Overview
Corporation Tax is charged on a company’s taxable profits after business expenses and capital allowances. Most companies pay the main rate, while smaller companies may qualify for the small profits rate or marginal relief. Financial years run from 1 April to 31 March, and profits are split on a time basis where an accounting period spans two years.
Rates for the year to 31 March 2027
| Rate | Profits band (£) | Rate (%) |
|---|---|---|
| Small profits rate | 0 – 50,000 | 19 |
| Effective marginal rate | 50,001 – 250,000 | 26.5 |
| Main rate | Over 250,000 | 25 |
| Marginal relief fraction | 3/200 |
Who must pay
- UK limited companies on trading profits, investment income and chargeable gains.
- Overseas companies with a UK permanent establishment or branch, on UK profits.
- Unincorporated associations such as clubs and some co-operatives.
- Sole traders and partnerships don’t pay Corporation Tax. They pay Income Tax and National Insurance through Self Assessment.
Frequently Asked Questions
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What Is Marginal Relief?
Marginal relief applies to companies with profits between £50,000 and £250,000, where the small profits rate and the main rate meet. It raises the effective Corporation Tax rate gradually instead of jumping from 19% to 25% in one step. The relief is calculated using the 3/200 fraction, which gives an effective marginal rate of 26.5% on profits within this band.
When Is Corporation Tax Paid?
Corporation Tax is usually due nine months and one day after the end of your company’s accounting period. This payment date is separate from your filing deadline, so you need to pay the tax before you submit your return. The CT600 company tax return must be filed with HMRC within 12 months of the accounting period end.
Can I Reduce My Corporation Tax Bill?
Yes, you can lower your bill legitimately by claiming all allowable business expenses and capital allowances on qualifying equipment and assets. Reliefs such as Research and Development (R&D) relief and pension contributions for directors can also reduce your taxable profits. It is important to keep clear records and claim accurately, so speaking to an accountant is recommended.
Do I Have to Pay Corporation Tax If my Company Made a Loss?
No, if your company makes a loss, there is no Corporation Tax to pay for that accounting period. You must still file your company tax return and accounts to report the loss to HMRC. Trading losses can often be carried forward to reduce future profits, or sometimes carried back against earlier profits, so a loss can still be valuable.
What Happens If I Miss The Corporation Tax Deadline?
If you pay late, HMRC charges interest on the unpaid tax from the date it was due until the day it is paid in full. If you miss the filing deadline, an automatic £100 penalty applies, which rises further the longer the return is overdue. Filing and paying on time protects your company from these costs and keeps your compliance record clean.
Do Associated Companies Affect the Small Profits Rate?
Yes, if your company has associated companies, the profit limits for the small profits rate and marginal relief are divided between them. For example, with one associated company, the £50,000 and £250,000 limits are each shared, so each company gets a lower threshold. This can mean you pay a higher rate sooner, so it is important to review your company structure carefully.
What Is the Current Corporation Tax Rate?
For the year to 31 March 2027, the small profits rate is 19% on profits up to £50,000, and the main rate is 25% on profits over £250,000. Companies with profits between these two limits pay an effective marginal rate of 26.5% on the portion within that band. Which rate applies depends on your company’s total profits and whether it has any associated companies.
When Do I Need to Register for Corporation Tax?
You must register your company for Corporation Tax with HMRC within three months of starting any business activity, such as trading, advertising or employing staff. Registration is done online, and HMRC will then send you a Unique Taxpayer Reference (UTR) and details of your filing and payment deadlines. Registering late can lead to penalties, so it is best to complete this step as soon as your company begins operating.