UK Corporation Tax Calculator

Between £50,000 and £250,000 of profit the rate is neither 19% nor 25%. Marginal relief fills the gap, and every extra pound in that range is taxed at 26.5%.

Taxable profit for the year£100,000.00
£
Corporation Tax due
£22,750.00
Effective rate22.75%
Profit after tax£77,250.00

Profits are between £50,000 and £250,000, so marginal relief applies. The main 25% rate is charged and then reduced, which produces an effective rate between 19% and 25% — and a marginal rate of 26.5% on each extra pound.

About the UK Corporation Tax Calculator

Corporation Tax in the United Kingdom is a fundamental statutory levy that all active limited companies, foreign companies with a UK branch or office, and certain unincorporated associations (such as clubs, co-operatives, or community groups) must legally pay on the profits they generate from doing business. When a company registers for Corporation Tax with HM Revenue and Customs (HMRC), it becomes fully obligated to calculate, accurately report, and pay this tax based on its accounting periods. Unlike personal income tax, there is no tax-free allowance for Corporation Tax, meaning every single pound of taxable profit is subject to the charge. The regulatory framework for Corporation Tax underwent a massive transformation in April 2023. Prior to this date, a unified, single flat rate was broadly applied to almost all businesses regardless of their total profit levels. However, the government introduced a much more nuanced, multi-tiered structure designed to foster small business growth while ensuring highly profitable corporations contribute a larger proportional share to public finances. This structural shift reintroduced the concepts of a Small Profits Rate and Marginal Relief, mechanisms that had been absent from the UK tax code for several years. Understanding exactly which rate your business falls into is the most critical first step. For companies with total taxable profits of £50,000 or less, the Small Profits Rate of 19% applies. This provides a highly significant and deliberate tax advantage for startups, micro-businesses, and small enterprises, keeping their tax burden relatively low and encouraging reinvestment. Conversely, highly profitable companies generating more than £250,000 in taxable profits are subject to the Main Rate of 25%. This higher rate reflects a broader economic policy aimed at balancing national revenue needs with corporate taxation. The most mathematically complex element of the current regime is the treatment of companies whose profits fall exactly between the £50,000 lower threshold and the £250,000 upper threshold. These businesses do not abruptly jump from paying 19% on everything to 25% on everything. Instead, they technically fall under the 25% Main Rate but are granted a statutory deduction known as Marginal Relief. This relief ensures a smooth, gradual tapering of the effective tax rate as profits increase. However, the mechanical reality of Marginal Relief means that any additional profit earned within this £50,000 to £250,000 corridor is effectively taxed at a marginal rate of 26.5%, even though the final average effective rate for the entire business will sit somewhere between 19% and 25%. This calculator is designed to execute these complex, multi-tiered calculations instantly and accurately.

Mathematical Formula & Logic

The calculation of UK Corporation Tax strictly depends on where your total taxable profits fall in relation to the two major statutory thresholds: the £50,000 lower limit and the £250,000 upper limit. The mathematical formulas are defined by HMRC as follows: 1. For profits less than or equal to £50,000, the Small Profits Rate is used. The formula is simply: Tax = Profits × 19% 2. For profits greater than or equal to £250,000, the Main Rate applies to the entire amount. The formula is: Tax = Profits × 25% 3. For profits strictly between £50,000 and £250,000, the calculation involves determining the gross tax at the 25% Main Rate and then subtracting the calculated Marginal Relief. The statutory formula for Marginal Relief is: Marginal Relief = (Upper Limit - Profits) × (3 / 200) Where the Upper Limit is fixed at £250,000. Therefore, the total tax due is: Total Tax = (Profits × 25%) - Marginal Relief. It is incredibly important to note that these specific thresholds (£50,000 and £250,000) are explicitly designed for a standard 12-month accounting period and for a company that has absolutely zero associated companies. If your accounting period is shorter than 12 months, or if your company is part of a larger corporate group and shares control with associated companies, HMRC requires these thresholds to be proportionally reduced, which heavily impacts the final tax calculation.

