Corporation Tax Rates in the UK for 2025/26
| Corporate Tax Band | Tax Band Details | Corporate Tax Rate |
| Small profits rate | Companies with annual profits <£50k | 19% |
| Main profits rate (eligible for Marginal Relief) | Companies with annual profits between £50-250k | 19-25% |
| Main profits rate (ineligible for Marginal Relief) | Companies with annual profits >£250k | 25% |
If you own, operate or manage the accounts of a company—or if you’re planning to start a limited company—then it is important to understand the rules and rates of corporation tax in the UK. With the introduction of the new government’s Autumn Budget 2024, corporation tax levels are set to remain the same for the upcoming tax year (2025-26) as they are in 2024-25.
Failure to complete your corporate tax return and pay the correct rate of corporation tax can result in hefty fines as well as, in extreme cases, legal action against your company. On the flip side, a comprehensive understanding of current levels of corporation tax puts you in the best position possible to make the most out of your profits, dividends and capital gains.
UWM Accountants have over 40 years of experience delivering dependable advice on corporate tax. The team is proud to continue this tradition with an updated and accessible guide to UK corporation tax levels for tax years 2023-24, 2024-25 and 2025-26.
What is corporation tax in the UK?
Like Income Tax is applied to your personal income, Corporation Tax is a tax levied against the profits of registered businesses operating in the UK, whether or not they have established a permanent presence here.
Corporation tax (CT) applies to your business’s Taxable Total Profits (TTP), including Capital Gains profits once losses and reliefs have been applied. Corporation Tax applies to your TTP according to your company’s accounting period—meaning that depending on your accounting period you may have to pay two different rates.
For example, if your accounting period runs from January 1st to December 31st, then you may have to account for one CT rate from 1 January to the end of the government tax year on 5 April, and another CT rate from 6 April to 31 December.
If a company has a shorter accounting period than a year, then corporation tax bands and rates are applied proportionally.
Similarly, if a company has other associated companies, then corporation tax levels are divided accordingly. For example, if your company has one other associated company, then the £50,000 lower limit and £250,000 upper limit would become £25,000 and £125,000 respectively, for the profits of each associated company.
The current level of corporation tax in the UK
With the release of the Autumn Budget 2024, we can confirm that corporation tax levels in the UK remain the same for tax year 2025-26 as they were in the current tax year, 2024-25. A timeline of the UK’s corporate tax rates, including the current level of corporation tax, is presented in the table below.
| UK Corporation Tax Levels Timeline | |
| 2023-24, 2024-25, and 2025-26 | |
| Small profits rate (under £50,000 profit) | 19% |
| Main profits rate (£50,000-£250,000 profit) | 25% (Marginal Relief may apply) |
| Main profits rate (over £250,000 profit) | 25% |
| 2022-23 and earlier | |
| A single fixed main profits rate | 19% |
Changes to corporation tax rates in the UK’s Autumn Budget 2024
Whilst corporation tax rates in the UK are set to remain the same from the current tax year (2024-25) to the next (2025-26), that doesn’t mean that other changes weren’t made to the minutiae of corporate tax law in the Autumn Budget.
In addition to changes being made to the Energy Profits Levy (EPL) and Carbon Capture Usage and Storage (CCUS) decommissioning fund, the government has also introduced corporation tax changes to companies’ capital allowances. For example, the 100% allowance for zero-emission electric vehicles and electric charging points is being extended for corporation tax purposes until 31st March 2026.
What is ‘Marginal Relief’ on corporation tax and when does it apply?
For businesses reporting profits between the ‘small’ and ‘main’ profit margins for UK corporation tax—that is, making between £50,000 and £250,000 in Taxable Total Profits—a so-called ‘Marginal Relief’ rate may apply.
Not every business is eligible for the Marginal Relief rate on their corporation tax bill, but those who are may be able to apply a sliding tax rate between 19% and 25%, depending on their profits and other relevant factors.
Who pays corporation tax?
All for-profit businesses operating in the UK, whether they are registered here or not, pay corporation tax to His Majesty’s Revenues & Customs (HMRC) provided they have made a profit to pay tax on.
What are ringfenced company profits?
Profit made by companies through oil extraction or oil rights in the UK or UK continental shelf are deemed ‘ring fenced profits’ by HMRC. Ring fence companies can claim Marginal Relief on profits between £50,000 and £250,000, just as other companies can, but pay a higher Corporation Tax rate (30%) on profits >£250k.
