UK Corporation Tax 2026: Rates & Relief

The UK corporation tax regime in 2026 is more involved than it has been at any point since the early 2000s. The single 19% rate that applied to almost every company between 2017 and 2023 is gone. In its place sit two headline rates, a marginal relief band, an associated company rule that shrinks the thresholds for any director with more than one company, and quarterly instalments for the largest payers.

This guide covers UK corporation tax 2026 — the rates table, a marginal relief worked example, the associated company trap, instalment rules, the CT600 deadline, and the mistakes that most often surface in HMRC enquiries.

Corporation tax rates in 2026

The rates that apply for accounting periods ending in 2026 are the same as those that have been in force since 1 April 2023. HMRC has confirmed no change for the 2025/26 or 2026/27 financial years.

Profit band	Rate	Effective rate after marginal relief
£0 – £50,000	19% (small profit rate)	19%
£50,001 – £250,000	25% headline, marginal relief applies	~26.5% on the slice above £50,000
Above £250,000	25% (main rate)	25%

The thresholds are for a 12-month accounting period and are pro-rated for shorter periods. They also drop sharply for any company that has associated companies — more on that below.

The headline numbers on the HMRC Corporation Tax rates and reliefs page are the same as those in the table. The marginal relief calculation is where companies go wrong.

How marginal relief works — a worked example

Marginal relief stops the corporation tax bill jumping suddenly when profits cross the £50,000 line. Without it, a company with £50,001 profit would pay £12,500 of tax (£50,001 at 25%), while one with £50,000 profit would pay £9,500 (£50,000 at 19%) — a £3,000 cliff edge.

The relief uses a standard fraction set by HMRC. For the current rates the fraction is 3/200. The formula is:

Relief = (Upper limit − Augmented profit) × (Taxable profit ÷ Augmented profit) × 3/200

The "upper limit" is £250,000 (less any pro-rating). "Augmented profit" is taxable profit plus most dividends received from non-group companies.

Take a company with £120,000 of taxable profit and no franked investment income.

• Tax at 25%: £120,000 × 25% = £30,000.
• Relief: (£250,000 − £120,000) × (£120,000 ÷ £120,000) × 3/200 = £130,000 × 1 × 0.015 = £1,950.
• Net corporation tax: £30,000 − £1,950 = £28,050.
• Effective rate: £28,050 ÷ £120,000 = 23.375%.

The effective rate climbs steadily as profit rises through the marginal band. At £50,001 it is just over 19%. At £250,000 it is 25%. On the slice between £50,000 and £250,000, the marginal rate works out at roughly 26.5%, which is higher than the main rate.

That oddity matters when you are deciding whether to bring forward a deductible expense. A £5,000 expense recognised this year saves £1,325 of tax in the marginal band, against £1,250 at the main rate.

The associated company rule

A director who owns two trading companies has a problem. The £50,000 and £250,000 thresholds get divided across all associated companies before they apply.

Two companies are associated if:

• One controls the other (more than 50% of share capital, voting rights, or rights to distributions), or
• Both are under the control of the same person, the same group of persons acting together, or the same business partnership.

Spouses, civil partners, and minor children count as the same person for "control by associates" purposes, unless the two businesses have no substantial commercial interdependence — a narrow test that HMRC interprets strictly.

A director with three companies (one trading, one holding a property, one dormant but still on the register) divides £50,000 by 3, giving a small profit threshold of £16,667 per company. Once profits in any of them cross that figure, marginal relief kicks in. Once they cross £83,333 (£250,000 ÷ 3), the main rate applies in full.

Striking off a dormant company you no longer need is often the single most effective corporation tax planning move a director makes. Companies House DS01 strike-off costs £33 online.

Quarterly instalments for larger companies

Companies are not all on the same payment timetable. Three bands apply:

1. Small companies (most owner-managed businesses). Profits under £1.5m, divided by the number of associated companies. Pay the corporation tax bill in one lump nine months and one day after the year end.
2. Large companies. Profits between £1.5m and £20m (divided across associated companies). Pay in four quarterly instalments — months 7, 10, 13, and 16 from the start of the accounting period.
3. Very large companies. Profits over £20m (divided). Pay in four instalments starting in month 3 of the accounting period. The first instalment falls due before the period has even ended.

