Main rate

25% (profits over £250,000)

Small profits rate

19% (profits up to £50,000)

Marginal relief

Available for profits between £50,000 and £250,000

Payment deadline

9 months and 1 day after accounting period ends

HMRC registration checklist

Key HMRC registration deadlines by business type.

Self Assessment (sole traders/partnerships): Register by 5 October after your first tax year
Corporation Tax (limited companies): Register within 3 months of starting to trade
VAT registration threshold: £90,000 turnover in 12 months (mandatory)
PAYE (employers): Register before first payday
CIS (construction): Register before first payment to subcontractors

Register with HMRC

1

Register within 3 months

Tell HMRC when your company starts trading or becomes active.
2

File your Company Tax Return

Submit CT600 within 12 months of accounting period end.
3

Pay on time

Pay Corporation Tax 9 months and 1 day after your accounting period.

PROFIT £50,000

Small profits rate: 19% Corporation Tax

Corporation Tax rates are tiered based on your annual profits. Companies with profits up to £50,000 pay 19%, while those over £250,000 pay 25%.

Above threshold:

Profits £50,000-£250,000 qualify for marginal relief. Over £250,000 pays 25%.

Below threshold:

You pay 19% Corporation Tax with no marginal relief calculation needed.

Corporation Tax rates

Corporation Tax marginal relief calculation

How marginal relief works for profits between £50,000 and £250,000, including the 3/200 formula from Finance Act 2022.

Corporation Tax rate structure since April 2023:

Small profits rate (19%): Profits up to £50,000
Main rate (25%): Profits over £250,000
Marginal relief: Tapered rate for profits between £50,000 and £250,000

The marginal relief zone smooths the transition from 19% to 25%, with the effective tax rate increasing gradually as profits rise through the £50,000-£250,000 range.

Small profits rate: 19% (profits up to £50,000)
Main rate: 25% (profits over £250,000)
Marginal relief zone: £50,000 to £250,000 (tapered effective rate 19%-25%)
Marginal relief fraction: 3/200 (0.015 or 1.5%)
Standard formula: MR = 3/200 × (Upper Limit - Profits) × (Profits / Profits)
Upper limit: £250,000 (adjusted for associated companies and short periods)
Associated companies rule: Thresholds divided equally between associated companies (e.g., 2 companies = £25,000 small profits threshold each)

Marginal relief formula

The statutory marginal relief formula from Finance Act 2022 is:

Marginal Relief = 3/200 × (Upper Limit - Taxable Profits) × (Taxable Total Profits / Augmented Profits)

For most companies without distributions or associated companies, this simplifies to:

MR = 3/200 × (£250,000 - Profits)

Worked examples

Example 1: £150,000 profit (midpoint)

Tax at main rate: £150,000 × 25% = £37,500
Marginal relief: 3/200 × (£250,000 - £150,000) = 3/200 × £100,000 = £1,500
Tax payable: £37,500 - £1,500 = £36,000
Effective rate: 24%

Example 2: £100,000 profit

Tax at main rate: £100,000 × 25% = £25,000
Marginal relief: 3/200 × (£250,000 - £100,000) = 3/200 × £150,000 = £2,250
Tax payable: £25,000 - £2,250 = £22,750
Effective rate: 22.75%

Corporation Tax rates and marginal relief

Company accounts and audit requirements

Beyond Corporation Tax, limited companies must file annual accounts with Companies House and may require a statutory audit depending on size.

Audit exemption for small companies

Criteria for exemption from statutory audit requirement for small companies.

Annual turnover threshold: £15 million or less (from 6 April 2025)
Balance sheet total threshold: £7.5 million or less (from 6 April 2025)
Qualification rule: Must meet both thresholds above
Previous thresholds (before 6 April 2025): £10.2 million turnover and £5.1 million balance sheet
Exceptions (always require audit): Public companies, financial services firms, subsidiaries of audited groups

Most small companies are exempt from audit. Directors must include a statement on the balance sheet confirming exemption eligibility and that members have not required an audit.

