Corporation Tax Calculator UK 2026 - Free Limited Company Tax Estimator

Corporation Tax Calculator UK 2026: Rates Explained

Corporation Tax Calculator UK searches usually come from business owners who already know their profit figure but are not sure whether their company pays 19%, 25%, or an effective rate between the two. Since April 2023, the UK has used a two-rate Corporation Tax system for non-ring-fence companies: a small profits rate for companies with lower profits, a main rate for companies with higher profits, and marginal relief for companies in the middle. That structure continues for the 2026 financial year.

In simple terms, most trading limited companies with taxable profits up to £50,000 pay 19%. Companies with profits over £250,000 pay 25%. Companies between those amounts usually calculate tax at 25% and then deduct marginal relief to reduce the bill. The result is a smooth increase in the effective rate instead of a sudden cliff edge at £50,001. For official rules, see the GOV.UK Corporation Tax rates and allowances page.

What Is Corporation Tax in the UK?

Corporation Tax is the tax paid by UK companies and some organisations on taxable profits. A company does not pay Corporation Tax on the amount of cash sitting in the bank; it pays on profits after allowable business expenses, accounting adjustments and tax adjustments. This is why your management accounts, bank balance and taxable profit may all show different numbers.

For a limited company, taxable profit normally starts with accounting profit. Your accountant then adjusts that figure. Depreciation is usually added back because UK tax uses capital allowances instead. Some expenses may be disallowable. Some reliefs may reduce the taxable figure. Losses brought forward may also reduce the amount exposed to tax. The final number is then used in the Company Tax Return, commonly called the CT600.

This page is written for ordinary UK trading businesses, ecommerce sellers, Amazon sellers, Shopify brands, agencies, freelancers operating through a limited company, consultants and directors who want to understand their tax bill before year-end. It does not cover specialist oil and gas ring-fence rates, banking surcharge rules, large multinational transfer pricing, insurance company rules or bespoke tax avoidance arrangements.

How to Use the Corporation Tax Calculator UK 2026

1. Enter your taxable profit

   Use taxable profit, not sales, turnover, bank balance or profit before accounting adjustments. If you are unsure, start with your profit before tax from your accounts and remember the final CT600 may differ after your accountant applies tax adjustments.

2. Add augmented profit if it differs

   For many small trading companies, augmented profit is the same as taxable total profit. If your company has relevant distributions or other items that increase augmented profit for marginal relief purposes, enter the higher number. This helps the calculator estimate marginal relief more closely.

3. Enter associated companies

   If your company has other companies under common control, enter the number of associated companies excluding your current company. The calculator will divide the lower and upper limits by the total number of companies in the group.

4. Select the accounting period length

   If your accounting period is shorter than 12 months, enter the number of months. The lower and upper limits are reduced proportionately for short accounting periods.

5. Use the result as a planning estimate

   The result shows tax due, after-tax profit and the effective rate. Use it for cash-flow planning, but confirm your actual Corporation Tax with a qualified accountant before filing your CT600.

Corporation Tax Rates 2026 Table

The following table shows how the 2026 Corporation Tax bands work for a single company with no associated companies and a full 12-month accounting period. If either of those conditions changes, the thresholds can change.

Marginal Relief for Corporation Tax 2026

Marginal Relief is the mechanism that reduces Corporation Tax for companies with profits between the lower and upper limits. Without marginal relief, a company could experience a harsh jump in tax once profits moved above £50,000. Instead, relief tapers away as profits move toward £250,000.

GOV.UK explains that from 1 April 2023, taxable profits below £50,000 use the 19% small profits rate, profits above £250,000 use the 25% main rate, and marginal relief creates a gradual increase in the Corporation Tax rate between those two points. You can read the official HMRC guidance on Marginal Relief for Corporation Tax.

Marginal Relief Worked Example for 2026

Suppose a UK trading company has taxable profits of £120,000 for a full 12-month accounting period, no associated companies and no augmented profit difference. The tax estimate would be:

• Tax at main rate: £120,000 × 25% = £30,000
• Marginal Relief: 3/200 × (£250,000 − £120,000) = £1,950
• Estimated Corporation Tax: £30,000 − £1,950 = £28,050
• Effective Corporation Tax rate: £28,050 ÷ £120,000 = 23.38%

Associated Companies and Corporation Tax Thresholds

Associated companies are one of the most important Corporation Tax planning points for 2026. If the same person or group controls more than one company, the lower and upper limits are normally divided between the companies. This can push a company into marginal relief or the main rate sooner than expected.

