When is Corporation Tax due?

Most companies must pay 9 months and 1 day after the end of the accounting period, even though the Company Tax Return itself is due 12 months after the end of the accounting period. For a year ending 31 March 2026 that means paying by 1 January 2027 and filing by 31 March 2027. Companies with profits over £1.5 million pay in quarterly instalments instead.

How do I work out Corporation Tax with marginal relief?

Charge the whole profit at 25%, then subtract marginal relief: 3/200 × (upper limit − augmented profits) × (taxable profits ÷ augmented profits). With £100,000 of profit, no dividends and no associated companies, that is £25,000 − £2,250 = £22,750. HMRC's online marginal relief calculator does the same sum.

What is an associated company for Corporation Tax?

Two companies are associated if one controls the other or both are controlled by the same person or group of people, wherever they are based. Companies that did not trade or carry on any business during the period are ignored. The £50,000 and £250,000 limits are divided by the number of associated companies plus one.

Do I have to file a Corporation Tax return if my company made a loss?

Yes. Every company that receives a notice to deliver a return must file a CT600, accounts and computations even if it made a loss or owes nothing. Filing the loss also lets you carry it forward or back against other profits. Only dormant companies that HMRC has agreed are dormant can skip the return.

Can I still file my Company Tax Return free on HMRC's website?

No. HMRC's free 'File your accounts and Company Tax Return' service closed on 31 March 2026. From 1 April 2026 companies must use commercial software (or an accountant) to file the CT600 online. Paper returns are only accepted with a reasonable excuse or if you are filing in Welsh.

Income & corporation tax

Corporation Tax in the UK (2026): Rates, Marginal Relief, Deadlines and Allowances

UK Corporation Tax in 2026: 19% and 25% rates, how marginal relief works with a £ example, associated companies, CT600 and payment deadlines, and allowances.

Edited by Sumeet YadavFounder & editor, MSMETOOLS · fact-checked against official sources

Updated October 2026 Verified against official sources 7 October 2026 13 min read

UK Corporation Tax rates, marginal relief and deadlines — MSMETOOLS guide cover

Contents (10)

1. What is Corporation Tax and who pays it?
2. Corporation Tax rates for 2026
3. How marginal relief works (with worked examples)
4. Associated companies: when your limits shrink
5. Accounting periods, CT600 and deadlines
6. Penalties for late Corporation Tax returns
7. Quarterly instalments for large companies
8. Allowances and reliefs that cut the bill
9. Common Corporation Tax mistakes
10. What to do next

Corporation Tax is the tax a UK limited company pays on its profits. If you run a company — or are about to set one up — you need to know which rate applies, how marginal relief works between £50,000 and £250,000, and the two separate deadlines for paying and filing. This guide covers the 2026 rates, worked examples in pounds, associated companies, quarterly instalments for large companies and the capital allowances that cut your bill.

Quick answer

UK companies pay 19% on profits up to £50,000 and 25% on profits over £250,000. Between the two, marginal relief brings the effective rate somewhere between 19% and 25%. Pay the tax 9 months and 1 day after the end of the accounting period, and file the CT600 return 12 months after the end of the accounting period.

The limits are divided by the number of associated companies plus one, and cut pro rata for periods under 12 months
Companies with profits above £1.5 million pay in quarterly instalments
Late filing costs £200 on day one, rising to 10% of unpaid tax after six months
Full expensing (100%) and the £1 million Annual Investment Allowance let you deduct equipment costs in full
HMRC's free filing service closed on 31 March 2026 — you now need commercial software or an accountant

What is Corporation Tax and who pays it?

Corporation Tax is charged on the taxable profits of:

UK limited companies (private and public)
foreign companies with a UK branch or office
clubs, co-operatives and other unincorporated associations, such as sports clubs and community groups

Sole traders and partnerships don't pay it. They pay Income Tax on their profits through Self Assessment instead (see our sole trader guide).

Taxable profits are trading profits, investment income (such as interest) and chargeable gains from selling assets. They are not the same as the profit in your accounts. You add back costs that tax law doesn't allow, such as client entertaining, depreciation and most fines. Then you deduct capital allowances instead of depreciation. Dividends you pay to shareholders come out of profit that has already been taxed, so they don't reduce the Corporation Tax bill. Shareholders then pay dividend tax on what they receive.

There is no tax-free allowance for companies. The first pound of profit is taxable.

