Overview
Corporation Tax is charged on a company’s taxable profits after business expenses and capital allowances. Most companies pay the main rate, while smaller companies may qualify for the small profits rate or marginal relief. Financial years run from 1 April to 31 March, and profits are split on a time basis where an accounting period spans two years.
Rates for the year to 31 March 2027
| Rate | Profits band (£) | Rate (%) |
|---|---|---|
| Small profits rate | 0 – 50,000 | 19 |
| Effective marginal rate | 50,001 – 250,000 | 26.5 |
| Main rate | Over 250,000 | 25 |
| Marginal relief fraction | 3/200 |
Who must pay
- UK limited companies on trading profits, investment income and chargeable gains.
- Overseas companies with a UK permanent establishment or branch, on UK profits.
- Unincorporated associations such as clubs and some co-operatives.
- Sole traders and partnerships don’t pay Corporation Tax. They pay Income Tax and National Insurance through Self Assessment.
FAQs
Frequently asked questions
What is marginal relief?
It applies to profits between the small profits threshold and the main rate threshold, raising the effective rate gradually rather than in one step.
When is Corporation Tax paid?
Usually nine months and one day after the end of the accounting period. The CT600 must be filed within 12 months of the period end.
Can I reduce my Corporation Tax bill?
Yes, by claiming allowable expenses, capital allowances, R&D relief and other reliefs that lower taxable profits.