For 2026/27 a limited company pays corporation tax on its profits at 19% up to £50,000, 25% over £250,000, and a sliding Marginal Relief rate in between — so each extra £1 of profit in the £50,000–£250,000 band is effectively taxed at about 26.5%. It's charged on your profit after allowable expenses and salaries, but before any dividends you draw. That means the "is corporation tax just 25%?" answer most directors expect is simply wrong for the majority of profitable companies, which sit in the marginal band. Get the band right and you know what the company owes; get it wrong and you either over-provision or under-pay. Here's how the three bands work for 2026/27, what Marginal Relief actually does to your bill, and how the tax fits with the way you pay yourself.
Figures are for the 2026/27 tax year and sourced to gov.uk and HMRC; rates change at each Budget. General guidance, not personal tax advice.
How much corporation tax will my company pay?
It depends on your taxable profit, and there are three bands for 2026/27. Profits up to £50,000 are taxed at the 19% small-profits rate. Profits over £250,000 are taxed at the 25% main rate. Between £50,000 and £250,000, Marginal Relief tapers the bill so the effective rate climbs gradually from 19% towards 25% rather than jumping in one step (gov.uk).
Taxable profit (2026/27)
Corporation tax rate
Up to £50,000
19% (small-profits rate)
£50,000 – £250,000
Marginal Relief — ≈26.5% effective on profit in this band
Over £250,000
25% (main rate)
Corporation tax bands for limited companies, 2026/27. Source: gov.uk/corporation-tax-rates and HMRC CTM03910.
One thing that trips directors up: those £50,000 and £250,000 limits are reduced if you have associated companies (broadly, companies under common control) and for accounting periods shorter than 12 months. If you run a single company on a standard year, the full thresholds apply — but check the associated-companies position if you control more than one.
Knowing your band is the first step; the next is checking which costs reduce the profit it's charged on.
Marginal Relief is the mechanism that bridges the 19% and 25% rates, and it's the part generic "corporation tax is 25%" pages get wrong. Above £50,000 of profit your company doesn't suddenly pay 25% on everything — instead, Marginal Relief reduces the headline 25% charge using a standard fraction of 3/200, so the effective rate rises smoothly across the band. The practical result is that every extra £1 of profit earned between £50,000 and £250,000 is taxed at roughly 26.5% — higher than the 25% main rate on that slice, which surprises people, because it's the cost of clawing back the 19% benefit as profits rise.
So a company with £100,000 of taxable profit doesn't pay a flat 25%. The first £50,000 effectively sits at the lower end, and the profit above £50,000 carries the ≈26.5% marginal cost, giving a blended rate somewhere between 19% and 25%. HMRC publishes a Marginal Relief calculator so you can put your own profit and any associated-company count in and see the figure for your year.
The takeaway for directors: if your profit lands between £50,000 and £250,000 — where most steadily profitable single-director companies sit — your real corporation tax rate is closer to 26.5% on the upper slice than to either headline number.
How does corporation tax fit with how you pay yourself?
This is where corporation tax stops being abstract. The order matters: the company calculates profit after deducting allowable expenses and any salary it pays you (salary is a deductible cost, so it reduces the profit corporation tax is charged on). Corporation tax is then charged on what's left. Only after that tax is paid can the company distribute profit to you as dividends — and those dividends are taxed again in your own hands.
For 2026/27, dividends above the £500 dividend allowance are taxed at 10.75% in the basic-rate band and 35.75% in the higher-rate band (gov.uk). So a pound of company profit you draw as a dividend has been through corporation tax first and dividend tax second — which is exactly why the salary-versus-dividend split, and how much profit you leave in the company, is worth planning rather than guessing. Our guides on how to pay yourself from a limited company and dividend tax in 2026/27 walk through both layers.
The corporation-tax surprise we see most is that £50,000–£250,000 zone: directors expect a clean 19% or 25%, and the marginal-relief maths sits in between, so the take-home picture is rarely as simple as a single percentage. A partner accountant models the whole stack — expenses, salary, corporation tax, then dividends — so the number you plan around is real.
You pay corporation tax 9 months and 1 day after the end of your company's accounting period, and you file a Company Tax Return to report the profit and the tax due. The deadline to pay actually falls before the deadline to file the return for most small companies, which catches first-time directors out — the money is due first, the paperwork shortly after. There's no payment slip from HMRC reminding you; the responsibility to work out and pay the right amount sits with the company.