Corporation Tax rates for 2026

Since 1 April 2023, there have been two rates and a band in between. The rates were confirmed again for the financial year beginning 1 April 2026. HMRC's financial year for Corporation Tax runs from 1 April to 31 March.

Taxable profits (no associated companies, 12-month period)	Rate	Tax on example profit
£0 – £50,000	19% small profits rate	£40,000 → £7,600
£50,001 – £250,000	25% less marginal relief	£100,000 → £22,750
Over £250,000	25% main rate on everything	£300,000 → £75,000

Ring-fence profits from UK oil and gas extraction have their own rates and are outside this guide.

One number matters more than the headline rates: between the two limits, each extra £1 of profit costs 26.5p in tax until you reach £250,000. That is higher than the main rate. It matters when you decide whether to buy equipment, pay a bonus or make a pension contribution before your year end. A deduction is worth most to a company whose profits fall in this band.

How marginal relief works (with worked examples)

If your profits fall between the limits, you work out tax at the 25% main rate on all of them. Then you deduct marginal relief using HMRC's formula:

Marginal relief = 3/200 × (U − A) × (N ÷ A)

U is the upper limit — £250,000, adjusted for associated companies and short periods
A is augmented profits: taxable profits plus most dividends received from companies outside your group
N is taxable total profits

If the company received no dividends, A and N are the same and the last part of the formula equals 1.

Example 1: £100,000 profit, no associated companies

Bright Signs Ltd in Bristol has a 12-month accounting period from 1 April 2026 to 31 March 2027 and taxable profits of £100,000. It received no dividends.

Tax at 25%: £100,000 × 25% = £25,000
Marginal relief: 3/200 × (£250,000 − £100,000) × 1 = £2,250
Corporation Tax: £25,000 − £2,250 = £22,750 (an effective rate of 22.75%)

Example 2: same profit, one associated company

The director also controls a second trading company, so Bright Signs has one associated company. Divide both limits by 2 (one associated company plus Bright Signs itself). The lower limit becomes £25,000 and the upper limit £125,000.

Tax at 25%: £25,000
Marginal relief: 3/200 × (£125,000 − £100,000) = £375
Corporation Tax: £24,625 — £1,875 more than in Example 1, just because of the second company

Example 3: a short first period

A new company's first accounting period runs for 9 months. The limits are cut to 9/12: the lower limit is £37,500 and the upper limit £187,500. A company with £40,000 of profit in that period is above the lower limit, so it gets marginal relief rather than a flat 19%.

You can check any figure with HMRC's online marginal relief calculator (linked below).

HM Revenue & Customs office buildings on Lower Thames Street in the City of London — HMRC collects Corporation Tax from every UK company with taxable profits — the return goes in 12 months after the period ends, the tax is due sooner.· Image: Robert Lamb (geograph.org.uk) (CC BY-SA 2.0)

Associated companies: when your limits shrink

Associated companies are the most common reason a small company pays more than it expected. A company is associated with yours if, at any time in the accounting period:

one company controls the other, or
both are controlled by the same person or group of people.

"Control" broadly means holding more than half the shares, the votes, or rights to more than half the income or assets on a winding up. Shares held by close relatives and business partners can be counted in some cases. Overseas companies count too.

Two exclusions help:

A company that did not carry on any trade or business during the period (for example, one that was dormant) is ignored.
A passive holding company is ignored if it only holds shares in its 51% subsidiaries, receives only dividends that it passes on, and has no gains.

Associated companies	Lower limit	Upper limit
None	£50,000	£250,000
1	£25,000	£125,000
2	£16,667	£83,333
3	£12,500	£62,500

If you run several small companies, a group with three associated companies pays the full 25% on anything over £62,500, not £250,000.

Accounting periods, CT600 and deadlines

Registering and your accounting period

When you incorporate at Companies House, HMRC is told and sends your company's Unique Taxpayer Reference (UTR). For more on what a UTR is, see our UTR number guide. You must then tell HMRC that the company is active within 3 months after starting to do business. You do this through the company's business tax account.

An accounting period for Corporation Tax usually matches your company's financial year. It can never be longer than 12 months. A company's first accounts often cover more than 12 months, from incorporation to the first year end. In that case you have two accounting periods and file two returns: one for the first 12 months and one for the remainder.