Small company accounts thresholds 2026/27

Thresholds for filing abbreviated small company accounts with Companies House from 6 April 2025.

Annual turnover threshold: £15 million or less (increased from £10.2 million)
Balance sheet total threshold: £7.5 million or less (increased from £5.1 million)
Average employees threshold: 50 or fewer (unchanged)
Qualification rule: Must meet 2 of the 3 thresholds above
Consecutive years required: 2 years (unless first year)
Effective date: Financial years starting on or after 6 April 2025
Previous thresholds (before 6 April 2025): £10.2 million turnover / £5.1 million balance sheet / 50 employees

Small companies can file abbreviated accounts without a profit and loss statement. Must qualify as small for 2 consecutive years before filing in this format.

Corporation Tax quarterly instalment payment schedule

Quarterly instalment requirements for large companies (profits over £1.5 million).

Large companies must pay Corporation Tax in quarterly instalments rather than in one lump sum. This significantly affects cash flow planning and is often missed by growing businesses crossing the £1.5m threshold for the first time.

Threshold for quarterly instalments: £1.5 million annual profits
Associated companies rule: £1.5m threshold divided equally (e.g., 2 associated companies = £750,000 threshold each)
Very large companies threshold: Profits over £20 million (earlier payment schedule applies)
Amount per instalment: 25% of estimated annual Corporation Tax liability

Payment schedule for £1.5m-£20m profits

Companies with profits between £1.5 million and £20 million must pay Corporation Tax in quarterly instalments on the following schedule:

Instalment 1: Month 7 of accounting period (14 days after end of month 6)
Instalment 2: Month 10 (14 days after end of month 9)
Instalment 3: Month 13 (1 month and 14 days after period end)
Instalment 4: Month 16 (4 months and 14 days after period end)

Example: Company with December year-end and £2m profit

Estimated Corporation Tax: £2m × 25% = £500,000
Per instalment: £500,000 ÷ 4 = £125,000
Instalment 1: 14 July (while still trading - 6 months before year-end)
Instalment 2: 14 October
Instalment 3: 14 February (after year-end)
Instalment 4: 14 May

Cash flow impact: You pay significant Corporation Tax before the accounting period ends - when cash may be tied up in stock, debtors, or reinvested in growth.

Very large companies (over £20m profits)

Companies with profits over £20 million must pay instalments even earlier - starting in month 7 of the accounting period (compared to month 14 for companies in the £1.5m-£20m bracket).

Important: You must estimate profits accurately. HMRC charges interest if you underpay instalments. Missing instalments triggers automatic interest charges (even if unintentional).

Corporation Tax quarterly instalment payments

R&D tax credits

Companies investing in research and development can claim significant tax relief. The merged scheme introduced in April 2024 simplifies the system.

R&D tax credits eligibility

Tax relief for companies investing in research and development. Pure data reference.

Merged scheme rate: 20% above-the-line credit (15% after 25% Corporation Tax)
R&D intensive SMEs (ERIS): 27% tax credit for loss-making SMEs spending 30%+ on R&D
SME definition: Under 500 employees and turnover below €100m
Applies from: Accounting periods starting on or after 1 April 2024

R&D tax relief

Corporation Tax basics

Corporation tax rates and small profits relief

Plan your Corporation Tax payments

Claim R&D tax relief for your company

Patent Box: reduce Corporation Tax on patented profits

File your company accounts with Companies House

Register within 3 months

File your Company Tax Return

Pay on time

Small profits rate: 19% Corporation Tax

Above threshold:

Below threshold:

Company accounts and audit requirements

R&D tax credits

Related guides in Tax & Finance

Register within 3 months

File your Company Tax Return

Pay on time

Small profits rate: 19% Corporation Tax

Above threshold:

Below threshold:

Company accounts and audit requirements

R&D tax credits