UK Corporation Tax Rates 2026: Rates, Reliefs & CT600 Guide
UK Corporation Tax Rates 2026: Complete Compliance & Relief Guide for Businesses
A practical 2026 guide to UK Corporation Tax rates, Marginal Relief, allowable business costs, capital allowances, CT600 filing, payment deadlines and the compliance points company directors should understand before making tax decisions.
UK Corporation Tax Rates 2026: The Short Answer
If you run a UK limited company, one of the first questions to understand in 2026 is how Corporation Tax applies to your company's taxable profits.
For most non-ring-fence companies, the current Corporation Tax structure has two headline rates. Companies with profits of £50,000 or less may qualify for the 19% Small Profits Rate. Companies with profits above £250,000 generally pay the 25% main rate. Companies with profits between £50,000 and £250,000 may qualify for Marginal Relief, which gradually increases the effective tax burden between the two rates.
The important point is that simply looking at your accounting profit and multiplying it by 19% or 25% is not always enough. Your taxable total profits, accounting period, associated companies and other rules can affect the calculation.
2026 UK Corporation Tax Rates at a Glance
| Taxable profit position | General 2026 treatment | What the business should check |
|---|---|---|
| £50,000 or less | Small Profits Rate of 19% may apply | Check taxable profits, accounting period and associated companies. |
| More than £50,000 to £250,000 | Main rate of 25%, reduced by Marginal Relief where eligible | Calculate Marginal Relief rather than simply applying 25% to the whole profit. |
| More than £250,000 | Main rate of 25% | Check taxable profits and whether other special rules apply. |
These thresholds are not always used as simple fixed numbers for every company. They can be adjusted, including for short accounting periods and associated companies.
What Is Corporation Tax?
Corporation Tax is a tax charged on the taxable profits of companies and certain other organisations. A limited company does not simply pay tax on every pound that appears as accounting profit.
The tax calculation normally starts with the company's accounting results and then applies tax rules. Certain expenses may be deductible, while some accounting costs may require tax adjustments. Capital expenditure can also be treated differently from ordinary revenue expenditure.
That is why a company's profit and loss account and its Corporation Tax computation should not be treated as identical documents.
19% Small Profits Rate: When Can It Apply?
The Small Profits Rate is generally 19% where a company's taxable profits are within the lower limit of £50,000, subject to the relevant Corporation Tax rules.
For example, if a company has £40,000 of taxable profits and the Small Profits Rate applies, the basic Corporation Tax calculation would be:
£40,000 taxable profits × 19% = £7,600 Corporation Tax
This is a simplified example. Real Corporation Tax computations can involve adjustments, reliefs, losses, associated companies and other factors.
25% Main Corporation Tax Rate
The main Corporation Tax rate for non-ring-fence profits is 25%. It generally applies where taxable profits are above the upper limit of £250,000.
For example, if a company has £300,000 of taxable profits and the main rate applies:
£300,000 × 25% = £75,000 Corporation Tax
Again, this is a simplified illustration rather than a complete Corporation Tax computation. Companies should consider the actual tax rules before relying on a calculation for a filing or financial decision.
What Is Marginal Relief?
Marginal Relief is designed to prevent a sudden jump in the effective Corporation Tax rate when a company's profits move above the Small Profits Rate threshold.
For companies with profits between £50,000 and £250,000, the main rate is used but Marginal Relief can reduce the amount of Corporation Tax payable.
The standard Marginal Relief fraction for the relevant non-ring-fence rules is 3/200.
The calculation can become more complicated where a company has associated companies, a short accounting period, franked investment income or other relevant circumstances. This is why a simple online percentage calculation may not always produce the correct Corporation Tax liability.
Why Associated Companies Matter in 2026
One of the most commonly overlooked Corporation Tax issues for growing business owners is the associated-company rule.
The £50,000 and £250,000 thresholds can be reduced where a company has associated companies. This means a group of companies cannot necessarily treat every company as if it had the full thresholds available independently.
The ownership and control position therefore matters when determining which Corporation Tax rate applies.
- Whether the company has another company under common control.
- Whether companies are commercially connected under the relevant rules.
- Whether the accounting period is shorter than 12 months.
- Whether profits need to be considered alongside associated companies.