Two deadlines, not one

Corporation Tax is unusual because you pay before you file:

Pay: 9 months and 1 day after the end of the accounting period
File the Company Tax Return (CT600): 12 months after the end of the accounting period

Deadlines for a company with a 31 March 2026 year end

31 Mar 2026

Accounting period ends

31 Dec 2026

Annual accounts due at Companies House (9 months for a private company)

1 Jan 2027

Corporation Tax payment deadline (9 months and 1 day)

31 Mar 2027

CT600 Company Tax Return due at HMRC (12 months)

The return includes the CT600 form, your statutory accounts and a tax computation showing how you got from accounting profit to taxable profit. You must file a return even if the company made a loss or owes nothing.

Filing online after the service closure

HMRC's free "File your accounts and Company Tax Return" service closed on 31 March 2026. From 1 April 2026 you need commercial software that can produce a CT600, a computation and iXBRL-tagged accounts. Alternatively, an accountant can file for you. HMRC publishes a list of recognised software. Paper returns are accepted only with a reasonable excuse or if you are filing in Welsh. You still file accounts separately with Companies House.

Paying

Pay by Direct Debit, online banking, Faster Payments, CHAPS or a corporate card. Use the payment reference for that accounting period. A Faster Payment usually arrives the same or next day. Bacs and Direct Debit can take three working days or more. Late payment interest runs at Bank of England base rate plus 4%. HMRC pays a lower rate of interest if you pay early.

Penalties for late Corporation Tax returns

1 day late: £200
3 months late: another £200
6 months late: HMRC estimates your bill and adds 10% of the unpaid tax
12 months late: another 10% of the unpaid tax

If your return is late three times in a row, the two £200 penalties become £1,000 each. After six months, HMRC sends a tax determination that you cannot appeal against. You have to file the real return to replace it. Late payment is charged as interest, as described above.

Quarterly instalments for large companies

If your taxable profits for the period are at an annual rate of more than £1.5 million, you are a "large" company. You must pay Corporation Tax electronically in four quarterly instalments based on your estimated bill for the current year.

Instalment rules by company size

	Large company	Very large company
Profit threshold	Over £1.5 million	Over £20 million
Instalments (12-month period)	Months 7 and 10 of the period, then months 1 and 4 after it ends (14th day)	14th day of months 3, 6, 9 and 12 of the period
Example: year 1 Apr 2026 – 31 Mar 2027	14 Oct 2026, 14 Jan 2027, 14 Apr 2027, 14 Jul 2027	14 Jun 2026, 14 Sep 2026, 14 Dec 2026, 14 Mar 2027
First-year exemption	Yes, if profits ≤ £10m and not large in the previous 12 months	No

Profit threshold

Large company: Over £1.5 million
Very large company: Over £20 million

Instalments (12-month period)

Large company: Months 7 and 10 of the period, then months 1 and 4 after it ends (14th day)
Very large company: 14th day of months 3, 6, 9 and 12 of the period

Example: year 1 Apr 2026 – 31 Mar 2027

Large company: 14 Oct 2026, 14 Jan 2027, 14 Apr 2027, 14 Jul 2027
Very large company: 14 Jun 2026, 14 Sep 2026, 14 Dec 2026, 14 Mar 2027

First-year exemption

Large company: Yes, if profits ≤ £10m and not large in the previous 12 months
Very large company: No

Three points catch growing companies out:

Both thresholds are divided by the number of associated companies plus one. With three associated companies, the instalment threshold is £375,000, not £1.5 million.
No instalments are needed if the total liability for the period is under £10,000.
A company that becomes large for the first time can usually skip instalments for that year, if profits are no more than £10 million and it wasn't large in the previous 12 months.

View over the City of London financial district from the Shard — Companies with profits above £1.5 million pay Corporation Tax in quarterly instalments during the year rather than nine months after it.· Image: It's No Game (Flickr) (CC BY 2.0)

Allowances and reliefs that cut the bill

Capital allowances: full expensing and the AIA

You can't deduct depreciation, but you can claim capital allowances on equipment, machinery, vans, computers and fixtures.

Capital allowances for companies in 2026

Allowance	Relief	What qualifies
Annual Investment Allowance	100% up to £1 million a year	Most plant and machinery, new or second-hand; not cars. One AIA shared by companies under common control
Full expensing	100%, no cap	New and unused main-rate plant bought from 1 April 2023; not cars or assets for leasing. Permanent
50% first-year allowance	50% in year one	New special-rate assets such as integral features and long-life assets
New 40% first-year allowance	40% in year one	New main-rate assets from 1 January 2026, including some bought for leasing; not cars
Writing-down allowance	14% a year on the main pool	Anything not covered above, including most cars. Cut from 18% from 1 April 2026