For example, if you run two companies under common control, the thresholds are divided by two. The lower limit becomes £25,000 and the upper limit becomes £125,000 for each company, assuming a full 12-month accounting period. If you run three associated companies in total, the lower limit becomes £16,666.67 and the upper limit becomes £83,333.33.

Short Accounting Periods and Corporation Tax

If your company has a short accounting period, the £50,000 and £250,000 limits are reduced proportionately. This usually happens when a company is newly formed, changes its accounting date, stops trading, joins a group or has an unusual first period.

For example, a company with a 6-month accounting period and no associated companies has a lower limit of £25,000 and an upper limit of £125,000. If it has £80,000 of taxable profits in that 6-month period, it will not be treated the same as a £80,000 profit company with a full 12-month period. The profit is tested against reduced thresholds.

What Counts as Taxable Profit for Corporation Tax?

The most common mistake when using a business tax estimator is entering sales revenue or bank deposits instead of taxable profit. Corporation Tax is calculated on profit after allowable costs and tax adjustments. If your company sells £500,000 of products but has £410,000 of allowable costs, the rough profit before adjustments is £90,000, not £500,000.

Common Adjustments Before Corporation Tax Is Calculated

• Depreciation is normally added back because capital allowances are used for tax instead.
• Capital allowances may reduce taxable profits for qualifying equipment, computers, vans, machinery, fixtures and eligible plant.
• Client entertainment is usually disallowable even if it appears in the accounting profit and loss account.
• Employer pension contributions can be deductible when paid wholly and exclusively for business purposes.
• Trading losses may be carried back or forward depending on the rules and facts.
• R&D relief can change taxable profit significantly, but the rules are detailed and should be reviewed carefully.
• Dividends paid to shareholders are not deductible for Corporation Tax purposes.
• Director loan account write-offs and benefits can have separate tax consequences.

Corporation Tax Payment Deadlines 2026

For companies with taxable profits up to £1.5 million, Corporation Tax is normally due 9 months and 1 day after the end of the accounting period. For larger companies, quarterly instalment rules can apply. GOV.UK also notes that Corporation Tax payment deadlines depend on taxable profits and that companies over £1.5 million generally pay by instalments. See the official pay your Corporation Tax bill guidance.

Late Payment Interest and Penalties

HMRC charges interest where Corporation Tax is paid late. The rate can change over time because HMRC interest rates are linked to the Bank of England base rate. GOV.UK states that from 9 January 2026 the late payment interest rate shown for Corporation Tax pay and file is 7.75%, with repayment interest at 2.75%. Always check the latest HMRC interest page before publishing fixed rates in client-facing advice.

Late filing penalties can also apply if the Company Tax Return is not filed on time, even where there is no Corporation Tax to pay. The safest system is to maintain monthly bookkeeping, complete year-end accounts quickly and set aside tax as profits are earned rather than waiting until the deadline arrives.

Corporation Tax for Ecommerce and Amazon Sellers

Ecommerce companies often underestimate Corporation Tax because sales platforms create confusing cash flows. Amazon, eBay, Shopify, Etsy and payment providers may deduct fees before payout, hold reserves, issue refunds in a different month, or combine multiple tax and shipping amounts into one bank deposit. For Corporation Tax, you need clean accounting records, not only bank deposits.

An Amazon seller should reconcile gross sales, refunds, referral fees, FBA fees, storage fees, advertising spend, VAT, COGS, inventory movements and settlements before estimating taxable profit. A Shopify brand should reconcile Stripe, PayPal, Klarna, chargebacks, shipping income, discounts, fulfilment costs, stock purchases and unpaid supplier invoices. This is why our related guides on Amazon seller accounting, ecommerce bookkeeping and inventory accounting for ecommerce are important internal resources.

