How much Corporation Tax Marginal Relief applies to £225,000 profit in 2026/27?

Full answer

Marginal Relief tapers away almost entirely as profits approach the £250,000 upper limit, where it disappears completely and the full 25% main rate applies with no adjustment. The formula is Marginal Relief = (Upper Limit minus profit) multiplied by the marginal relief fraction of 3/200. On £225,000 profit: Marginal Relief = (£250,000 minus £225,000) times 3/200 = £25,000 times 0.015 = £375. Corporation Tax at the full 25% main rate on £225,000 is £56,250, and after deducting the modest £375 relief the payable amount is £55,875. That is an effective rate of 24.83% (£55,875 divided by £225,000) -- only 0.17 percentage points below the full 25% main rate, illustrating that Marginal Relief provides negligible benefit this close to the upper limit. Compare this with the 20.25% effective rate at £60,000 profit: the relief mechanism front-loads its benefit near the lower £50,000 limit and steadily withdraws it as profit rises, rather than providing a flat discount across the whole £200,000-wide marginal band. A company forecasting profit near £225,000 gains very little extra by keeping profit just under £250,000 compared with going over it, since both scenarios are taxed at close to 25%. Use the Corporation Tax calculator to compare your exact position against the £250,000 upper limit.

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