UK Corporation Tax Calculator 2026

For the financial year beginning 1 April 2026 the main rate is 25% on profits above £250,000 and the small profits rate is 19% on profits of £50,000 or less. Between those two figures the main rate applies but is reduced by Marginal Relief, which produces a gradual increase rather than a cliff edge. The rates, the limits and the standard fraction are all unchanged from the previous year.

HMRC applies the standard fraction to the difference between the upper limit and your augmented profits, then scales the result by the proportion of those profits that are taxable. Written out, it is 3/200 multiplied by the upper limit less augmented profits, multiplied by taxable total profits divided by augmented profits. The relief is then deducted from the tax charged at the main rate.

The standard fraction for the financial years from 2023 to 2026 is 3/200, which is the same thing as 1.5%. It exists to bridge the gap between the 25% main rate and the 26.5% rate at which profits in the relief band are effectively taxed. Because that difference is 1.5 percentage points, the fraction is expressed as 3/200.

Inside the relief band each additional pound of profit costs 26.5p, because the extra pound is taxed at 25% and simultaneously withdraws a slice of the relief. It is the same arithmetic that produces the 60% band in personal income tax: a taper is a rate rise in disguise. Above £250,000 the marginal cost falls back to 25%, which is the unusual result of a marginal rate that goes down as you get bigger.

Augmented profits are your taxable total profits plus exempt distributions received from companies that are not part of your group. They are the figure that decides which rate applies and that drives the relief calculation, even though the tax itself is charged on taxable profits alone. A company sitting just below £250,000 of trading profit can therefore be pushed into the main rate by a modest dividend from an outside shareholding, which is why this calculator asks for that figure separately.

The £50,000 and £250,000 limits are divided between your company and its associated companies. With three associated companies the limits become £12,500 and £62,500, because the thresholds are shared across four companies in total. Control, rather than shareholding percentage alone, is what makes a company associated, and the test looks well beyond the obvious group structure.

Broadly, another company is associated with yours where one controls the other, or where both are under the control of the same person or persons. That reaches personal holdings, companies controlled by close family in some circumstances, and dormant trading companies that have simply never been struck off. Because each additional associate shrinks your limits, an unnoticed second company is one of the more expensive filing errors we see.

Both limits are reduced proportionately. A six-month period halves them to £25,000 and £125,000, so profits that would comfortably sit in the small profits band across a full year can attract Marginal Relief or even the main rate in a short period. This most often bites in a company’s first period or in the stub period created by changing the year end.

Marginal Relief is not available to close investment holding companies, nor to companies that are not resident in the United Kingdom, nor of course to companies whose profits exceed the upper limit. A close investment holding company also loses the small profits rate, so it pays 25% on the whole of its profits. Whether a company falls into that category turns on what it actually does with its assets, and it is a status that can be acquired accidentally when trading winds down.

For most companies the tax is payable nine months and one day after the end of the accounting period, while the return itself is not due until twelve months after the period end. Larger companies pay by quarterly instalments instead. The payment deadline arriving three months before the filing deadline catches out a surprising number of owner-managed businesses.

No. A UK company owned by a US person is generally a controlled foreign corporation, and the United States taxes its profits to you personally in the year they arise, whether or not anything is distributed. Paying UK Corporation Tax discharges the UK liability only. The rules that decide how much American tax lands on top were rewritten with effect from 1 January 2026, so positions settled under the old regime need revisiting.

For tax years beginning after 31 December 2025 the regime is renamed net CFC tested income. The substance changed as well as the label: the deduction under section 250 fell from 50% to 40%, the deduction for qualified business asset investment was removed, and the cap on the indirect foreign tax credit rose from 80% to 90%. The effective corporate rate on the inclusion consequently rose from 10.5% to 12.6%.

Where a controlled foreign corporation’s income bears an effective foreign rate above 18.9%, being 90% of the 21% US corporate rate, the shareholder may elect annually to exclude that income from the tested income base altogether. The UK small profits rate of 19% clears that threshold by one tenth of a percentage point, and the main rate clears it comfortably. In headline terms, therefore, most UK trading companies qualify.

Yes, and this is the trap the 19% headline conceals. The test measures the effective rate actually borne, not the rate on the statute book. A company claiming research and development relief, or taxing profits at the 10% Patent Box rate, can easily drive its effective rate below 18.9% and lose the exclusion for that year. The relief that saved British tax then imports an American charge, which is why this calculator asks what reliefs you claim rather than assuming the headline rate.

It is an election allowing an individual shareholder to be taxed on the inclusion at corporate rates as though a domestic corporation had received it, which unlocks both the 40% deduction and the deemed-paid foreign tax credit that individuals otherwise cannot claim. Without it the inclusion is taxed at ordinary rates of up to 37% with no credit for the UK Corporation Tax already paid. The difference on a profitable company routinely runs into five or six figures, and the election is made annually on the return.

Not always. The election reduces the tax on the inclusion now, but the money is taxed again when it is actually distributed, to the extent the distribution exceeds the tax paid under the election. It suits a company retaining profits to reinvest and suits it less where cash is being drawn out promptly each year. Modelling both years together, rather than the inclusion in isolation, is what determines the answer.

Yes, and the penalties sit on the forms rather than the tax. A US person controlling a UK company generally files Form 5471 with their personal return, and the information penalty for failing to do so begins at $10,000 per company per year regardless of whether any tax was payable. An excluded inclusion is a reporting position, not an absence of one.

A salary is deductible against Corporation Tax and so reduces taxable profits, though it carries employer National Insurance. A dividend is paid out of profits after tax and does not reduce the company’s bill at all. For an American owner the comparison is more layered still, because a dividend from the company interacts with the inclusion already taxed and with the treaty, so the optimal split is rarely the one a purely British calculation suggests.

An unincorporated business pays income tax and Class 4 National Insurance on its profits, and for an American abroad it also attracts self-employment tax unless a certificate of coverage moves that charge to the United Kingdom. A limited company converts that into Corporation Tax plus a charge on extraction, but introduces the controlled foreign corporation rules on the US side. Neither structure is universally better, and the answer depends on how much profit is retained rather than drawn.

It applies the official rates, limits and standard fraction for the financial year beginning 1 April 2026, uses HMRC’s own Marginal Relief formula including the augmented profits adjustment, and models the US position on the rules in force for tax years beginning after 31 December 2025. It does not compute your taxable profits for you, nor model capital allowances, losses, group relief, quarterly instalments or the detail of your tested income under US rules. Treat it as a well-founded planning figure rather than a filed computation.