Allowable Business Expenses and Corporation Tax
Corporation Tax planning is not simply about finding a lower tax rate. Good bookkeeping and accurate expense classification are equally important.
A genuine business expense may be deductible when it is incurred wholly and exclusively for the purposes of the trade, subject to the relevant tax rules.
Depending on the circumstances, common business costs can include:
- Accounting and professional services.
- Business software and subscriptions.
- Commercial premises and eligible business costs.
- Employee salaries and certain employment costs.
- Employer pension contributions where the relevant conditions are met.
- Marketing and advertising.
- Professional insurance.
- Business travel and other qualifying operating expenses.
However, an expense appearing in a company's accounting records does not automatically mean the full amount is deductible for Corporation Tax.
Personal expenditure, capital expenditure and costs subject to special rules may require tax adjustments.
Revenue Expenses vs Capital Expenditure
This distinction is particularly important for companies investing in equipment, technology, vehicles, property improvements or other long-term assets.
An ordinary operating expense and a capital purchase can receive different tax treatment. A business should therefore avoid treating every payment leaving its bank account as an ordinary deductible expense.
Good bookkeeping should capture the transaction correctly from the beginning. The Corporation Tax computation can then apply the appropriate tax treatment.
Annual Investment Allowance: £1 Million
The Annual Investment Allowance, commonly known as AIA, can provide significant tax relief for qualifying capital expenditure.
The current AIA limit is £1 million, subject to the detailed rules and qualifying conditions.
This can be particularly relevant for businesses investing in qualifying plant and machinery.
However, not every asset automatically qualifies for AIA. Businesses should check the nature of the expenditure and the applicable capital-allowance rules before assuming that the entire purchase price can be deducted immediately.
Electric Vehicles and Other First-Year Allowances
Certain qualifying investments can receive 100% first-year capital allowances where the relevant conditions are met.
For example, current rules provide 100% first-year allowances for qualifying new electric or zero-emission cars and certain electric vehicle charging-point equipment for Corporation Tax purposes, subject to the applicable conditions and dates.
This is an area where businesses should check the current rules before purchasing an asset purely because of its potential tax treatment.
Corporation Tax Payment Deadline
For many companies with taxable profits of up to £1.5 million, Corporation Tax is normally due 9 months and 1 day after the end of the accounting period.
For example, if a company's accounting period ends on 31 March, the Corporation Tax payment deadline will normally fall on 1 January of the following year.
The rules are different for larger companies that fall within the quarterly instalment payment regime.
| Requirement | General deadline | Important point |
|---|---|---|
| Corporation Tax payment | Normally 9 months and 1 day after the accounting period ends | Large companies may fall under quarterly instalment rules. |
| Company Tax Return / CT600 | Normally 12 months after the accounting period ends | Filing and payment deadlines are different. |
| Annual accounts | Normally 9 months after the financial year ends for a private company | Companies House filing requirements are separate from Corporation Tax filing. |
CT600 Filing Deadline: Do Not Confuse Filing With Payment
A common mistake is assuming that the Corporation Tax payment deadline and CT600 filing deadline are the same.
They are not.
For most companies, the Company Tax Return must normally be filed within 12 months after the end of the accounting period.
Corporation Tax is generally payable earlier, normally 9 months and 1 day after the accounting period ends for companies outside the quarterly instalment regime.
What Happens If a CT600 Is Filed Late?
Late filing can result in penalties. For Company Tax Returns with filing dates on or after 1 April 2026, the initial late-filing penalty is £200.
If the return remains more than three months late, a further £200 fixed penalty can apply, bringing the flat-rate penalty to £400. Additional tax-related penalties can apply when a return remains outstanding for longer periods, and higher fixed penalties can apply to repeated late filing.
The exact consequences depend on the circumstances and the relevant filing period.
Corporation Tax Record Keeping: What Should a Business Keep?
Accurate records are essential for preparing accounts and supporting a Corporation Tax return.
Depending on the business, records can include:
- Sales invoices and income records.
- Purchase invoices and receipts.
- Business bank statements.
- Payroll and employee records.
- Asset and capital expenditure records.
- Loan and finance documentation.
- VAT records where applicable.
- Accounting ledgers and reconciliations.
- Evidence supporting unusual or significant transactions.
Digital accounting systems can make record management easier, but the important issue is not simply having software. The underlying records should be accurate, complete and capable of supporting the figures included in the accounts and tax return.
