UK Corporation Tax Calculator 2026/27

How UK corporation tax works in 2026/27

Corporation tax is charged on the taxable profits of UK limited companies, foreign companies with a UK permanent establishment, and certain other organisations. The tax year for corporation tax follows your company's accounting period rather than the UK tax year.

The current corporation tax regime, introduced in April 2023, replaced the previous flat 19% rate with a two-rate system featuring a marginal relief band for profits between £50,000 and £250,000.

The three profit bands

Important: These thresholds are divided by the number of associated companies plus one. If your company has two associates, the small profits threshold drops to £16,667 and the upper threshold to £83,333. Use the calculator above and enter your associated companies count to get the correct figures.

How marginal relief is calculated

Marginal relief reduces the corporation tax for companies with profits between the two thresholds. HMRC calculates it using a specific formula rather than simply taxing different slices at different rates.

The formula is: Marginal Relief = (Upper Threshold − Taxable Profit) × (Taxable Profit ÷ Augmented Profit) × 3/200

In practice, this means the effective tax rate rises smoothly from 19% at £50,000 to 25% at £250,000, there is no cliff edge where an extra pound of profit suddenly triggers a dramatically higher bill. However, the marginal rate on each additional pound of profit within this band is effectively 26.5%, which is something to bear in mind when planning salary and dividend extraction.

Associated companies and the threshold split

If your company is associated with one or more other companies, the £50,000 and £250,000 thresholds are divided equally between all companies. Two companies in a group would each have a small profits threshold of £25,000 and an upper threshold of £125,000.

Companies are associated if one controls the other, or if both are controlled by the same person or persons. Control is generally defined as owning more than 50% of the ordinary share capital. HMRC's rules also include certain connected parties such as close business associates where there is substantial commercial interdependence.

Corporation tax payment deadlines

Most small and medium-sized companies must pay their corporation tax liability in a single payment, due 9 months and 1 day after the end of the accounting period. For a company with a 31 March year-end, this means payment is due by 1 January of the following year.

Large companies — those with annual profits exceeding £1.5 million — must pay in quarterly instalments during the accounting period itself, rather than waiting until after the year-end. Very large companies with profits over £20 million face even earlier instalment dates.

The corporation tax return (CT600) must be filed with HMRC within 12 months of the end of the accounting period, which is later than the payment deadline. This means most companies pay their tax before they formally file their return.

What counts as taxable profit?

Taxable profits for corporation tax purposes start with your accounting profit and then apply various adjustments. Some expenses are not deductible for tax even if they appear in your accounts, and some reliefs reduce your taxable profit below the accounting figure.

• Disallowable expenses: entertaining clients, fines and penalties, depreciation (replaced by capital allowances)
• Capital allowances: deducted instead of depreciation, the Annual Investment Allowance (AIA) provides 100% relief on qualifying plant and machinery up to £1 million per year
• R&D relief: qualifying research and development costs attract an enhanced deduction under the merged R&D scheme from April 2024
• Losses: trading losses can be carried back one year or carried forward indefinitely against future profits of the same trade

Dividend vs salary planning and the 26.5% trap

The marginal rate of 26.5% on each additional pound of profit within the £50,000-£250,000 band has important implications for director remuneration planning. Extracting an extra £10,000 of salary reduces taxable profit by £10,000, saving corporation tax at 26.5% (£2,650), but that salary is subject to income tax and National Insurance.

Whether a salary increase is more tax-efficient than leaving profits in the company depends on the director's total income, the dividend tax rates in the relevant year, and whether the company has other shareholders. Use our Dividend vs Salary Calculator to model the full picture.

R&D tax relief for 2026/27

The merged R&D expenditure credit (RDEC) scheme, which replaced the separate SME and large company schemes from April 2024, provides a credit of 20% of qualifying R&D expenditure. For loss-making R&D-intensive SMEs that qualify for the Enhanced R&D Intensive Support (ERIS) scheme, the rate is higher. R&D credits reduce your corporation tax liability and any excess is repayable.

Frequently asked questions about UK corporation tax

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