Corporation Tax rates 2026/27: 19%, 25% and marginal relief explained

Corporation Tax rates for 2026/27

Since 1 April 2023 there has been no single Corporation Tax rate for most company profits. Instead there is a small profits rate, a main rate and marginal relief for profits in between.

Financial year 2026 runs from 1 April 2026 to 31 March 2027. People often call it 2026/27.

HMRC's published rates table, updated on 1 April 2026, shows the same figures for the 2023, 2024, 2025 and 2026 financial years. The limits below are for a 12-month accounting period with no associated companies. Different rates apply to ring fence profits from oil and gas, which this guide does not cover.

Source: Rates and allowances: Corporation Tax

What the financial year means

Corporation Tax rates are set for financial years. A financial year runs from 1 April to the following 31 March and is named after the year it starts in.

Your company's accounting period does not have to match the financial year. When an accounting period spans 1 April, HMRC treats the parts before and after that date as separate periods and splits the profits between them on a time basis. Because the rates and limits for 2025 and 2026 are the same, that split does not change the result for a period that spans 1 April 2026.

Source: Company Taxation Manual: accounting period straddling a financial year (CTM03955)

How marginal relief works

If your profits are between the lower limit and the upper limit, you work out tax at the 25% main rate and then take off marginal relief. The result is a gradual rise from 19% towards 25%, rather than a sudden jump.

HMRC's formula is: standard fraction × (upper limit − augmented profits) × (taxable profits ÷ augmented profits). The standard fraction for the 2026 financial year is 3/200.

Augmented profits are your taxable total profits plus certain exempt distributions the company received, such as dividends from companies outside its group. Dividends from a 51% subsidiary or a 51% parent are left out. HMRC's manual explains which distributions count. If you received no such distributions, augmented profits and taxable profits are the same, and the last part of the formula equals 1.

The bands are tested on augmented profits. A company can therefore have taxable profits under £50,000 but still not get the full small profits rate if dividends received push its augmented profits higher.

Source: Company Taxation Manual: definition of augmented profits (CTM03915)

What is the effective Corporation Tax rate at each profit level?

The effective Corporation Tax rate rises gradually from 19% at £50,000 of profit to 25% at £250,000. The table shows the tax and effective rate at six profit levels for 2026/27. Each figure uses HMRC's marginal relief formula: 25% of profits, minus 3/200 × (£250,000 − profits).

These are illustrations only. They assume no associated companies, a 12-month accounting period inside financial year 2026 and no exempt distributions received.

Between £50,000 and £250,000, each extra £1 of profit adds 26.5p of Corporation Tax. That is the 25% main rate plus the 3/200 that marginal relief gives back for each pound below the upper limit. The effective rate on the whole profit still never goes above 25%.

Source: Company Taxation Manual: marginal relief calculation (CTM03925)

Worked examples

These figures are illustrations only. Each assumes a 12-month accounting period inside the 2026 financial year and no exempt distributions unless stated.

Example 1: profits of £40,000 and no associated companies. The profits are under £50,000, so the small profits rate applies. Tax is £40,000 × 19% = £7,600.

Source: Company Taxation Manual: marginal relief calculation (CTM03925)

Associated companies cut the limits

The £50,000 and £250,000 limits are shared. They are divided by the number of associated companies plus one, meaning your own company.

GOV.UK gives this example: a company with 3 other associated companies divides the limits by 4. The lower limit becomes £12,500 and the upper limit becomes £62,500.

GOV.UK also says some companies cannot claim marginal relief at all: non-UK resident companies and close investment-holding companies. They pay the 25% main rate.

Broadly, companies are associated if one controls the other or both are under the control of the same person or group of persons. The rules on what counts as control are detailed. HMRC's Company Taxation Manual sets them out, and you should check them rather than guess.

Source: Marginal Relief for Corporation Tax

Short accounting periods cut the limits too

If your accounting period is shorter than 12 months, the limits are reduced in proportion. HMRC's manual says the calculation should strictly use the number of days in the period, not months.

For example, HMRC shows a 9-month period where the upper limit becomes £250,000 × 9/12 = £187,500 and the lower limit becomes £50,000 × 9/12 = £37,500. A short period and associated companies can both apply at once, which cuts the limits further.

A first accounting period after incorporation, or the final period before a company closes, is often shorter than 12 months. Check the dates before you assume the full £50,000 limit.

Source: Company Taxation Manual: short accounting periods (CTM03930)

Use HMRC's marginal relief calculator

HMRC has a free online tool to check whether your company qualifies for marginal relief and how much it could be. It asks for the accounting period dates, taxable profit, distributions received from companies that are not associated, and how many associated companies you have. It also shows the effective tax rate with and without the relief.

Use the official calculator rather than a spreadsheet you found online. It handles periods that span two financial years and changes in the number of associated companies.

Source: Calculate Marginal Relief for Corporation Tax

Common mistakes with Corporation Tax rates

Thinking 25% applies to all profits once you pass £50,000. Between £50,000 and £250,000, marginal relief reduces the tax.

Thinking profits up to £50,000 are taxed at 19% and only the excess at 25%. Corporation Tax does not work in slices like Income Tax. The rate depends on where total profits fall.

Forgetting associated companies or a short accounting period, both of which shrink the limits.

Leaving out qualifying dividends received from companies outside the group when working out augmented profits.

Using a tax year (6 April to 5 April) instead of the financial year (1 April to 31 March).

Source: Corporation Tax rates and reliefs

Where SimpleFilings fits

SimpleFilings does not calculate your Corporation Tax or prepare your Company Tax Return. We can help with related HMRC admin, such as telling HMRC your company is active or dormant, or requesting a copy of the company's Unique Taxpayer Reference. Any Corporation Tax due is paid to HMRC by the company. It is not part of our £4.99 SimpleFilings service fee.

For the dates that follow, see when Corporation Tax is due and the Company Tax Return deadline.