UK Corporation Tax Calculator

UK limited companies pay Corporation Tax on their taxable profits, at a rate that depends on how much profit the company makes. This calculator works out your Corporation Tax bill, your profit after tax, and your effective tax rate, correctly applying marginal relief if your profit falls between the small profits and main rate thresholds.

How to use the Corporation Tax calculator

Enter your company's annual taxable profit, after allowable business expenses, capital allowances and any other reliefs have already been applied. The calculator automatically works out which rate band your profit falls into, applies marginal relief if relevant, and shows your Corporation Tax bill, profit after tax, and effective tax rate as a percentage of profit.

How the calculation works

Profits of £50,000 or less are taxed in full at the small profits rate of 19%. Profits of £250,000 or more are taxed in full at the main rate of 25%. For profits in between, marginal relief applies: tax is first calculated at the 25% main rate, then reduced by a relief amount worked out as the gap between your profit and the £250,000 upper limit, multiplied by HMRC's standard marginal relief fraction of 3/200. This produces an effective rate that rises smoothly from just above 19% to 25% as profit increases through the band.

Worked example

A company with £80,000 of taxable profit falls into the marginal relief band. Tax at the main rate would be £80,000 × 25% = £20,000. Marginal relief is (£250,000 − £80,000) × 3/200 = £2,550. Corporation Tax due is £20,000 − £2,550 = £17,450, leaving £62,550 profit after tax, an effective rate of around 21.81%, comfortably between the 19% and 25% headline rates.

For comparison, a smaller company with £40,000 of taxable profit stays entirely within the small profits rate, paying £40,000 × 19% = £7,600, an effective rate of exactly 19%. A larger company with £300,000 of taxable profit is above the £250,000 upper limit, so the full main rate applies with no marginal relief: £300,000 × 25% = £75,000, an effective rate of exactly 25%. Together, these three examples show how the effective rate climbs steadily from 19% to 25% as profit moves through and beyond the marginal relief band, rather than jumping in a single step.

Reducing your taxable profit legitimately

Since Corporation Tax is charged on taxable profit rather than turnover, anything that legitimately reduces that profit figure reduces the tax bill too. Common examples include claiming all allowable business expenses, using capital allowances such as the Annual Investment Allowance on qualifying equipment purchases, and making employer pension contributions on behalf of directors or staff, which are generally deductible business expenses in their own right. Research and development relief may also be available for companies carrying out qualifying innovation work, though the rules are detailed and specific to the type of work involved.

None of this changes the rates or thresholds this calculator uses, only the taxable profit figure you enter into it. Because getting allowable expenses, reliefs and capital allowances right can make a meaningful difference to the final bill, many companies, particularly once profit moves into the marginal relief band or above, find it worthwhile to have an accountant review their position each year rather than estimating taxable profit informally.

Corporation Tax versus other business taxes

Corporation Tax is only one of several taxes a limited company deals with. VAT is charged separately on qualifying sales once a business is VAT registered, regardless of whether the company is profitable, and is accounted for quite differently from Corporation Tax. When profit is eventually paid out to shareholders as dividends, a further layer of personal dividend tax applies on top, at the individual's own tax rates, which is why the total tax “take” on company profit extracted as dividends is usually higher than the Corporation Tax rate alone suggests. Salary paid to directors or employees is a deductible expense against Corporation Tax, but is instead subject to Income Tax and National Insurance at the personal level.

Common mistakes to avoid

A common mistake is assuming Corporation Tax jumps straight from 19% to 25% once profit passes £50,000, missing the marginal relief band entirely and overestimating the bill for mid-sized profits. Another is forgetting that the £50,000 and £250,000 limits are shared across any associated companies under common control, which can push a smaller company into a higher effective rate sooner than expected.

It is also easy to confuse taxable profit with turnover or with the profit shown in management accounts before allowable expenses, capital allowances and reliefs have been applied. Getting your allowable expenses right, ideally with the help of an accountant, has a direct effect on the taxable profit figure this calculator needs to be accurate. Finally, missing the filing and payment deadlines, generally 9 months and 1 day after your accounting period ends for payment, and 12 months for the return itself, can lead to interest and penalties on top of the tax actually owed.

Related calculators

If you are weighing up how to pay yourself from the company, our dividend vs salary calculator compares the two routes after Corporation Tax and personal tax. Our break-even calculator and profit margin calculator help with pricing decisions before profit reaches the taxable stage, and our VAT calculator handles VAT separately from Corporation Tax. If you are still deciding between operating as a sole trader or a limited company, our self-employed tax guide covers the sole trader side of that comparison. If a client is overdue on an invoice, our late payment interest calculator works out the statutory interest and compensation you can claim. For a fuller walkthrough of the small profits rate, main rate and marginal relief, see our Corporation Tax guide.