Corporation Tax calculator for limited companies

How Corporation Tax is worked out

Corporation Tax depends on how much taxable profit the company made in its accounting period. For the financial year starting 1 April 2026, HMRC's rates and allowances table gives a small profits rate of 19% on profits up to £50,000 and a main rate of 25% on profits over £250,000. Between the two, you pay 25% and take off marginal relief.

Marginal relief is how the rate climbs from 19% to 25% without a sudden jump. HMRC's Company Taxation Manual (CTM03925) sets the formula out as F × (U − A) × N ÷ A. F is the standard fraction, which is 3/200 for 2026. U is the upper limit, £250,000. A is the company's augmented profits and N is its taxable total profits.

For most trade companies, A and N are the same number. Augmented profits are taxable profits plus certain exempt dividends received from companies outside your group (CTM03915). If your company does not hold shares in other companies, the N ÷ A part equals 1 and the relief is simply 3/200 × (£250,000 − profit). The calculator assumes that.

Here is the working for a building firm with £80,000 of taxable profit in a 12-month accounting period and no associated companies.

• Which band: £80,000 is above the £50,000 lower limit and below the £250,000 upper limit, so marginal relief applies.
• Tax at the main rate: £80,000 × 25% = £20,000.
• Marginal relief: 3/200 × (£250,000 − £80,000) = 3/200 × £170,000 = £2,550.
• Corporation Tax: £20,000 − £2,550 = £17,450.
• Effective rate: £17,450 ÷ £80,000 = 21.81%.
• Profit after tax: £80,000 − £17,450 = £62,550. This year's dividends come out of this figure, not the £80,000.

The 26.5% slice most owners miss

Every extra pound of profit between £50,000 and £250,000 costs 26.5% in Corporation Tax, more than the 25% main rate. That is the main rate plus the 3/200 fraction (1.5%) clawing the relief back. The average rate still never goes over 25%, because the profit below £50,000 was charged at 19% to start with.

A quicker way to the same answer, for a full year with no associated companies: £9,500 on the first £50,000, then 26.5% of everything above it. For the £80,000 firm that is £9,500 + (26.5% × £30,000) = £17,450, matching the formula.

This matters when you are deciding whether to spend money before the year end. A genuine business cost that knocks £5,000 off profit in this band saves £1,325 of Corporation Tax. It is still £3,675 out of the company's bank, so only buy what the business actually needs.

When the £50,000 and £250,000 limits shrink

The £50,000 and £250,000 limits assume one company and a 12-month accounting period. gov.uk's Corporation Tax rates page says both are proportionately reduced for short accounting periods and by the number of associated companies. The calculator has a box for each, and both change the answer more than people expect.

Two worked examples with smaller limits

Same formula, different limits. Put these figures into the calculator and you should get the same answers.

• An electrician with a second company. The electrician owns two trading companies outright, so each has one associated company. £80,000 of profit in a 12-month period. Limits become £25,000 and £125,000. Tax at 25% is £20,000. Marginal relief is 3/200 × (£125,000 − £80,000) = £675. Corporation Tax is £19,325, an effective rate of 24.16%, against £17,450 with no second company.
• A roofer's first accounting period. The company was set up part way through the year, so its first period runs 6 months, with £30,000 of profit. Limits become £25,000 and £125,000. Tax at 25% is £7,500. Marginal relief is 3/200 × (£125,000 − £30,000) = £1,425. Corporation Tax is £6,075, an effective rate of 20.25%. Over a full year, £30,000 would have been taxed at a flat 19%.

What goes in the taxable profit box

Enter the company's taxable profit, not its turnover and not the money in the bank. Day-to-day running costs, such as the accountant's fee, come off as revenue expenses. Some costs are specifically disallowed, entertaining clients being gov.uk's own example. A new van is a capital expense: it does not come off directly, but the company can usually deduct its full cost through the annual investment allowance. Your accountant settles the final figure on the Company Tax Return.

Dividends never reduce it. gov.uk is clear that you cannot count dividends as business costs when you work out Corporation Tax. They are paid from what is left after the tax, and the company can only pay them out of profits it has available, this year's or ones kept from before. Our dividend tax calculator picks up from there.

An accounting period cannot be longer than 12 months. If your accounts cover 15 months, there are two Company Tax Returns: one for the first 12 months and one for the last 3, each with its own limits.

Where your accountant's figure may differ

Treat the result as a planning estimate rather than tax advice. Corporation Tax is UK-wide, so it applies to companies in England, Scotland, Wales and Northern Ireland alike. It covers ordinary trading profits for the financial year from 1 April 2026. Rates for 2025 were the same, so a period that straddles 1 April 2026 gives the same answer.

It leaves out exempt dividends received from other companies (the A and N difference), ring fence oil and gas profits, losses brought forward, group relief, and research and development claims. If any of those apply, your accountant's figure will differ.

You do not get a bill for Corporation Tax. The company works it out on its return and pays it. For taxable profits up to £1.5 million the payment is due 9 months and 1 day after the end of the accounting period. That is usually before the return itself is due, so put the money aside as you go.

Common questions