UK Corporation Tax Rates for 2026/27 — A Plain-English Guide

If you run a UK limited company, corporation tax is the single biggest line in your annual filings. Get the rate wrong and you'll either overpay HMRC or trigger a late-payment penalty. This guide cuts through the jargon and gives you the exact numbers for the 2026/27 tax year.

The headline rates

There are two corporation tax rates in the UK, plus a tapered middle band:

• Small Profits Rate — 19% applies to companies with taxable profits up to £50,000.
• Main Rate — 25% applies to companies with taxable profits over £250,000.
• Marginal Relief tapers the effective rate between £50,000 and £250,000.

Profits here means taxable trading profit after allowable deductions — not turnover, and not the headline number on your P&L. AIS calculates this for you on the /tax/corporation page.

How marginal relief actually works

Marginal Relief is HMRC's way of softening the jump from 19% to 25%. The formula is:

Marginal Relief = (Upper Limit - Profits) x (Profits / Profits) x Marginal Fraction

Where the Marginal Fraction for 2026/27 is 3/200. In practice, this means companies in the £50k–£250k band pay an effective rate that smoothly rises from 19% to 25%.

Worked example — £100k profit

• Main rate calc: £100,000 x 25% = £25,000
• Marginal Relief: (£250,000 - £100,000) x (£100,000 / £100,000) x 3/200 = £2,250
• Tax due: £25,000 - £2,250 = £22,750
• Effective rate: 22.75%

Worked example — £150k profit

• Main rate calc: £150,000 x 25% = £37,500
• Marginal Relief: (£250,000 - £150,000) x (£150,000 / £150,000) x 3/200 = £1,500
• Tax due: £37,500 - £1,500 = £36,000
• Effective rate: 24.0%

The associated companies trap

If your company is part of a group, the £50k and £250k thresholds are divided by the number of associated companies. Two associated companies? Small Profits Rate threshold drops to £25k each. Five associated companies? Drops to £10k each. This catches a lot of contractor groups out.

Payment deadlines

Corporation tax is due 9 months and 1 day after the end of your accounting period. Filing the CT600 is due 12 months after the end of the period — but you can't pay without filing, so most accountants file by month 9.

Late-payment penalty starts immediately and accrues HMRC interest (currently base rate + 2.5%).

How AIS handles it

When you create an organisation in AIS, the /tax/corporation page automatically:

1. Pulls your accounting year-end from org.settings.financialYearEnd
2. Aggregates trading profits from transactions + invoices minus allowable expenses
3. Applies the right rate band (and marginal relief if you're in the middle)
4. Schedules the CT600 + payment deadlines on /tax/ltd-calendar

If you're new to a Ltd, the most expensive mistake we see is forgetting marginal relief entirely and paying the full 25% on £100k of profit. That's £2,250 left on the table per year.

Next steps

• Read Optimal Director Salary for 2026/27
• See how AIS calculates your liability on the Corporation Tax page
• Or start a free trial to get your numbers in 60 seconds