Because the figure depends on getting your profit right — which means capturing every allowable expense and the right salary — this is the stage where a good accountant earns their fee. If you're weighing whether incorporating is worth the tax and admin at all, our comparison of sole trader vs limited company sets out the trade-off, and the limited company expenses you can claim directly reduce the profit this tax is charged on. We're a connector, not the firm that signs your accounts — we help you understand the bill and, through our accountancy partner network, match you with a trusted partner accountant who'll file it correctly and on time.
Corporation tax isn't one rate — it's a three-band system, and most profitable directors land in the marginal middle rather than at either end. Knowing that is the difference between budgeting accurately and being caught short. Get the bands and the timing right, and the company's tax becomes a number you plan for, not one that surprises you.
How much corporation tax does a limited company pay in 2026/27?
It depends on taxable profit. Profits up to £50,000 are taxed at 19%, profits over £250,000 at 25%, and profits between the two carry Marginal Relief — an effective rate of roughly 26.5% on the profit in that band. Most steadily profitable single-director companies sit in the marginal middle.
What is the corporation tax rate for 2026/27?
There isn't a single rate. The small-profits rate is 19% up to £50,000, the main rate is 25% over £250,000, and Marginal Relief bridges the gap between them. Saying "corporation tax is 25%" is wrong for any company earning £250,000 or less.
What is Marginal Relief?
Marginal Relief is the mechanism that smooths corporation tax between the 19% and 25% rates for profits of £50,000–£250,000. It uses a standard fraction of 3/200 to reduce the 25% charge, with the practical effect that each extra £1 of profit in that band is taxed at about 26.5%. HMRC provides an online Marginal Relief calculator.
Is corporation tax paid before or after dividends?
Before. Corporation tax is charged on company profit after allowable expenses and salaries, but before any dividends. Dividends are paid from post-tax profit and are then taxed again in your hands — at 10.75% or 35.75% above the £500 dividend allowance for 2026/27.
When is corporation tax due?
For most small companies, corporation tax is due 9 months and 1 day after the end of the accounting period, with the Company Tax Return filed shortly after. The payment deadline comes before the filing deadline, so the money is owed first — a point that catches new directors out.
For 2026/27 a limited company pays corporation tax on its profits at 19% up to £50,000, 25% over £250,000, and a sliding Marginal Relief rate in between — so each extra £1 of profit in the £50,000–£250,000 band is effectively taxed at about 26.5%. It's charged on your profit after allowable expenses and salaries, but before any dividends you draw. That means the "is corporation tax just 25%?" answer most directors expect is simply wrong for the majority of profitable companies, which sit in the marginal band. Get the band right and you know what the company owes; get it wrong and you either over-provision or under-pay. Here's how the three bands work for 2026/27, what Marginal Relief actually does to your bill, and how the tax fits with the way you pay yourself.
Figures are for the 2026/27 tax year and sourced to gov.uk and HMRC; rates change at each Budget. General guidance, not personal tax advice.
How much corporation tax will my company pay?
It depends on your taxable profit, and there are three bands for 2026/27. Profits up to £50,000 are taxed at the 19% small-profits rate. Profits over £250,000 are taxed at the 25% main rate. Between £50,000 and £250,000, Marginal Relief tapers the bill so the effective rate climbs gradually from 19% towards 25% rather than jumping in one step (gov.uk).
Taxable profit (2026/27)
Corporation tax rate
Up to £50,000
19% (small-profits rate)
£50,000 – £250,000
Marginal Relief — ≈26.5% effective on profit in this band
Over £250,000
25% (main rate)
Corporation tax bands for limited companies, 2026/27. Source: gov.uk/corporation-tax-rates and HMRC CTM03910.
One thing that trips directors up: those £50,000 and £250,000 limits are reduced if you have associated companies (broadly, companies under common control) and for accounting periods shorter than 12 months. If you run a single company on a standard year, the full thresholds apply — but check the associated-companies position if you control more than one.
Knowing your band is the first step; the next is checking which costs reduce the profit it's charged on.
Marginal Relief is the mechanism that bridges the 19% and 25% rates, and it's the part generic "corporation tax is 25%" pages get wrong. Above £50,000 of profit your company doesn't suddenly pay 25% on everything — instead, Marginal Relief reduces the headline 25% charge using a standard fraction of 3/200, so the effective rate rises smoothly across the band. The practical result is that every extra £1 of profit earned between £50,000 and £250,000 is taxed at roughly 26.5% — higher than the 25% main rate on that slice, which surprises people, because it's the cost of clawing back the 19% benefit as profits rise.