What about non-resident companies or Close Investment Holding Companies (CIHCs)?
Non-resident, or foreign companies without ‘permanent establishment’ in the UK are nevertheless subject to UK corporation tax—though they must pay the main rate (25%) of CT regardless of their profit levels and are not eligible for Marginal Relief.
Close Investment Holding Companies (CIHCs) also pay corporation tax at the main rate (25%) regardless of their profits.
How do UK corporation tax levels impact capital gains?
Capital gains are profits made from the disposal of business assets like, say, company cars or the sale of business properties. Whilst individuals and business partners pay a separate Capital Gains Tax on their capital gains, limited companies include their capital gains when calculating their Total Taxable Profits (TTP). As such, corporation tax applies to capital gains in the same way it does to your other types of business income.
And what about dividends?
Dividends are payments made by a limited company to its shareholders from the profits it accrues during the accounting year. Dividends cannot be counted as business costs when calculating your corporation tax, and must be paid to stakeholders after corporation tax is calculated. The same goes for other tax liabilities like VAT and business expenses.
See our section, ‘Changes to corporation tax rates in the UK’s Autumn Budget 2024’ for more information on changes to capital allowances for corporation tax.
In short, whilst corporation tax does not apply to dividends, receiving shareholders may still have to pay Income Tax on dividends above £500 (though it’s worth noting that dividend income tax rates are favourable, compared to traditional income tax rates.)
A guide to calculating and paying corporation tax in 2024/25 and beyond
Let’s close this guide to the current level of corporation tax in the UK with a look at how to calculate and pay your corporate tax bill for 2024-25 and 2025-26.
How to calculate your corporate tax: An example case study
We’ll use a fictional example to demonstrate how you can calculate the rate and amount of corporation tax you need to pay. In this example, the company’s accounting year is the same as the tax year (6 April – 5 April). To calculate corporation tax, the company’s director or accountant first needs to know these three things:
- The company’s gross profit for the year: £52,560
- Business costs which are not considered tax deductible or allowances (e.g., staff lunches): £3,000
- Business costs which are considered tax deductible or allowable (e.g., new office equipment): £6,400
To calculate the company’s corporate tax bill, the director next needs to work out their Total Taxable Profits (TTP). To do so, use the following formula:
- Gross profit + non-allowable expenses – allowable expenses = TTP
- £52,560 + £3,000 – £6,400 = £49,160
Because TTP is calculated below the £50,000 profit lower limit for corporation tax, the company pays 19% CT on £49,160.
- TTP (total taxable profit) x CTR (corporation tax rate) = CT (corporate tax) owed
- £49,160 x 0.19 = £9,340.40
The example company owes HMRC £9,340.40 in corporation tax.
How to pay your corporation tax bill
Paying corporation tax has changed a little with the phased introduction of the UK’s Making Tax Digital scheme—the idea being to move all tax accounting and payments online, in an effort to improve efficiency, transparency and accuracy whilst reducing dependency on environmentally unsustainable paper.
Filing your corporate tax return and settling your bill is fairly straightforward, and to be completed through your company’s Corporate Tax HMRC Online account. If you’ve never had to pay corporate tax before, you may have to register for a CT account with HMRC before you can file your first corporate tax return.
It is your responsibility to accurately report your earnings, calculate your corporation tax owed, and file this in your tax return to HMRC.
Finally, to pay corporation tax, you’ll need your 7-character CT reference for the accounting period in question, which can be found via your online account or on the payslip you receive once you’ve submitted your corporate tax return.
Conclusion: Recapping the current level of corporation tax in the UK
With the introduction of the 2024 Autumn Budget, it is confirmed that corporation tax levels in the UK will remain the same in the 2025/26 tax year as they are in this tax year (2024/25).
This means that the current level of corporation tax is set at 19% for companies whose Total Taxable Profits fall below £50,000, 25% for companies with TTP greater than £250,000, and a potential sliding Marginal Relief rate between 19-25% for companies with profits between £50,000 and £250,000.
Calculating corporation tax, filing and paying it is one thing. But making the most out of your tax returns—ensuring compliance whilst being as tax efficient as possible for the betterment of your company—is an entirely different kettle of fish.
For competent, dependable and local corporate tax advice, UWM is here to help.
