Corporation Tax Calculator

Two headline rates, and a band in between

Companies with taxable profit at or below the small profits rate threshold pay Corporation Tax at 19%. Companies with profit above the main-rate threshold pay 25%. Profit that falls between the two thresholds doesn't simply jump from one rate to the other — it qualifies for Marginal Relief, which tapers the effective rate smoothly between 19% and 25%.

How Marginal Relief works

Marginal Relief is calculated by taxing the whole profit at the main rate (25%), then subtracting a relief amount based on how far your profit sits below the main-rate upper threshold. The result is that a company just above the lower threshold pays an effective rate only a little above 19%, rising gradually to the full 25% as profit approaches the upper threshold — HMRC publishes an official Marginal Relief calculator that uses the same method.

Why this matters for group structures and multiple companies

The small profits and main-rate thresholds are shared between 'associated' companies under common control, so the thresholds for a single company are divided by the number of associated companies. A group with several companies effectively has lower per-company thresholds than the headline figures suggest — this calculator assumes a single, standalone company.

Corporation Tax vs Income Tax on the same profit

For a limited company, profit is taxed at these Corporation Tax rates before anything is distributed to shareholders — dividends drawn from post-tax profit are then taxed again at the dividend tax rates on the individual's own Self Assessment return. That two-stage structure is the basis of the dividend-vs-salary comparison many director-shareholders run each year.

Filing your CT600

This calculator estimates the liability; filing requires a CT600 return with iXBRL-tagged accounts submitted to HMRC and Companies House. ac-co's Corporation Tax product produces both from your company's books.

A worked example

A company with £80,000 of taxable profit falls between the small profits and main-rate thresholds, so Marginal Relief applies. Taxed at the main rate first, £80,000 at 25% gives £20,000; the relief then reduces that based on how far £80,000 sits below the main-rate upper threshold, bringing the effective liability down to a figure between the £15,200 it would owe entirely at 19% and the full £20,000 at 25% — an effective rate a little over 19%, in line with Marginal Relief's design of easing companies into the main rate gradually rather than all at once.

Common mistakes to avoid

The most common error is applying the 25% main rate to the whole profit simply because it's above the small profits threshold, without checking whether Marginal Relief reduces the effective rate — most companies in the marginal band pay well below 25% overall. Another is treating the thresholds as fixed for every company: they're shared across 'associated' companies under common control, so a group structure with several companies has correspondingly lower per-company thresholds, and using the full standalone thresholds by mistake understates the tax due.

Taxable profit vs accounting profit

This calculator takes taxable profit as its input, which usually differs from the profit shown in a company's statutory accounts — capital allowances, disallowable expenses (client entertaining, for example) and other adjustments turn accounting profit into the taxable figure HMRC actually charges Corporation Tax on. Getting that adjustment right is most of the work in a real CT600 computation, which is why ac-co's Corporation Tax product builds it directly from the company's books rather than asking for a single profit figure.