By
August 10, 2026
How Much Corporation Tax Does a UK Limited Company Pay?
If you run a UK limited company, Corporation Tax is one of the main taxes your business may need to pay. The amount due depends primarily on the company's taxable profits, available allowances and reliefs, and its circumstances.
For the financial year beginning 1 April 2026, the published Corporation Tax rates are:
Marginal Relief provides a gradual increase in the effective Corporation Tax rate between the Small Profits Rate and the Main Rate.
The UK government updated its Corporation Tax rates and allowances guidance on 1 April 2026, confirming the 19% Small Profits Rate, 25% Main Rate and the £50,000 and £250,000 Marginal Relief thresholds for 2026.
Tax rates, thresholds and rules can change. Companies should therefore check the latest official information from HMRC and GOV.UK before calculating their Corporation Tax liability.
Check the latest UK Corporation Tax rates on GOV.UK
Companies House should also be consulted for the latest requirements relating to company accounts, confirmation statements and other statutory company filings.
If a UK limited company has £40,000 of taxable profit and qualifies for the 19% Small Profits Rate, its Corporation Tax would generally be:
£40,000 × 19% = £7,600
This would leave approximately £32,400 after Corporation Tax, before dividends or other distributions to shareholders are considered.
The actual tax liability can differ depending on the company's circumstances, deductions, reliefs and other relevant factors.
Corporation Tax is generally calculated on a company's taxable profits, rather than simply on the total amount of revenue or sales received by the business.
For example, a company could generate £150,000 in annual revenue but have only £40,000 in taxable profit after allowable costs and expenses.
This distinction is important because legitimate business expenses and qualifying tax reliefs can reduce taxable profits and therefore affect the amount of Corporation Tax payable.
Depending on the business and its circumstances, available allowances or reliefs may include:
HMRC provides guidance on the allowances and reliefs that companies may be able to claim.
The standard £50,000 and £250,000 thresholds can be reduced where a company has associated companies or where its accounting period is shorter than 12 months.
For example, where a company has three other associated companies, HMRC explains that the thresholds are divided by four, reducing the lower threshold to £12,500 and the upper threshold to £62,500.
This makes the associated-company rules particularly important for business owners who control more than one company.
Based on the rates published for the financial year beginning 1 April 2026:
Taxable profits up to £50,000 → 19% Small Profits Rate
Taxable profits between £50,000 and £250,000 → Main Rate with potential Marginal Relief
Taxable profits above £250,000 → 25% Main Rate
These thresholds can be adjusted in certain circumstances, including where associated companies are involved.
Keeping accurate accounting records, correctly identifying allowable business expenses and claiming available tax reliefs can help ensure that your company calculates and pays the correct amount of Corporation Tax.
Corporation Tax legislation, rates and thresholds can change. Always check the latest HMRC/GOV.UK guidance before calculating or submitting your company's Corporation Tax return.
For company accounts, confirmation statements and statutory filing obligations, businesses should also check the latest guidance from Companies House.
This article is provided for general information only and should not be considered tax or accounting advice. If you are unsure about your company's Corporation Tax position, consider consulting a qualified accountant or tax adviser.
