A standalone UK company with £25,000 of taxable profit for the2026/27 financial year pays £4,750 in corporation tax — an effective rate of 19%. This profit sits in the small-profits rate (19%).
Assumption: figures assume a single standalone UK company (no 51% associated companies) with a full 12-month accounting period and no group relief surrendered to or from it. Associates or short periods reduce the marginal-relief limits pro rata.
Corporation tax
£4,750
on £25,000 profit
Effective rate
19%
vs taxable profit
Calculation Breakdown
Taxable profit£25,000
Bandsmall
Small-profits rate (19%)£4,750
Total corporation tax£4,750
How UK corporation tax works in 2026/27
From April 2023, UK corporation tax has operated under a tiered structure. Companies with taxable profits up to £50,000 pay the small-profits rate of 19%. Companies with profits at or above £250,000 pay the main rate of 25% on every pound. Between those two limits the company pays the main rate but then deducts marginal relief, calculated as (Upper Limit − Profit) × 3/200. This produces a smooth effective curve from 19% to 25% across the £200,000 marginal band.
For £25,000 of profit specifically, the company falls in the small-profits rate (19%). The whole £25,000 is taxed at the flat 19% small-profits rate, giving £4,750 of corporation tax.
Corporation tax is paid nine months and one day after the company's accounting period ends for small and medium companies; very large companies pay in quarterly instalments. Profits can be reduced by capital allowances (including the 100% Full Expensing relief for qualifying plant and machinery), R&D tax relief, group relief from loss-making associates, and the Patent Box for qualifying IP income. These reliefs can materially change the £4,750 headline figure shown here.
On £25,000 of taxable profit for the UK 2026/27 financial year, a standalone company pays £4,750 in corporation tax — an effective rate of 19%. Profits up to £50,000 are taxed at the small-profits rate of 19%; profits at or above £250,000 are taxed at the main rate of 25%; between those limits, marginal relief applies using the fraction 3/200.
When must I pay corporation tax on £25,000?
For a small or medium company, the £4,750 corporation tax on £25,000 is payable nine months and one day after the end of the accounting period — for example, by 1 January for a year ending 31 March. The CT600 company tax return must be filed within 12 months of the period end. Large companies with profits above £1.5 million pay in quarterly instalments during the period itself.
Can I reduce my corporation tax bill?
Yes. Legitimate reliefs that reduce the £4,750 bill on £25,000 include: the Annual Investment Allowance (AIA) and 100% Full Expensing for qualifying plant and machinery; R&D tax relief (enhanced deduction or payable credit); employer pension contributions as a deductible expense; the Patent Box for qualifying intellectual property; and group relief from loss-making associates. Director salary up to a reasonable commercial level is also deductible. Always take advice from a qualified accountant before claiming.
What is marginal relief and does it apply at £25,000?
Marginal relief only applies to profits between £50,000 and £250,000. At £25,000, the company is in the small-profits band — below the marginal-relief range — so the flat 19% rate applies with no marginal relief.
Do I need to file a Company Tax Return at £25,000?
Yes. All UK limited companies must file a CT600 Company Tax Return with HMRC, regardless of profit level or whether any tax is due. For a company with £25,000 of profit, the CT600 (and full company accounts) must be filed within 12 months of the accounting period end. Failure to file on time incurs automatic penalties starting at £100, rising to £1,000 for persistent failure. Companies must also pay any corporation tax due nine months and one day after the period end.
What is the small profits rate threshold?
The small-profits rate of 19% applies to taxable profits up to £50,000 (£50,000) per 12-month accounting period for a standalone company. Between £50,000 and £250,000 (£250,000), marginal relief applies. Above £250,000, the full main rate of 25% applies. These thresholds are divided by the number of 51%-associated companies plus one for companies in a group.
Can director salary reduce corporation tax?
Yes. Director salary is a deductible business expense, so it reduces taxable profit before corporation tax is calculated. For a company with £25,000 of profit, paying a director salary of, say, £50,000 would reduce the taxable profit — and therefore the corporation tax bill — accordingly. However, salary is subject to PAYE income tax and National Insurance (employee and employer), so the optimal salary level depends on the director's other income and NI position. Most owner-directors combine a low salary with dividends for tax efficiency.
What is the dividend vs salary strategy for £25,000 profit?
For owner-directors with £25,000 of company profit, the typical strategy is to pay a small salary (usually around the NI secondary threshold of £5,000 for 2026/27, or up to the personal allowance of £12,570 if no other income) and extract the rest as dividends. Dividends are paid from post-corporation-tax profit and taxed at dividend rates (8.75% basic, 33.75% higher, 39.35% additional) — lower than income tax rates. The optimum balance depends on personal circumstances; a company with £25,000 profit should model both options with an accountant.
Disclaimer: Figures show pre-relief corporation tax on stated taxable profit and assume a standalone UK company with no associated companies and a full 12-month accounting period. Actual liability will differ once capital allowances, R&D relief, group relief, Patent Box and other claims are taken into account. Speak to a qualified accountant for company-specific advice.
