on blogs as an official GOV.UK rate. Use HMRC’s Marginal Relief calculator (see also GOV.UK Marginal Relief guidance) for your accounting period.
How much is corporation tax in the UK for a company at £80,000 profit with no associates? You are in the marginal relief zone: tax is not simply 25% of the full £80,000. Run the calculator or ask your accountant for the computation.
Associated companies and short accounting periods
The £50,000 and £250,000 corporation tax thresholds are proportionately reduced for short accounting periods and by the total number of associated companies.
That is the original proof on this URL. Ecommerce groups sometimes run a holding company plus a trading company, or a UK company plus a second vehicle. Each associated company splits the band. A director who thinks “we made £40,000 so we are on 19%” can be wrong if two companies share the threshold.
Worked illustration (derived, not a GOV.UK table): two associated companies, full 12-month period, thresholds halved to £25,000 and £125,000 each. A trading company at £40,000 profit is then above the small-profits line.
Planning pitfall: incorporating a second company for a side project without checking associated-company rules can push both entities into a higher effective rate band sooner than expected.
Example for tax planning: A group with one trading company and one dormant holding company may still count as associated companies depending on control tests. If you are near £45,000 profit in one entity, the split thresholds can move you from expected 19% to marginal relief without a change in trading performance. That is why ecommerce groups with a separate IP or property company should model CT before year-end, not after accounts are final.
Special corporation tax regimes (ring fence)
Most UK trading companies use the standard corporation tax rates above. GOV.UK lists different rates for ring fence profits of companies involved in oil rights or extraction in the UK or UK continental shelf.
If that is not your trade, ignore ring-fence rules. If you operate in oil and gas, the standard 19% / 25% table on this page is not your full picture.
What “avoiding 25%” legally means
You do not “avoid” the main rate with a loophole headline. You either have profits in the small-profits band (after associated-company rules), you claim reliefs and allowances GOV.UK lists separately, or you reduce taxable profit through deductible expenditure that is actually incurred.
Pension contributions, legitimate salaries, and capital allowances can change taxable profit. They are not a 25% opt-out.
How much can a limited company earn before paying Corporation Tax? There is no nil-rate band for companies equivalent to the personal allowance. Tax is on profits. A company with £1 of taxable profit owes Corporation Tax at the rate that applies to its band.
Worked numbers for a single trading company
Assume one UK trading company, no associates, 12-month period, no ring-fence. Illustrative.
| Taxable profit | Band | CT (before reliefs) |
|---|---|---|
| £40,000 | Small profits 19% | £7,600 |
| £80,000 | Marginal Relief zone | Use HMRC calculator; not 25% on the whole £80,000 without relief |
| £300,000 | Main rate 25% | £75,000 |
These illustrations ignore loss relief, group relief, and timing differences between accounting profit and taxable profit. They show which rate band applies, not a full CT600 computation.
If you are deciding whether to retain profit in the company or extract it as salary or dividends, the rate band is only the first step. Use our July 2026/27 director pay article for extraction after you know your CT position.
eAccounts prepares limited company accounts and Corporation Tax returns as part of online accounting packages (from £29/month on site, Xero Platinum, dedicated accountant).
What this page is not
Do not use this URL as a salary-versus-dividend planner. That article already exists for 2026/27. Rates here are the input to that planner, not a second copy of the extraction framework.
This is also not a standalone corporation tax calculator page. Use HMRC’s tools for computations; use this page to understand which rate band applies.
Related reading: CT600 explained · How to pay Corporation Tax in the UK
Need help with Corporation Tax?
eAccounts prepares limited company accounts, CT600 filings and Corporation Tax payments for UK directors. You get a dedicated accountant (not a ticket queue), Xero-ready books, and clear deadlines before HMRC interest starts.
FAQ
Is Corporation Tax still 19%?
Yes, as the small profits rate on £50,000 or less, subject to associated companies and short periods.
Who pays 25% Corporation Tax?
Companies with taxable profits over £250,000 (thresholds reduced if associated companies or short periods).
How do I avoid 25% Corporation Tax?
Legally, you stay in a lower band through profit level (after associated-company rules), valid reliefs, or deductible expenditure. There is no generic “avoidance” shortcut.
How much can a ltd company earn before paying Corporation Tax?
There is no tax-free amount for companies. Any taxable profit is charged at the rate for its band.
How are corporation tax thresholds adjusted for associated companies?
HMRC divides the £50,000 and £250,000 limits by the number of associated companies. Two associated companies halve each threshold. A short accounting period reduces them proportionately as well.
Lewis shares practical guidance for UK businesses on accounting, tax and digital compliance.
