What is Corporation Tax? UK Definition 2026/27
Quick Answer
Tax paid by UK limited companies on their profits at 19% or 25%.
Definition of Corporation Tax
Corporation Tax is paid by UK limited companies on their taxable profits. From April 2023, the main rate is 25% for companies with profits over £250,000, while a small profits rate of 19% applies to companies with profits under £50,000. Marginal relief applies between these thresholds.
Corporation Tax — Key Facts for 2026/27
| Main rate | 25% |
| Small profits rate | 19% |
| Small profits threshold | £50,000 |
| Main rate threshold | £250,000 |
How Corporation Tax Works — Example
- 1Profit: £100,000
- 2Marginal relief calculation applies
- 3Effective rate: ~22.75%
- 4Tax due: £22,750
- 5Due 9 months after year end
How Corporation Tax Affects Your Tax
The UK's Corporation Tax rates are competitive internationally. Marginal relief smooths the transition between rates. Companies should consider timing of expenses and capital allowances to manage tax liability.
Official HMRC Guidance on Corporation Tax
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Corporation Tax ratesFrequently Asked Questions about Corporation Tax
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.