Glossary · UK
What is Corporation Tax?
UK tax on company profits — 19% small profits rate, 25% main rate for 2026/27.
Full Definition
Corporation Tax is paid by UK limited companies and some other corporate entities on their profits (income minus allowable expenses). For 2026/27: 19% small profits rate on profits up to £50,000; 25% main rate on profits above £250,000; marginal relief applies between £50,000 and £250,000 (effectively a sliding scale from 19% to 25%). The company is responsible for filing a CT600 return and paying tax within 9 months and 1 day after the company's accounting period ends. Distributing profits as dividends triggers personal dividend tax for shareholders (separate from Corporation Tax).
How Corporation Tax is calculated
Profit <= 50000: Tax = Profit x 19%
Profit >= 250000: Tax = Profit x 25%
In between: Tax = (Profit x 25%) - (250000 - Profit) x 3/200- 19%
- Small profits rate (taxable profit up to GBP 50,000).
- 25%
- Main rate (taxable profit of GBP 250,000 or more).
- 3/200
- Marginal relief fraction used between the two limits.
Worked example: On GBP 100,000 profit: (100,000 x 25%) - (250,000 - 100,000) x 3/200 = 25,000 - 2,250 = GBP 22,750, an effective rate of 22.75%.