UK limited companies pay Corporation Tax on their taxable profits, but the amount you pay depends on the level of profits, whether Marginal Relief applies and whether your company has associated companies.
For the financial year beginning 1 April 2026, the main Corporation Tax rate is 25%. Companies with qualifying profits of £50,000 or less can generally use the 19% Small Profits Rate, while companies with profits between £50,000 and £250,000 may qualify for Marginal Relief.
Those profit limits can be reduced where the company has associated companies or a short accounting period, so the headline thresholds do not apply unchanged in every case.
This guide explains how much Corporation Tax a limited company may pay, how the rates work, how Marginal Relief is calculated and why associated companies can affect the final bill.
Estimate your bill: Use our Corporation Tax Calculator
What Is Corporation Tax?
Corporation Tax is a tax paid by companies and certain other organisations on taxable profits.
For a trading limited company, taxable profits can include profits from trading, investments and chargeable gains from disposing of assets.
The amount shown in your company accounts is not necessarily the same as the profit on which Corporation Tax is calculated. Tax adjustments, allowable expenses, capital allowances, losses and reliefs can change the taxable figure.
Read: How to file a Company Tax Return
Do Limited Companies Pay Corporation Tax?
Yes. UK limited companies are normally within the Corporation Tax regime when they are active and have taxable profits.
Corporation Tax is a liability of the company rather than the shareholder or director personally.
Sole traders do not pay Corporation Tax on their self-employed profits. They are generally taxed personally through Income Tax and Self Assessment instead.
Do You Pay Corporation Tax If You Leave the Money in the Company?
Yes. Corporation Tax is based on the company’s taxable profits, not simply on how much cash a director withdraws.
Leaving money in the company bank account does not, by itself, remove the Corporation Tax liability on profits already earned.
The way a director later extracts money from the company, for example through salary or dividends, creates separate personal tax considerations.
Corporation Tax Rates for Limited Companies (2025/26 and 2026/27)
Here are the current headline rates and thresholds:
| Taxable profits | Corporation Tax treatment |
|---|---|
| £50,000 or less | 19% Small Profits Rate, if eligible |
| £50,001 to £250,000 | 25% main rate less Marginal Relief, if eligible |
| More than £250,000 | 25% main rate |
These are the standard limits for a company with no associated companies and a full 12-month accounting period.
The £50,000 and £250,000 thresholds are proportionately reduced where the company has associated companies or a shorter accounting period.
Different rules apply to some specialist companies and activities.
What About Close Investment-Holding Companies?
A close investment-holding company generally cannot use the Small Profits Rate or claim Marginal Relief and is instead charged at the main Corporation Tax rate.
Whether a company falls within this definition depends on what it does and the statutory conditions, so investment companies should not assume that the standard Small Profits Rate applies.
Corporation Tax Examples
Example 1: £30,000 taxable profit
Assuming the company qualifies for the Small Profits Rate and has no associated companies:
£30,000 × 19% = £5,700
Estimated Corporation Tax: £5,700
Example 2: £100,000 taxable profit
Main-rate calculation:
£100,000 × 25% = £25,000
Marginal Relief:
(£250,000 − £100,000) × 3/200 = £2,250
Corporation Tax:
£25,000 − £2,250 = £22,750
Effective rate: 22.75%
Example 3: £150,000 taxable profit
Main-rate calculation:
£150,000 × 25% = £37,500
Marginal Relief:
(£250,000 − £150,000) × 3/200 = £1,500
Corporation Tax:
£37,500 − £1,500 = £36,000
Effective rate: 24%
Example 4: £500,000 taxable profit
£500,000 × 25% = £125,000
Estimated Corporation Tax: £125,000
These simplified examples assume a full accounting period, no associated companies and no complications affecting the Marginal Relief calculation. The actual calculation can differ where adjusted thresholds or other factors apply.
Calculate your own estimate: Corporation Tax Calculator
How Do Associated Companies Affect Corporation Tax?
Associated companies can significantly change the profit thresholds used for the Small Profits Rate and Marginal Relief.
Broadly, where companies are associated, the £50,000 lower limit and £250,000 upper limit are divided by the total number of associated companies, including the company itself.
| Total associated companies including the company | Lower limit | Upper limit |
|---|---|---|
| 1 | £50,000 | £250,000 |
| 2 | £25,000 | £125,000 |
| 3 | approx. £16,667 | approx. £83,333 |
| 4 | £12,500 | £62,500 |
For example, if a company has one associated company, there are two companies in total for threshold purposes. The standard limits are therefore divided by two.
