UK Corporation Tax Calculator (Marginal Relief, FY2026)

UK Corporation Tax has had two rates since 1 April 2023. Profits at or below £50,000 are charged at the small profits rate of 19%. Profits at or above £250,000 are charged at the main rate of 25%. Between those limits, the main rate applies but is reduced by Marginal Relief, which tapers the effective rate smoothly from 19% up to 25%.

The consequence catches people out: because the effective rate is climbing across that band, the marginal rate on profits inside it is 26.5%, higher than the headline main rate. A company just below £250,000 pays more tax on its next £1,000 of profit than a company well above it.

Both limits are reduced if a company has associated companies, and pro-rated for accounting periods shorter than 12 months.

Step 1 -- Adjust the limits. The £50,000 lower limit and £250,000 upper limit are each divided by the number of associated companies plus one, then multiplied by the accounting period length over 365 days. A company with three other associates has limits of £12,500 and £62,500.

Step 2 -- Determine the basis of charge. If augmented profits are at or below the adjusted lower limit, the small profits rate of 19% applies to taxable total profits. If they are at or above the adjusted upper limit, the main rate of 25% applies with no relief. Otherwise, Marginal Relief applies.

Step 3 -- Marginal Relief. HMRC's statutory formula is:

where F is the standard fraction of 3/200, U is the adjusted upper limit, A is augmented profits, and N is taxable total profits. The Corporation Tax due is then the main rate charge less this relief.

The fraction of 3/200 is not arbitrary. It is derived from the rates and limits as (25% − 19%) × £50,000 ÷ £200,000 = 0.015, which is exactly what makes the relief reconcile to 19% at the lower limit and 25% at the upper limit.

£100,000 profits, no associates, 12-month period:

• Limits are unadjusted: £50,000 and £250,000
• Profits sit between them, so Marginal Relief applies
• Relief: 3/200 × (£250,000 − £100,000) × (£100,000 ÷ £100,000) = 0.015 × £150,000 = £2,250
• Tax: £100,000 × 25% − £2,250 = £25,000 − £2,250 = £22,750
• Effective rate: 22.75%

Checking the boundaries:

• At £50,000: the small profits rate gives £9,500, which is exactly 19%
• At £250,000: no relief remains, so £62,500, exactly 25%
• At £200,000: relief is 0.015 × £50,000 = £750, so £50,000 − £750 = £49,250

From £100,000 to £200,000 the tax rises by £26,500 on £100,000 more profit, which is the 26.5% marginal rate.

£100,000 profits with three associated companies:

• Limits become £12,500 and £62,500
• £100,000 now exceeds the adjusted upper limit, so the full main rate applies
• Tax: £25,000, an extra £2,250 purely because of the associations

• Computing taxable total profits. This starts from a profit figure you supply. Capital allowances, full expensing, disallowable expenditure, R&D relief and loss relief all sit upstream of it.
• Augmented profits differing from taxable total profits. Augmented profits include exempt distributions from non-group companies. Where the two differ, the N/A term in the formula matters; the calculator assumes they are equal, which is correct for most standalone companies.
• Accounting periods straddling two financial years, where rates or limits differ between them and profits must be apportioned.
• Ring fence profits from oil and gas extraction, which have their own rates and limits.
• Close investment-holding companies, which are denied the small profits rate entirely.
• Whether companies are actually associated. This depends on control and substantial commercial interdependence, and is a judgement rather than a calculation.
• Quarterly instalment payments, which large and very large companies must make rather than paying nine months and one day after the period end.

• Assuming the marginal rate is 25%. Inside the relief band it is 26.5%. A company at £240,000 of profit pays 26.5p of tax on its next pound, while one at £300,000 pays 25p.
• Forgetting associated companies. This is the most common way a company ends up paying the main rate unexpectedly. Three associates cut the upper limit to £62,500, so quite modest profits reach the main rate.
• Pro-rating profits instead of the limits for a short period. The limits are pro-rated; the profits are whatever they actually were.
• Looking for the standard fraction on the main gov.uk guidance page. It is not there -- that page points to an online calculator. The fraction of 3/200 is in HMRC's Company Taxation Manual at CTM03925.
• Treating dividends paid as deductible. They are not. Corporation Tax is charged on profits before distributions, and the shareholder is then taxed separately on the dividend.
• Assuming a group of companies shares one set of limits proportionally by size. The limits are divided equally by the number of associated companies, regardless of their relative size.

• GOV.UK: "Corporation Tax rates and reliefs" -- main rate 25% above £250,000, small profits rate 19% at or below £50,000, effective from 1 April 2023
• HMRC Company Taxation Manual CTM03925 -- the Marginal Relief formula (F x (U - A)) x (N / A) and the standard fraction of 3/200
• HMRC Company Taxation Manual CTM03930 -- pro-rating the limits for accounting periods shorter than 12 months
• Corporation Tax Act 2010 Part 3A -- associated companies and the division of the limits
• All figures verified on 30 August 2026 and mirrored in engine/tables/2026/uk-2026-27.json