Is corporation tax paid on turnover or profit?

Corporation tax is always paid on profit, not turnover. Taxable profit is your company's income after deducting allowable business expenses, capital allowances, losses, and other reliefs. Turnover (total sales income) is not directly taxed, only the profit remaining after those deductions. This is why accurate bookkeeping and claiming all allowable deductions matters significantly to your CT liability.

What is the small profits rate for corporation tax?

The small profits rate for 2026/27 is 19%, applying to companies with taxable profits up to £50,000. This threshold is divided by one plus the number of associated companies, so two associated companies each get a £25,000 small profits limit. If your profit falls in the marginal relief band (£50,001–£250,000), you pay an effective rate between 19% and 25%.

What is marginal relief for corporation tax?

Marginal relief applies to companies with taxable profits between £50,000 and £250,000, reducing the corporation tax rate from the full 25% main rate to something between 19% and 25%. The relief is calculated as (3/200) × (£250,000 − profit). This creates a smooth effective rate curve rather than a cliff-edge. The thresholds are divided by the number of associated companies.

When do I need to pay corporation tax?

Corporation tax is due 9 months and 1 day after the end of your accounting period. For example, if your accounting period ends 31 March 2027, payment is due 1 January 2028. Large companies with profits over £1.5 million must pay quarterly instalments instead. You must also file a company tax return (CT600) within 12 months of the end of your accounting period.

How much corporation tax do I pay on £100,000 profit?

With £100,000 taxable profit in 2026/27, marginal relief applies because the profit falls between £50,000 and £250,000. The main rate charge would be £25,000 (£100,000 × 25%), then marginal relief of approximately £3,750 is deducted, giving a corporation tax bill of approximately £21,250. The effective rate is around 21.25%. Always verify with your accountant as reliefs may further reduce this.

Updated 6 April 2026

Corporation Tax Calculator · Free UK 2026/27

Calculate your UK corporation tax liability instantly, including marginal relief. Updated for 2026/27 HMRC rates.

✓ Free to use✓ Marginal relief✓ Updated 2026/27✓ HMRC aligned

Corporation Tax Calculator

Enter taxable profit. CT liability and effective rate appear instantly

Taxable profit

Corporation tax due

£—

Enter your taxable profit above

Monthly

£—

Weekly

£—

Daily

£—

Hourly

£—

Corporation tax 2026/27. Small profits rate 19%, main rate 25%. Marginal relief applies £50k–£250k (adjusted for associated companies). Verify with your accountant.

How Corporation Tax is Calculated

Quick Answer:Corporation tax is calculated on your company’s taxable profits. For 2026/27: profits up to £50,000 pay 19% (small profits rate); profits over £250,000 pay 25% (main rate); profits between £50,000 and £250,000 attract marginal relief, a sliding effective rate between 19% and 25%. The small profits threshold is adjusted proportionally for associated companies.

What is Corporation Tax?

Corporation tax is the tax a UK limited company pays on its taxable profits each accounting period. Unlike income tax (paid by individuals), corporation tax is paid by the company itself. The rate you pay depends on how much profit your company makes in the accounting year.

Formula

CT = Taxable Profit × Rate (adjusted for marginal relief where applicable)

£100,000 profit: marginal relief applies, effective rate between 19% and 25%

Worked Example: Three profit levels

Profit £40,000, rate 19% (small profits)Tax £7,600

Profit £100,000, marginal relief appliesEffective rate ~21.5%, Tax ~£21,500

Profit £300,000, rate 25% (main rate)Tax £75,000

Marginal relief fraction: (250,000 − profit) × 3/200. Always verify with your accountant.

Marginal Relief Explained

Marginal relief prevents a cliff-edge between the 19% small profits rate and the 25% main rate. If your profits are between £50,000 and £250,000, you receive a reduction calculated as (3/200) × (£250,000 − profit). This produces an effective rate that graduates smoothly from 19% to 25% as profits rise through the band.

Important: both the £50,000 and £250,000 thresholds are divided by one plus the number of associated companies. Two associated companies each have limits of £25,000 and £125,000.

Corporation tax rates 2026/27

Small profits rateprofits ≤ £50,000	19%
Main rateprofits ≥ £250,000	25%
Marginal relief band	£50,000–£250,000
Marginal relief fraction	3/200

Source: HMRC / GOV.UK, 2026/27 tax year

Frequently Asked Questions

Corporation tax is calculated on your company's taxable profits for each accounting period. For 2026/27, the rate depends on profit level: the small profits rate of 19% applies up to £50,000; the main rate of 25% applies above £250,000; and marginal relief applies in between. Taxable profit equals gross income minus allowable expenses, capital allowances, and any reliefs claimed.