Glossary · UK
What is Marginal Relief (Corporation Tax)?
Tapered Corporation Tax for company profits between £50,000 and £250,000 — effective rate rises from 19% to 25%.
Full Definition
Since April 2023 the UK has two Corporation Tax rates: 19% small profits rate for profits up to £50,000 and 25% main rate for profits above £250,000. Profits between the two limits pay 25% reduced by Marginal Relief, producing a smoothly rising effective rate that peaks at 25% at £250,000. The marginal rate on each extra £1 of profit in the band is 26.5%. The £50,000 and £250,000 thresholds are divided by the number of «associated companies» (broadly companies under common control), so groups can lose the small profits rate. Augmented profits (including dividends from non-group companies) are used for the threshold test.
How Marginal Relief (Corporation Tax) is calculated
Marginal Relief = (250000 - Profit) x 3/200
Tax = (Profit x 25%) - Marginal Relief- 250000
- Upper marginal relief limit (GBP).
- 3/200
- Standard marginal relief fraction for 2026/27.
- Profit
- Augmented taxable profit between GBP 50,000 and GBP 250,000.
Worked example: On GBP 100,000 profit: relief = (250,000 - 100,000) x 3/200 = GBP 2,250, so tax = (100,000 x 25%) - 2,250 = GBP 22,750.