Question 1

What is the corporation tax rate for 2025/26?

Accepted Answer

The main rate is 25% for profits over £250,000. Companies with profits under £50,000 pay the small profits rate of 19%. Between £50,000 and £250,000, marginal relief applies — the effective rate gradually increases from 19% to 25%.

Question 2

What is marginal relief and how does it work?

Accepted Answer

Marginal relief reduces your corporation tax when profits fall between £50,000 and £250,000. It uses the formula: (Upper Limit - Profits) × 3/200. This creates an effective marginal rate of 26.5% on profits in this band.

Question 3

How do associated companies affect my corporation tax?

Accepted Answer

If you have associated companies, the £50,000 small profits limit and £250,000 upper limit are divided equally between all associated companies (including yours). For example, with 1 associated company, your limits become £25,000 and £125,000.

Question 4

When do I need to pay corporation tax?

Accepted Answer

Corporation tax is due 9 months and 1 day after your accounting period ends. If your profits exceed £1.5 million, you must pay in quarterly instalments.

Corporation Tax Calculator 2025/26

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