Crossing the £1.5m threshold for the first time triggers a one-year exemption — you do not have to make instalments in the year you first become large. The exemption applies once, then the instalment regime takes over.

Interest runs on underpaid instalments at the HMRC rate (currently 7.5%). Overpayments earn a lower rate. Most large companies overpay slightly on the first instalment and trim later ones once the profit forecast firms up.

CT600 return and payment deadlines

The corporation tax return is the CT600. It has to be filed online, with iXBRL-tagged accounts and a computation, by HMRC's Company Tax Return deadline.

Key deadlines for a 12-month period ending 31 March 2026:

• CT payment. Nine months and one day after the period end — 1 January 2027 for a 31 March year end.
• CT600 filing. 12 months after the period end — 31 March 2027.
• Statutory accounts to Companies House. Nine months after the period end — 31 December 2026 (private company).
• Confirmation statement. Once every 12 months on the company's review date.

The CT payment deadline comes before the filing deadline, which catches many directors out in their first year. You have to estimate the bill, pay it, and then file the return later. If the estimate is too low, interest runs from the original due date.

Penalties for a late CT600 start at £100 and rise quickly. A return that is six months late triggers a 10% tax-related penalty on top of the fixed sum. The same penalty applies again at the 12-month mark.

Five corporation tax mistakes that catch directors

Most enquiries open on one of a handful of recurring issues. None of them are about exotic tax avoidance — they are about basic compliance that the director got wrong.

1. Director's loan accounts not cleared in time. A director who owes the company money at the year end has to repay it within nine months. If not, the company pays a Section 455 charge at 33.75% of the outstanding balance. It is refundable when the loan is repaid but it ties up cash for years.
2. R&D claims that have not been documented properly. The R&D tax credit regime has been tightened repeatedly since 2023. Claims now need a pre-notification, a Claim Notification Form, and a competent professional sign-off. About one in three claims gets challenged on first review under the new rules.
3. Capital vs revenue confusion. A £900 laptop is revenue. A £2,500 software development project is usually capital and goes through the Annual Investment Allowance instead. Getting the line wrong costs deductions in year one and forces a restatement later.
4. Missed associated company declarations. The CT600 specifically asks for the number of associated companies. Many directors leave this at 0 when they should declare 1, 2, or more. HMRC cross-checks against Companies House records and writes to correct the position.
5. Treating reimbursed expenses as a cost. When a director pays a business expense personally, the company should reimburse via an expense claim, not record the cost twice. Double-counting shows up as a difference between the management accounts and the tax computation.

Capital allowances worth claiming

For most owner-managed companies, the Annual Investment Allowance (AIA) is the main capital allowance. It gives 100% first-year relief on qualifying plant and machinery, up to £1m a year per business (or per group of associated companies — another reason to track associates carefully).

Full expensing — 100% relief on new and unused plant and machinery — runs alongside AIA for companies and has no cap. The two regimes overlap for most spending under £1m a year. Cars do not qualify for either; they use the writing-down allowance instead.

FAQ

Frequently asked questions

What is the small profit rate of UK corporation tax?

The small profit rate is 19% and applies to companies with profits of £50,000 or less. It has been at 19% since April 2023, when the main rate split from a single 19% figure into the current tiered system.

What is marginal relief?

Marginal relief is the mechanism that bridges the small profit rate and the main rate when profits fall between £50,000 and £250,000. It produces an effective rate of around 26.5% on the slice above £50,000. The headline figure on the company's tax bill is still 25%, with the relief calculated using a fraction set by HMRC.

What counts as an associated company?

Two companies are associated if one controls the other, or if both are under common control by the same person, family group, or business partnership. Each associated company shares the £50,000 and £250,000 thresholds, so a group of three associated companies each gets its own thresholds of around £16,666 and £83,333 respectively.

When do quarterly instalments apply?

A company must pay corporation tax in quarterly instalments if its profits exceed £1.5m, divided by the number of associated companies plus one. Very large companies (profits over £20m, again divided across the group) pay on an accelerated schedule that starts months before the year ends.

When are CT600 and CT payments due?

The CT600 corporation tax return is due 12 months after the end of the accounting period. The tax itself is due nine months and one day after the period ends. The two deadlines do not match — companies often file early because they have to pay before the return is due anyway.

This article is general guidance, not personal tax advice. Speak to a qualified accountant before acting on it.