How to Reduce Corporation Tax Legally

The goal is not to hide profit. The goal is to claim the reliefs, allowances and deductions your company is legally entitled to claim. Good Corporation Tax planning should happen before the accounting period ends, not after the accounts are already finished.

1. Keep bookkeeping up to date monthly

   Monthly bookkeeping gives you an early view of profit and allows better decisions before the year ends. Waiting until month nine after year-end leaves very little room for planning.

2. Review capital allowances

   Qualifying plant and machinery, computers, equipment, vans, fixtures and some business assets may qualify for Annual Investment Allowance, full expensing or other capital allowance treatment. Keep purchase invoices and asset details.

3. Consider employer pension contributions

   Employer pension contributions can be a powerful planning tool where they are commercially justifiable and paid correctly. Timing matters because the deduction generally follows when contributions are paid.

4. Check R&D eligibility carefully

   Some software, engineering, manufacturing and product development businesses may have R&D claims, but the rules have become more detailed. Do not submit weak claims; prepare evidence and speak to a specialist.

5. Plan director salary and dividends

   Director remuneration affects Corporation Tax, PAYE, National Insurance and dividend tax. A salary can be deductible for the company; dividends are not deductible. Use our salary and dividend calculator for extraction planning.

6. Claim trading losses correctly

   If the company makes a loss, consider whether it can be carried back, carried forward, surrendered as group relief, or used against other profits. The best answer depends on the company’s trading history and structure.

7. Avoid disallowable expense surprises

   Some costs appear in accounts but do not reduce Corporation Tax. Examples include most client entertainment, some penalties and personal costs put through the company. Review them before relying on your accounting profit.

Corporation Tax vs Income Tax: Key Difference

Limited companies pay Corporation Tax on company profits. Individuals pay Income Tax and National Insurance on personal income. When a director extracts profits through salary, bonus, benefits or dividends, there may be personal tax on top of Corporation Tax. This means a company tax estimate is only one part of the total tax picture.

For example, if a company earns £100,000 profit before director extraction, the Corporation Tax result depends on deductible salary, pension contributions, business expenses and reliefs. If the remaining profit is later paid as dividends, shareholders may have personal dividend tax. For a complete view, compare this calculator with our Dividend Tax Calculator UK, Salary After Tax Calculator UK and Self Assessment Tax Calculator.

Small Profits Rate vs Main Rate: Which Applies?

The small profits rate is usually the best outcome because tax is charged at 19%. The main rate is 25%. The marginal relief band sits between the two. However, the rate is not selected manually. It depends on taxable profits, augmented profits, associated companies, period length and company type.

Common Corporation Tax Calculator Mistakes

1. Entering Turnover Instead of Profit

A company with £300,000 turnover does not automatically pay 25% Corporation Tax on £300,000. It pays tax on taxable profit after allowable costs and tax adjustments. Always start with profit, not revenue.

2. Forgetting Associated Companies

Multiple companies under common control can reduce the thresholds. A profitable side company, property company or ecommerce company may affect the tax rate of another company.

3. Ignoring Short Accounting Periods

If the accounting period is shorter than 12 months, the lower and upper limits are reduced. This matters for newly incorporated companies and companies changing year-end.

4. Treating Accounting Profit as Taxable Profit

Accounting profit is a useful starting point but not always the final taxable profit. Depreciation, disallowable expenses, capital allowances and reliefs can change the final figure.

5. Forgetting Personal Tax After Company Tax

Corporation Tax is paid by the company. If profits are later paid to shareholders, personal dividend tax may also apply. Directors should plan both company tax and personal tax together.

Corporation Tax Checklist for 2026

• Prepare monthly management accounts before year-end.
• Reconcile bank accounts, credit cards, Stripe, PayPal, Amazon settlements and loan accounts.
• Review taxable profit before the accounting period closes.
• Check whether associated companies reduce your thresholds.
• Confirm whether your company is a trading company or close investment-holding company.
• Review capital purchases and capital allowance claims.
• Check R&D, loss relief, group relief and creative relief eligibility where relevant.
• Plan salary, dividends and pension contributions before year-end.
• Set aside cash for Corporation Tax well before the payment deadline.
• File the CT600 and statutory accounts on time.

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