Answers · UK 2025/26
What is corporation tax and what rate do UK companies pay?
Corporation tax is the tax on limited company profits — in 2026/27 the main rate is 25% for profits over £250,000, the small profits rate is 19% for profits up to £50,000, with marginal relief between £50,000 and £250,000.
Full answer
**Corporation Tax (CT)** is the tax a UK limited company pays on its taxable profits — including trading profits, investment income, and capital gains. **2026/27 Corporation Tax rates:** | Profit level | CT rate | |---|---| | Up to £50,000 | **19%** (small profits rate) | | £50,001 – £250,000 | Marginal relief applies | | Above £250,000 | **25%** (main rate) | **Marginal relief (£50k–£250k):** The effective rate gradually increases from 19% to 25% via marginal relief. The effective marginal rate within the £50k–£250k band is approximately **26.5%**. **Associated companies:** If your company has associated companies (common ownership/control), the £50k and £250k thresholds are divided by the number of associated companies + 1. **Payment deadlines:** - **Small companies** (not "large"): Pay CT **9 months and 1 day** after the accounting period end (e.g. 1 October for a 31 December year-end) - **Large companies** (profits over £1.5M): Quarterly instalment payments **CT600 annual return:** Must be filed online with HMRC within **12 months** of the accounting period end. Penalties apply for late filing. **Expenses reducing CT:** - Director salaries and staff wages - Employer pension contributions - Rent, rates, utilities - Plant and machinery (via capital allowances / Full Expensing) - R&D costs (Merged R&D Scheme: 20% uplift/27% for R&D-intensive SMEs from April 2024) **R&D Merged Scheme (from April 2024):** The old RDEC and SME R&D relief were merged into a single scheme — **20% above-the-line R&D credit** for most companies, or **27%** for R&D-intensive SMEs (R&D spend > 30% of total expenditure).
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.