Annual Investment Allowance

Relief: 100% up to £1 million a year
What qualifies: Most plant and machinery, new or second-hand; not cars. One AIA shared by companies under common control

Full expensing

Relief: 100%, no cap
What qualifies: New and unused main-rate plant bought from 1 April 2023; not cars or assets for leasing. Permanent

50% first-year allowance

Relief: 50% in year one
What qualifies: New special-rate assets such as integral features and long-life assets

New 40% first-year allowance

Relief: 40% in year one
What qualifies: New main-rate assets from 1 January 2026, including some bought for leasing; not cars

Writing-down allowance

Relief: 14% a year on the main pool
What qualifies: Anything not covered above, including most cars. Cut from 18% from 1 April 2026

Example: a joinery company with £180,000 of profit buys a £60,000 new CNC router in the same year. Full expensing deducts the whole £60,000, so taxable profit falls to £120,000. Tax drops from £43,950 to £28,050, a saving of £15,900. That is 26.5% of the cost, because the deduction comes off the marginal band.

Other deductions and reliefs

Salaries, employer National Insurance and employer pension contributions are deductible. Many owner-directors pay themselves a salary plus dividends. Read our guides to registering as an employer and dividend tax.
Trading losses can be carried back against the previous 12 months' profits for a refund, or carried forward against future profits.
Research and development (R&D) relief is available for qualifying R&D projects through the merged R&D scheme. It has its own claim rules and notification deadlines.
Charitable donations made by the company are deductible.

Common Corporation Tax mistakes

Paying on the filing date. Payment is due three months before the return. Interest runs from day one after the payment deadline.
Ignoring associated companies. A second company you control can cost you thousands in marginal relief and pull you into instalments.
Forgetting the long first period. If your first accounts cover more than 12 months, you need two CT600s.
Assuming no tax means no return. A loss-making or zero-tax company still has to file.
Leaving filing software to the last minute. HMRC's free service has gone. Choose software or an accountant well before the deadline.
Mixing up VAT and Corporation Tax. They are separate taxes with separate registrations. See VAT registration.

Official GOV.UK and HMRC links

What to do next

Put your two deadlines in the diary the day your year ends, and set aside Corporation Tax every month rather than once a year. If your profits sit between £50,000 and £250,000, time equipment purchases and pension contributions before the year end to get relief at the 26.5% marginal rate. Track margins with the profit margin calculator and plan cash for the bill with the budget planner. If you haven't incorporated yet, start with our guide to limited company set-up.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

For the financial year starting 1 April 2026, companies with taxable profits of £50,000 or less pay the small profits rate of 19%. Profits above £250,000 pay the main rate of 25%. In between, you pay the main rate reduced by marginal relief, so the effective rate sits between 19% and 25%. Both limits shrink if you have associated companies or a short accounting period.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1.Corporation Tax rates and allowances — HMRC / GOV.UK · accessed 7 October 2026
2.Corporation Tax rates, expenses and reliefs — GOV.UK · accessed 7 October 2026
3.Marginal Relief for Corporation Tax — HMRC / GOV.UK · accessed 7 October 2026
4.CTM03925 — marginal relief formula — HMRC · accessed 7 October 2026
5.CTM03940 — associated company definition — HMRC · accessed 7 October 2026
6.Pay your Corporation Tax bill — GOV.UK · accessed 7 October 2026
7.Pay Corporation Tax if you're a large company — HMRC / GOV.UK · accessed 7 October 2026
8.Pay Corporation Tax if you're a very large company — HMRC / GOV.UK · accessed 7 October 2026
9.Company Tax Returns — GOV.UK · accessed 7 October 2026
10.Company Tax Returns — penalties for late filing — GOV.UK · accessed 7 October 2026
11.Filing company accounts and tax returns if you previously used the HMRC online service — HMRC / GOV.UK · accessed 7 October 2026
12.Corporation Tax: trading and non-trading — HMRC / GOV.UK · accessed 7 October 2026
13.Claim capital allowances — Annual Investment Allowance — GOV.UK · accessed 7 October 2026
14.Check if you can claim full expensing or 50% first year allowances — HMRC / GOV.UK · accessed 7 October 2026
15.Capital allowances: new first-year allowance and reducing main rate writing-down allowances — HMRC · accessed 7 October 2026
16.HMRC interest rates for late and early payments — HMRC / GOV.UK · accessed 7 October 2026
17.Capital allowances: 2026/27 changes explained — Deloitte Taxscape · accessed 7 October 2026

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