The rates

• Profit up to £50,000: small profits rate, 19%
• Profit £50,000 to £250,000: 25% reduced by marginal relief
• Profit over £250,000: main rate, 25%

One warning before the sums: if your company has “associated companies”, broadly other companies under the same control, the £50,000 and £250,000 bands are divided between them. Two associated companies halve the bands. Worth knowing before you set up a second company to “save tax”.

Worked examples

£40,000 profit. All within the small profits band. £40,000 at 19% = £7,600.

£100,000 profit. Start with 25%: £25,000. Marginal relief is £250,000 minus your profit, multiplied by 3/200: £150,000 x 0.015 = £2,250. Bill: £25,000 – £2,250 = £22,750, an effective rate of 22.75%.

£300,000 profit. Above the upper band. £300,000 at 25% = £75,000.

Between £50,000 and £250,000 the effective rate climbs smoothly, which is why “what rate do I pay?” only has a clean answer at the extremes.

What profit actually means

Corporation Tax is on taxable profit, which is not the same as the number in your bookkeeping software. Trading income, investment income and gains on selling assets all count. Allowable business expenses come off, capital allowances apply to equipment, and some bookkeeping items, depreciation being the classic, get added back.

Your company works it out itself

There is no brown envelope with a bill. The company registers for Corporation Tax, keeps records, works out the tax, files a Company Tax Return and pays. The filing and payment deadlines are different, and they trip people up, so they get their own answer on this site.

Sources

All pages checked 20 October 2026.

• Corporation Tax rates: https://www.gov.uk/corporation-tax-rates
• Corporation Tax overview: https://www.gov.uk/corporation-tax

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