Corporation Tax Rates Explained: 19%, 25% and Marginal Relief
Since April 2023 the UK has had two main Corporation Tax rates rather than one flat rate. Which rate your company pays depends on its profits — and if you sit between the two thresholds, a mechanism called marginal relief smooths the jump.
The rates
- Small profits rate: 19% for companies with profits of £50,000 or less.
- Main rate: 25% for companies with profits over £250,000.
- Between £50,000 and £250,000: marginal relief tapers you gradually from 19% towards 25%.
The thresholds are divided by the number of associated companies — broadly, companies under common control. If you run two associated companies, each effectively has a £25,000 small-profits band, so splitting work across companies no longer multiplies your allowances.
How marginal relief works in practice
In the £50,000 to £250,000 band, the effective tax rate climbs gradually rather than jumping overnight. The precise calculation uses a fraction set by HMRC, but the practical effect is that a company with £100,000 of profits pays noticeably less than the full main rate. Good accounting software or your accountant will compute the exact figure.
Deadlines that matter
- Corporation Tax payment: due 9 months and 1 day after the end of your accounting period.
- Company tax return (CT600): due 12 months after the end of your accounting period.
- Large companies (broadly those with profits above £1.5 million) pay in quarterly instalments instead.
Notice that payment is due before the return. You must work out and pay your liability before you have filed the paperwork — another reason directors keep their bookkeeping current rather than annual.
Reliefs worth knowing about
- Annual Investment Allowance: deduct the full cost of qualifying plant and machinery, up to £1 million per year.
- R&D tax relief: additional deductions for qualifying research and development, with a merged scheme now applying to most claims.
- Full expensing: a permanent 100% first-year deduction for qualifying new plant and machinery for companies.
- Creative industry reliefs: enhanced relief for film, TV, games, theatre and other qualifying productions.
