Corporation Tax is the tax a limited company pays on its profits. This guide covers the 2026/27 rates and marginal relief.
Published July 2026 · Updated July 2026
Corporation Tax is charged on the taxable profits of limited companies (and some other organisations). Unlike Income Tax, there is no tax-free allowance, the company pays tax on its profit and files a Company Tax return with HMRC.
The small profits rate is 19% for profits up to £50,000. The main rate is 25% for profits over £250,000. Between £50,000 and £250,000, marginal relief gradually lifts the effective rate from 19% to 25%. Thresholds are shared between associated companies.
No. Sole traders pay Income Tax on profits through Self Assessment. Corporation Tax applies to limited companies.
Usually nine months and one day after the end of the company's accounting period, with the return due 12 months after.
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.