How much Corporation Tax do I pay on £40,000 of company profit?

Full answer

UK Corporation Tax for 2026/27 has two headline rates depending on the level of taxable profit: a small profits rate of 19% for companies with profits of £50,000 or less, and a main rate of 25% for companies with profits above £250,000, with marginal relief smoothing the transition for profits in between. On £40,000 of taxable profit, since this is below the £50,000 small profits threshold, the entire amount is taxed at the 19% small profits rate, giving Corporation Tax of £7,600. This leaves the company with £32,400 of profit after tax, which can be retained in the business, distributed to shareholders as dividends (which are then taxed again at the shareholder's personal dividend tax rate), or reinvested. Companies with profits close to the £50,000 threshold should be aware that the small profits rate applies to the whole amount up to £50,000 -- there is no tapering below this level, unlike the marginal relief zone between £50,000 and £250,000. If the company has associated companies (under common control), the £50,000 and £250,000 thresholds are divided between them, so a group of two associated companies would each only get a £25,000 small profits threshold, potentially pushing profits that would otherwise qualify for the 19% rate into the marginal relief band instead.

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