Corporation Tax Losses: Why They Matter
A company that makes a loss does not necessarily have to pay Corporation Tax for that period, but the loss may have tax value depending on how it is used under the relevant rules.
Depending on the circumstances, qualifying losses may be available for relief against profits of the same accounting period, carried back against earlier profits or carried forward for future use.
Loss planning can become particularly important when a company is growing, investing heavily or experiencing temporary trading difficulties.
Because loss-relief rules contain conditions and limitations, companies should calculate the available relief rather than assuming every loss can be used immediately.
Corporation Tax and Director Decisions
The Corporation Tax rate is only one part of a company's overall tax position.
Directors may also need to consider:
- Salary and employment costs.
- Dividends and shareholder distributions.
- Employer pension contributions.
- Capital expenditure.
- Business investment.
- VAT registration and VAT accounting.
- Personal tax consequences for directors and shareholders.
- Cash flow and Corporation Tax payment dates.
A decision that appears tax-efficient in isolation may not be the best decision once cash flow, personal tax and the company's wider financial position are considered.
Corporation Tax Planning for E-Commerce Businesses
E-commerce businesses often have more complicated bookkeeping requirements because sales may come through multiple platforms.
A UK company selling through Amazon, Shopify, eBay or other marketplaces may need to reconcile:
- Marketplace sales.
- Refunds and returns.
- Platform fees.
- Payment processing charges.
- Shipping and fulfilment costs.
- Inventory purchases.
- VAT and other tax adjustments.
- Bank settlements and payment accounts.
If these transactions are not reconciled properly, the Corporation Tax computation may start from inaccurate accounting information.
Corporation Tax and Bookkeeping: Why Monthly Reconciliation Matters
Good Corporation Tax compliance starts well before the annual tax return.
Monthly bookkeeping gives a company an opportunity to identify missing invoices, unreconciled bank transactions, unusual expenses, duplicated entries and cash-flow issues before year-end.
For a growing business, this can make the year-end Corporation Tax process significantly easier.
- Reconcile business bank accounts.
- Reconcile payment processors and marketplace accounts.
- Review unpaid invoices and bills.
- Check payroll postings.
- Review unusual or high-value expenses.
- Update fixed-asset records.
- Review VAT records where applicable.
- Maintain supporting documents.
- Review management accounts.
- Track expected Corporation Tax cash requirements.
Corporation Tax Compliance Checklist for UK Companies
- Confirm the company's accounting period.
- Calculate accounting profit accurately.
- Identify Corporation Tax adjustments.
- Check whether the Small Profits Rate applies.
- Check Marginal Relief where relevant.
- Review associated companies.
- Review allowable expenses.
- Identify qualifying capital expenditure.
- Review available capital allowances.
- Check losses and available reliefs.
- Reconcile bank and payment accounts.
- Prepare accurate year-end accounts.
- Calculate the Corporation Tax liability.
- Set aside sufficient cash for the tax payment.
- Pay Corporation Tax by the applicable deadline.
- File the CT600 within the filing deadline.
- Keep supporting records securely.
Common Corporation Tax Mistakes to Avoid in 2026
1. Applying 19% to every company under £250,000
The 19% Small Profits Rate does not simply apply to every company below £250,000. The £50,000 and £250,000 limits define different parts of the Corporation Tax structure, with Marginal Relief applying between them where eligible.
2. Applying 25% to every company earning over £50,000
A company within the Marginal Relief range should not automatically assume that the full 25% rate applies without considering the relief calculation.
3. Ignoring associated companies
Associated companies can affect the relevant thresholds.
4. Treating every business expense as deductible
Accounting treatment and tax treatment are not always identical.
5. Confusing payment and filing deadlines
The Corporation Tax payment date and CT600 filing date are separate deadlines.
6. Leaving bookkeeping until year-end
Late bookkeeping increases the risk of missing transactions and creates unnecessary pressure during the tax-return process.
7. Buying assets only for tax relief
A tax allowance can reduce the tax cost of a qualifying investment, but it does not make an unnecessary purchase profitable.
How UK Directors Can Prepare for Corporation Tax in 2026
A practical approach is to stop thinking about Corporation Tax as a once-a-year task.
Instead, treat tax compliance as part of the company's monthly finance process.