Step-by-Step Example

To fully understand the mechanical application of these tax bands and the crucial impact of Marginal Relief, let us meticulously walk through three highly detailed, practical examples. Scenario 1: The Small Business. Imagine a small local graphic design agency, Alpha Ltd, which generates exactly £40,000 in total taxable profits for their 12-month accounting period. Because £40,000 is strictly below the £50,000 lower limit, Alpha Ltd qualifies entirely for the Small Profits Rate. The calculation is straightforward: £40,000 × 19% = £7,600. Their total Corporation Tax liability is exactly £7,600, yielding an effective tax rate of exactly 19.0%. Scenario 2: The Marginal Relief Band. Consider a growing software consultancy, Beta Ltd, which generates exactly £100,000 in total taxable profits. This places them squarely in the Marginal Relief corridor between £50,000 and £250,000. First, we calculate their gross tax at the 25% Main Rate: £100,000 × 25% = £25,000. Next, we must calculate their statutory Marginal Relief using the exact HMRC fraction of 3/200: (£250,000 upper limit - £100,000 actual profits) = £150,000. £150,000 × (3 / 200) = £2,250 in Marginal Relief. Finally, we subtract the relief from the gross tax: £25,000 - £2,250 = £22,750. Beta Ltd must pay £22,750 in Corporation Tax. If we divide £22,750 by their £100,000 profit, we see their actual effective tax rate is 22.75%. Scenario 3: The Large Corporation. A major manufacturing firm, Gamma Ltd, generates a highly successful £300,000 in taxable profits. Because their profits exceed the £250,000 upper threshold, they do not qualify for any Marginal Relief whatsoever. The entire profit pool is subject to the Main Rate. The calculation is: £300,000 × 25% = £75,000. Gamma Ltd pays a total of £75,000 in Corporation Tax, resulting in a flat, effective tax rate of exactly 25.0%.

Reference Data & Values

labelvalue
Profits of £40,000 (Small Profits Rate)£7,600 Tax (Effective Rate: 19.0%)
Profits of £50,000 (Boundary)£9,500 Tax (Effective Rate: 19.0%)
Profits of £100,000 (Marginal Relief)£22,750 Tax (Effective Rate: 22.75%)
Profits of £150,000 (Marginal Relief)£36,000 Tax (Effective Rate: 24.0%)
Profits of £200,000 (Marginal Relief)£49,250 Tax (Effective Rate: 24.625%)
Profits of £250,000 (Boundary)£62,500 Tax (Effective Rate: 25.0%)
Profits of £300,000 (Main Rate)£75,000 Tax (Effective Rate: 25.0%)

Frequently Asked Questions

The current Main Rate of Corporation Tax in the United Kingdom is 25%. This higher rate was officially introduced and took effect on 1 April 2023. It applies in full to all companies whose total taxable profits for a standard 12-month accounting period exceed the upper statutory limit of £250,000. For these large, highly profitable companies, the 25% rate is applied as a flat tax against their entire profit pool, with absolutely no deductions for Marginal Relief.
The 19% Small Profits Rate is a highly targeted tax relief measure specifically designed for smaller enterprises. It applies universally to companies whose total taxable profits are exactly £50,000 or less over a standard 12-month accounting period. If your company meets this specific criterion, your entire profit pool is taxed at a flat, highly favorable 19%, significantly reducing your financial burden compared to larger corporations.
Marginal Relief is a statutory calculation mechanism that provides a gradual, sliding scale for companies whose profits fall exactly between the £50,000 lower limit and the £250,000 upper limit. Instead of abruptly jumping from a 19% tax rate to a 25% tax rate, Marginal Relief acts as a discount against the 25% Main Rate. This ensures that your average effective tax rate smoothly increases from 19% up to 25% as your profits grow within that specific £200,000 corridor.
While your overall average tax rate will always sit somewhere between 19% and 25%, the mathematics of the Marginal Relief formula dictates that every single additional pound of profit you earn within the £50,000 to £250,000 band is effectively taxed at 26.5%. This is because earning more profit simultaneously increases your gross tax at 25% and mathematically reduces the amount of Marginal Relief you are entitled to receive, creating a combined marginal impact of exactly 26.5% on that specific slice of income.
No, there is absolutely no tax-free allowance (such as the Personal Allowance used in individual income tax) for Corporation Tax. Every single pound of taxable profit generated by a limited company is subject to Corporation Tax from the very first penny. While you can deduct legitimate, wholly necessary business expenses from your gross income to reduce your total taxable profits, the remaining profit itself enjoys no initial tax-free threshold.
If your company is part of a larger corporate group or has associated companies (companies under common, shared control), HMRC strictly requires you to divide the £50,000 and £250,000 thresholds by the total number of associated companies. For example, if you have one associated company (making two companies in total), your lower limit drops to £25,000 and your upper limit drops to £125,000. This anti-avoidance rule prevents businesses from artificially splitting themselves into smaller entities purely to abuse the 19% Small Profits Rate.
The statutory limits of £50,000 and £250,000 are explicitly defined for a standard 12-month accounting period. If your company’s accounting period is shorter—for example, if you are closing a business or changing your financial year-end date—you must proportionally reduce these thresholds. For a 6-month accounting period, the lower limit would be strictly halved to £25,000, and the upper limit would be halved to £125,000, affecting exactly when Marginal Relief and the 25% rate apply.
For the vast majority of small and medium-sized companies, the legal deadline to pay your Corporation Tax is exactly 9 months and 1 day after the end of your specific accounting period. It is crucial to note that this payment deadline is actually entirely separate from the deadline to file your formal Company Tax Return (form CT600), which is generally 12 months after the end of the accounting period. Very large companies with significant profits must usually pay their tax earlier in mandatory quarterly installments.