How much Corporation Tax do I pay on £500,000 of company profit?

Full answer

UK Corporation Tax for 2026/27 has a small profits rate of 19% on profits up to £50,000, a main rate of 25% on profits of £250,000 or more, and marginal relief smoothing the transition for profits in between those two limits. At £500,000 of profit, you are well above the £250,000 upper limit, so marginal relief no longer applies at all -- the full 25% main rate is charged on the entire profit, with no reduction: 25% of £500,000 is £125,000, an effective rate of exactly 25%. This is a simpler calculation than profits within the marginal relief band, since there is no fraction to apply once you are above £250,000. The £50,000 and £250,000 limits that determine when marginal relief applies are reduced if the company has associated companies under common control, or if the accounting period is shorter than 12 months -- neither is relevant once profit is this far above the upper limit, since the full main rate would apply regardless. Companies with profits at this level often have more sophisticated tax planning available, including group relief for losses in related companies, research and development tax relief for qualifying activity, and capital allowances such as the Annual Investment Allowance and full expensing on qualifying plant and machinery, all of which reduce taxable profit before the 25% rate is applied. Use the Corporation Tax calculator for your exact figure.

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More answers

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