Association is not determined simply by whether companies have similar names. Control and the statutory associated-company rules must be considered.
How Is Corporation Tax Calculated?
Corporation Tax starts with the company’s financial results, but taxable profit can differ from accounting profit.
A typical calculation may involve:
- preparing the company’s accounts
- identifying taxable income and gains
- adding back expenses that are not deductible for Corporation Tax
- deducting allowable expenses and available allowances
- applying capital allowances where relevant
- considering losses and Corporation Tax reliefs
- determining the company’s taxable total profits
- applying the correct Corporation Tax rate and Marginal Relief where applicable
The resulting liability is then reported through the Company’s Corporation Tax return process.
When Do You Pay Corporation Tax?
For most companies that do not fall within the quarterly instalment regime, Corporation Tax is normally due 9 months and 1 day after the end of the accounting period.
The Company Tax Return has a different deadline, normally 12 months after the end of the Corporation Tax accounting period.
Because payment and filing deadlines are different, companies should not wait until the filing deadline to calculate the tax due.
Read: How to file a Company Tax Return
Late filing: Corporation Tax penalties from April 2026
Can a Limited Company Reduce Its Corporation Tax Bill?
A company’s Corporation Tax liability can be affected by allowable business expenses, capital allowances, employer pension contributions, losses and other available reliefs.
The correct treatment depends on the nature of the expenditure and the company’s circumstances, so an amount being paid by the company does not automatically make it deductible.
Read: How to reduce Corporation Tax
Do You Pay Corporation Tax If the Company Makes a Loss?
If a company has no taxable profits for the period, there may be no Corporation Tax to pay for that period.
However, a Company Tax Return may still need to be filed where HMRC has issued a Notice to Deliver one.
Trading losses and other losses can sometimes be carried forward or used in other ways, subject to the relevant rules and the company’s circumstances.
Read: How to file a Company Tax Return
Do You Need an Accountant for Corporation Tax?
There is no general rule requiring every limited company to appoint an accountant solely because it pays Corporation Tax.
Professional support can be particularly useful where the company has associated companies, Marginal Relief, capital allowances, losses, complex expenses, multiple income sources or more complicated Corporation Tax calculations.
An accountant can also help make sure the tax computation agrees with the company accounts and that the Company Tax Return is prepared correctly.
Speak to our Corporation Tax accountants
Frequently Asked Questions About Corporation Tax for Limited Companies
What is the Corporation Tax rate for a limited company?
For the financial year beginning 1 April 2026, the main Corporation Tax rate is 25%. Qualifying companies with profits of £50,000 or less can generally use the 19% Small Profits Rate, while Marginal Relief can apply between £50,000 and £250,000.
Does every limited company pay 25% Corporation Tax?
No. Companies that qualify for the Small Profits Rate can pay 19%, while qualifying companies within the Marginal Relief band pay an amount between the Small Profits Rate outcome and the full main-rate outcome.
What is the Corporation Tax rate on £100,000 profit?
In a straightforward example with no associated companies or other adjustments, Corporation Tax on £100,000 of taxable profit would be approximately £22,750 after Marginal Relief, giving an effective rate of 22.75%.
What is the Corporation Tax rate on £150,000 profit?
In a straightforward example with no associated companies or other adjustments, Corporation Tax on £150,000 of taxable profit would be approximately £36,000, an effective rate of 24%.
Do associated companies change Corporation Tax thresholds?
Yes. The standard £50,000 and £250,000 thresholds are divided according to the number of associated companies for the relevant rules.
Does Corporation Tax apply if profits stay in the business?
Yes. Leaving profits in the company’s bank account does not by itself remove the Corporation Tax liability on taxable profits earned during the accounting period.
When does a limited company pay Corporation Tax?
For most companies outside the quarterly instalment regime, Corporation Tax is normally due 9 months and 1 day after the end of the accounting period.
Get Help With Your Corporation Tax
Corporation Tax can become more complicated once Marginal Relief, associated companies, losses, capital allowances or other reliefs are involved.
Accounting People helps UK limited companies calculate Corporation Tax, prepare tax computations, identify relevant reliefs and manage their Company Tax Return obligations.
If you want to understand how much Corporation Tax your company may owe, speak to our team.
Speak to a Corporation Tax Accountant