So a company with £100,000 of taxable profit doesn't pay a flat 25%. The first £50,000 effectively sits at the lower end, and the profit above £50,000 carries the ≈26.5% marginal cost, giving a blended rate somewhere between 19% and 25%. HMRC publishes a Marginal Relief calculator so you can put your own profit and any associated-company count in and see the figure for your year.
The takeaway for directors: if your profit lands between £50,000 and £250,000 — where most steadily profitable single-director companies sit — your real corporation tax rate is closer to 26.5% on the upper slice than to either headline number.
How does corporation tax fit with how you pay yourself?
This is where corporation tax stops being abstract. The order matters: the company calculates profit after deducting allowable expenses and any salary it pays you (salary is a deductible cost, so it reduces the profit corporation tax is charged on). Corporation tax is then charged on what's left. Only after that tax is paid can the company distribute profit to you as dividends — and those dividends are taxed again in your own hands.
For 2026/27, dividends above the £500 dividend allowance are taxed at 10.75% in the basic-rate band and 35.75% in the higher-rate band (gov.uk). So a pound of company profit you draw as a dividend has been through corporation tax first and dividend tax second — which is exactly why the salary-versus-dividend split, and how much profit you leave in the company, is worth planning rather than guessing. Our guides on how to pay yourself from a limited company and dividend tax in 2026/27 walk through both layers.
The corporation-tax surprise we see most is that £50,000–£250,000 zone: directors expect a clean 19% or 25%, and the marginal-relief maths sits in between, so the take-home picture is rarely as simple as a single percentage. A partner accountant models the whole stack — expenses, salary, corporation tax, then dividends — so the number you plan around is real.
You pay corporation tax 9 months and 1 day after the end of your company's accounting period, and you file a Company Tax Return to report the profit and the tax due. The deadline to pay actually falls before the deadline to file the return for most small companies, which catches first-time directors out — the money is due first, the paperwork shortly after. There's no payment slip from HMRC reminding you; the responsibility to work out and pay the right amount sits with the company.
Because the figure depends on getting your profit right — which means capturing every allowable expense and the right salary — this is the stage where a good accountant earns their fee. If you're weighing whether incorporating is worth the tax and admin at all, our comparison of sole trader vs limited company sets out the trade-off, and the limited company expenses you can claim directly reduce the profit this tax is charged on. We're a connector, not the firm that signs your accounts — we help you understand the bill and, through our accountancy partner network, match you with a trusted partner accountant who'll file it correctly and on time.
Corporation tax isn't one rate — it's a three-band system, and most profitable directors land in the marginal middle rather than at either end. Knowing that is the difference between budgeting accurately and being caught short. Get the bands and the timing right, and the company's tax becomes a number you plan for, not one that surprises you.
How much corporation tax does a limited company pay in 2026/27?
It depends on taxable profit. Profits up to £50,000 are taxed at 19%, profits over £250,000 at 25%, and profits between the two carry Marginal Relief — an effective rate of roughly 26.5% on the profit in that band. Most steadily profitable single-director companies sit in the marginal middle.
What is the corporation tax rate for 2026/27?
There isn't a single rate. The small-profits rate is 19% up to £50,000, the main rate is 25% over £250,000, and Marginal Relief bridges the gap between them. Saying "corporation tax is 25%" is wrong for any company earning £250,000 or less.
What is Marginal Relief?
Marginal Relief is the mechanism that smooths corporation tax between the 19% and 25% rates for profits of £50,000–£250,000. It uses a standard fraction of 3/200 to reduce the 25% charge, with the practical effect that each extra £1 of profit in that band is taxed at about 26.5%. HMRC provides an online Marginal Relief calculator.
Is corporation tax paid before or after dividends?
Before. Corporation tax is charged on company profit after allowable expenses and salaries, but before any dividends. Dividends are paid from post-tax profit and are then taxed again in your hands — at 10.75% or 35.75% above the £500 dividend allowance for 2026/27.
When is corporation tax due?
For most small companies, corporation tax is due 9 months and 1 day after the end of the accounting period, with the Company Tax Return filed shortly after. The payment deadline comes before the filing deadline, so the money is owed first — a point that catches new directors out.
