UK Corporation Tax Rates 2025/26: Complete Guide
Corporation tax rates changed significantly in April 2023, introducing a two-tier system with marginal relief. Here's everything you need to know for the 2025/26 financial year.
Current Rates (Financial Year 2025)
| Taxable Profits | Rate | Effective Rate |
|---|---|---|
| £0 – £50,000 | 19% | 19% |
| £50,001 – £250,000 | 25% with marginal relief | 19% – 25% |
| Over £250,000 | 25% | 25% |
The Small Profits Rate: 19%
Companies with taxable profits of £50,000 or less pay the small profits rate of 19%.
This applies to the vast majority of UK limited companies. According to HMRC statistics, approximately 70% of active companies have profits below this threshold.
The Main Rate: 25%
Companies with taxable profits over £250,000 pay the main rate of 25%.
This is a significant increase from the flat 19% rate that applied from 2017 to 2023. For a company with £500,000 profit, the additional tax compared to the old flat rate is £30,000.
Marginal Relief: The Band Between
For profits between £50,000 and £250,000, marginal relief applies. This creates a gradual increase from 19% to 25%.
The formula:
Marginal Relief = F × (U – A) × (N / A)
Where:
- F = Marginal Relief Fraction (3/200 = 0.015)
- U = Upper Limit (£250,000)
- A = Augmented Profits (taxable profits + exempt distributions)
- N = Taxable Profits (net, before exempt distributions)
Worked Example: £100,000 Profit
| Step | Calculation |
|---|---|
| Gross CT at 25% | £100,000 × 25% = £25,000 |
| Marginal Relief | 3/200 × (£250,000 – £100,000) × (£100,000/£100,000) = £2,250 |
| Net CT | £25,000 – £2,250 = £22,750 |
| Effective rate | 22.75% |
Effective Rates at Key Thresholds
| Profit | CT Due | Effective Rate |
|---|---|---|
| £25,000 | £4,750 | 19.00% |
| £50,000 | £9,500 | 19.00% |
| £75,000 | £16,125 | 21.50% |
| £100,000 | £22,750 | 22.75% |
| £150,000 | £36,000 | 24.00% |
| £200,000 | £49,250 | 24.63% |
| £250,000 | £62,500 | 25.00% |
| £500,000 | £125,000 | 25.00% |
Associated Companies
If you (or your fellow directors) control associated companies, the £50,000 and £250,000 thresholds are divided equally between them.
What Counts as an Associated Company?
Two companies are associated if one controls the other, or both are controlled by the same person(s). This includes:
- Companies you own more than 50% of
- Companies controlled by you and your spouse/civil partner
- Companies where you have rights to more than 50% of profits or assets
Example: Two Associated Companies
| Threshold | Normal | With 2 Associated Companies |
|---|---|---|
| Small profits rate | £50,000 | £25,000 each |
| Main rate threshold | £250,000 | £125,000 each |
A company with £75,000 profit and one associated company would pay the marginal rate (effective ~21.5%), whereas without an associated company it would pay 19%.
Dormant Companies
Dormant companies that have no trade and no income do NOT count as associated companies. HMRC explicitly excludes passive dormant companies from the count.
Historical Rates
| Financial Year | Rate(s) |
|---|---|
| 2025 (Apr 25–Mar 26) | 19% / 25% (current) |
| 2024 (Apr 24–Mar 25) | 19% / 25% |
| 2023 (Apr 23–Mar 24) | 19% / 25% (two-tier introduced) |
| 2022 (Apr 22–Mar 23) | 19% flat |
| 2021 (Apr 21–Mar 22) | 19% flat |
| 2020 (Apr 20–Mar 21) | 19% flat |
| 2017–2019 | 19% flat |
| 2015–2016 | 20% flat |
Special Rates
Ring Fence Profits (Oil & Gas)
- Small profits rate: 19%
- Ring fence rate: 30%
- Ring fence supplementary charge: 10%
- Energy profits levy: 35% (temporary)
Patent Box
Companies can elect for a 10% rate on profits from qualifying patents. This is claimed via the CT600 and requires additional computations.
Bank Surcharge
Banks pay an 8% surcharge on profits over £100 million (reduced from £25 million in 2023).
Straddling Accounting Periods
If your accounting period spans two financial years (e.g., 1 January 2025 to 31 December 2025, straddling FY2024 and FY2025), your profits are time-apportioned between the two years.
Each portion is taxed at the rates applicable to that financial year. Since FY2024 and FY2025 have the same rates, this currently makes no practical difference — but it mattered in FY2022/FY2023 when rates changed.
How to Report on Your CT600
| Box | Description |
|---|---|
| 430 | Corporation tax chargeable (after marginal relief) |
| 440 | Marginal relief claimed |
| 475 | CT before marginal relief |
Your CT600 filing software calculates these automatically based on your taxable profit and associated company count.
Key Takeaways
- Most small companies pay 19% (profits ≤ £50,000)
- Marginal relief applies between £50K and £250K
- Associated companies divide the thresholds — check if you have any
- The effective rate never exceeds 25%, even with marginal relief calculations
- Dormant companies don't count as associated
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