Company tax rates and allowances

What is the rate of Corporation Tax? How does marginal relief work? Which companies pay the main rate of Corporation Tax? Which companies pay the small profits rate of Corporation Tax? How do I calculate Corporation Tax? 

This is a freeview 'At a glance' guide to Corporation Tax rates, including marginal relief. 

Corporation Tax rates for companies

Notes

• The company tax year, known as a Financial Year, starts on 1 April. 
• The main rate of Corporation Tax, for Financial Years 2017-2022, for all non-ring fence profits is 19%.
  • Ring fence profits are those from oil extraction or oil rights in the UK or UK continental shelf. 

From 1 April 2023:

• The main rate of Corporation Tax increased from 19% to 25%.
  • The small profits rate (19%) applies to single companies with Augmented profits of less than £50,000.
  • The main rate (25%) applies to single companies with Augmented profits of more than £250,000.
  • The main rate (25%) also applies to single companies with Augmented profits between £50,000 and £250,000, but marginal relief will be given. 
• The £50,000 threshold is known as the lower limit and the £250,000 threshold is known as the upper limit.
  • The upper and lower limits are apportioned according to the number of companies which are Associated for Corporation Tax.
  • The limits are also apportioned for short accounting periods.
• Close Investment Holding Companies (CIHCs) pay Corporation Tax at the main rate regardless of their level of profits.
• Non-resident companies without a permanent establishment within the UK are not eligible to use the Small Profits Rate (SPR) or apply Marginal Releif (MR) and must use the main tax rate when calculating the tax on any profits. See, Non-resident companies miss Corporation Tax rate changes

The marginal relief calculation from 1 April 2023

When adjusted 'Augmented' profits fall between the Lower and Upper limits, Marginal relief is given by reducing the 25% Corporation Tax charge by: 

Fraction x (Upper Limit – Augmented Profits) x Taxable Total Profits/Augmented Profits 

In the legislation it is described as: F x (U-A) x N/A 

• U = Upper limit 
• A = Augmented profits
• N = Taxable total profits
• F = Standard marginal relief fraction (3/200)

What are Augmented profits?

• Augmented Profits are Taxable Total Profits plus exempt income from dividends or distributions but excluding dividends from 51% group companies.
• See Calculating Corporation Tax: At a glance

How to calculate Corporation Tax?

• See: Calculating Corporation Tax: At a glance for example calculations, and explanations of Augmented profits, Associated Companies, Close Companies and Marginal Relief examples.

Earlier years Corporation Tax rates

Useful guides on this topic 

A new company? Start here
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Close Investment Holding Companies
When does a close company become a Close Investment Holding Company? What are the consequences?

Close companies: Definitions & control
This guide goes over basic definitions. When is a company deemed 'close' and what constitutes control?