If management accounts are updated regularly, directors can see the approximate trading position, identify unusual costs and estimate the likely tax cash requirement before the year-end.
This does not replace the final Corporation Tax computation, but it can make financial planning more predictable.
When Should a Business Consider Professional Accounting Support?
Professional accounting support can be particularly useful when a company has multiple revenue streams, associated companies, substantial capital expenditure, international transactions, e-commerce activity, payroll, VAT obligations or significant changes in profitability.
It can also be useful when the director simply wants a second professional review before filing.
The goal should not be to create unnecessary complexity. Good accounting support should make the company's financial information clearer and its compliance process more organised.
Frequently Asked Questions About UK Corporation Tax 2026
What is the UK Corporation Tax rate in 2026?
For most non-ring-fence companies, the Small Profits Rate is 19% for qualifying profits of £50,000 or less, while the main Corporation Tax rate is 25% for profits above £250,000. Profits between £50,000 and £250,000 may qualify for Marginal Relief.
Is Corporation Tax 19% or 25% in 2026?
It can be either depending on the company's taxable profit position and the applicable rules. The 19% Small Profits Rate can apply up to £50,000, while the 25% main rate generally applies above £250,000. The middle range is subject to Marginal Relief where eligible.
What happens between £50,000 and £250,000 profit?
Companies with profits between £50,000 and £250,000 generally use the 25% main rate with Marginal Relief where eligible. The relief provides a gradual increase in the effective Corporation Tax rate rather than an immediate jump from 19% to 25%.
What is the Corporation Tax payment deadline?
For many companies outside the quarterly instalment regime, Corporation Tax is normally due 9 months and 1 day after the end of the accounting period. Large companies can have different payment arrangements.
When must a company file its CT600?
A Company Tax Return is normally due within 12 months after the end of the accounting period.
What is the late CT600 penalty in 2026?
For Company Tax Returns with filing dates on or after 1 April 2026, the initial late-filing penalty is £200. Further penalties can apply depending on how late the return becomes and whether the company has repeated late filing.
Can a UK limited company reduce Corporation Tax legally?
A company can use legitimate deductions, reliefs, capital allowances and loss-relief rules where it qualifies. Tax planning should be based on the actual business position and current legislation rather than artificial transactions or unsupported claims.
Does Corporation Tax apply to sole traders?
Generally, no. Corporation Tax is primarily a tax on companies and certain other organisations. Sole traders are normally subject to Income Tax and National Insurance on their business profits instead.
Final 2026 Corporation Tax Checklist
Before your company reaches year-end, ask:
- Are all bank accounts reconciled?
- Are sales and expenses complete?
- Are marketplace and payment-platform balances reconciled?
- Are there any missing invoices?
- Are capital purchases correctly classified?
- Does the company have associated companies?
- Could Marginal Relief apply?
- Are there losses available?
- Are qualifying capital allowances being considered?
- Is enough cash reserved for Corporation Tax?
- Is the CT600 filing date recorded?
- Is the Corporation Tax payment date recorded separately?
Final Thoughts: Corporation Tax Is More Than a Percentage
The most useful way to approach UK Corporation Tax in 2026 is not to memorise one tax percentage.
The real objective is to understand how your company's profit, expenses, capital expenditure, losses, associated companies and accounting period interact with the Corporation Tax rules.
For a small company, accurate bookkeeping may be enough to keep the year-end process straightforward. For a growing company, more detailed planning may be required as profitability, payroll, assets, VAT, international sales and group structures become more complicated.
Most importantly, do not make business decisions purely because a tax allowance or rate appears attractive. The commercial benefit of the decision should come first, with tax treatment considered as part of the wider financial picture.
Need Help With UK Accounting & Corporation Tax Compliance?
SK Associates Global supports businesses with practical accounting, bookkeeping and finance-operations support for UK and international businesses.
- UK bookkeeping and accounting support
- Corporation Tax preparation and compliance support
- Management accounts and financial reporting
- VAT and HMRC compliance support
- Payroll and finance administration
- QuickBooks Online and Xero support
- E-commerce bookkeeping for Amazon, Shopify and other platforms
- US bookkeeping and cross-border finance support
- Odoo ERP implementation
- AI-powered finance automation
Related reading: UK Business Tax Changes 2026: What Businesses Should Know
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