Company Tax Rate UK: Current Rates and Thresholds

Understanding what rate of corporation tax your company pays is essential for financial planning. Since April 2023, the UK has used a two-rate system based on your company's taxable profits.

Current Corporation Tax Rates (2024/25)

Profit Level	Tax Rate	Rate Name
£0 to £50,000	19%	Small profits rate
£50,001 to £250,000	19-25%	Marginal relief
Over £250,000	25%	Main rate

These rates apply to accounting periods starting on or after 1 April 2023.

Small Profits Rate (19%)

If your company's taxable profits are £50,000 or less, you pay corporation tax at 19%.

Example Calculation

	Amount
Taxable profit	£40,000
Tax rate	19%
Corporation tax	£7,600

The small profits rate is designed to support smaller businesses. If your company consistently earns less than £50,000, your effective rate remains at 19%.

Main Rate (25%)

If your company's taxable profits exceed £250,000, you pay corporation tax at 25%.

Example Calculation

	Amount
Taxable profit	£500,000
Tax rate	25%
Corporation tax	£125,000

Marginal Relief (£50,001 to £250,000)

If your profits fall between the two thresholds, you don't jump straight from 19% to 25%. Instead, marginal relief creates a gradual transition.

How Marginal Relief Works

The formula is:

Marginal Relief = (Upper Limit - Profits) × (Profits - Lower Limit) / Profits × Fraction

Where:

• Upper limit = £250,000
• Lower limit = £50,000
• Fraction = 3/200 (0.015)

Don't worry about calculating this manually—tax software handles it automatically.

Effective Tax Rates

Taxable Profit	Effective Rate	Tax Payable
£50,000	19.00%	£9,500
£75,000	20.50%	£15,375
£100,000	21.50%	£21,500
£150,000	22.75%	£34,125
£200,000	23.75%	£47,500
£250,000	25.00%	£62,500

As you can see, the effective rate gradually increases from 19% to 25% as profits rise through the marginal band.

Marginal Rate

Within the £50,001 to £250,000 band, the marginal rate on additional profit is 26.5%. This means each extra pound of profit in this band costs 26.5p in tax—higher than the main rate.

This can affect decisions about extracting profit vs. keeping money in the company.

Associated Companies

If your company has associated companies, the profit thresholds are divided between them.

What Counts as Associated?

Companies are associated if they're under common control—typically where the same person or group controls both companies.

Dormant companies and certain holding company structures may not count.

How Thresholds Are Divided

Number of Associated Companies	Upper Limit	Lower Limit
1 (just your company)	£250,000	£50,000
2	£125,000	£25,000
3	£83,333	£16,666
4	£62,500	£12,500
5	£50,000	£10,000

Example: If you have two associated companies and each makes £30,000 profit, they'd each pay 19%. But if each makes £130,000, they'd both pay the 25% main rate (since the upper limit per company is £125,000).

Historical Corporation Tax Rates

Period	Main Rate	Small Profits Rate
April 2023 onwards	25%	19% (profits ≤£50k)
April 2017 - March 2023	19%	19% (single rate)
April 2015 - March 2017	20%	20% (single rate)
April 2014 - March 2015	21%	20%
April 2011 - March 2014	23-26%	20%

The UK had a single 19% rate from 2017 to 2023. The April 2023 changes reintroduced the two-rate system.

Tax Planning Considerations

Staying Below the Lower Limit

If your profits are close to £50,000, consider:

• Maximising allowable expenses
• Bringing forward planned purchases
• Pension contributions (employer contributions are deductible)

The Marginal Band Decision

In the £50,001-£250,000 band, the 26.5% marginal rate can influence:

• Whether to retain profits or pay dividends
• Timing of major purchases
• Pension vs. dividend extraction

Associated Company Planning

If you control multiple companies, ensure you're counting associated companies correctly. Getting this wrong can mean paying more tax than necessary—or facing HMRC penalties.

How Corporation Tax Is Calculated

Corporation tax is calculated on taxable profit, not accounting profit. The main adjustments are:

Add Back

• Depreciation (replaced by capital allowances)
• Entertainment costs
• Fines and penalties
• Dividends paid

Deduct

• Capital allowances
• Trading losses brought forward
• Certain reliefs (R&D, Patent Box)

When to Pay Corporation Tax

Corporation tax is due 9 months and 1 day after your accounting period ends.

Example: For a year ending 31 March 2025, pay by 1 January 2026.

Companies with profits over £1.5 million must pay in quarterly instalments instead.

See our guide on how to pay corporation tax.

File Your Company Tax Return

Once you know your tax rate and liability, you need to file a Company Tax Return (CT600) with HMRC.

TinyTax calculates your corporation tax automatically, including marginal relief, and files your return.

File your company tax return with TinyTax →

Related Guides

• Corporation Tax Explained
• Company Tax Return: Complete Guide
• How to Pay Corporation Tax
• Limited Company Tax Guide