Are you growing a profitable company and wondering how much Corporation Tax you will actually pay in 2026/27?
The answer depends on more than your turnover. UK Corporation Tax is calculated on taxable profits, after allowable expenses, capital allowances, losses and eligible reliefs have been considered. The right planning decisions can make a meaningful difference to the cash you retain : particularly if you are reinvesting in technology, hiring, product development or your next funding round.
In this guide, we explain the Corporation Tax UK 2026/27 rates, key deadlines and five practical Corporation Tax planning moves for business owners, directors and tech startup founders.
Important: This article provides general information for UK companies. Your exact Corporation Tax position can depend on your accounting period, associated companies, ownership structure and the type of expenditure you incur.
For the financial year beginning 1 April 2026, the main UK Corporation Tax rates remain:
| Taxable profit | Corporation Tax treatment |
|---|---|
| Up to £50,000 | 19% small profits rate |
| Between £50,000 and £250,000 | Marginal relief may apply |
| Above £250,000 | 25% main rate |
These thresholds generally apply to a standalone company with a 12-month accounting period and no associated companies. You can check the latest figures in the HMRC Corporation Tax rates and allowances guidance.
There is a common misconception that a company earning just over £50,000 suddenly pays 25% on every pound of profit. In reality, companies within the £50,000 to £250,000 marginal relief band usually pay an effective rate that gradually increases from 19% towards 25%.
For example, assuming taxable profits are the same as accounting profits and no other reliefs apply:
Your final liability may be different. But these examples show why Corporation Tax planning matters as your company moves from early-stage profitability into sustained growth.
Marginal relief prevents a company just above the small profits threshold from facing an abrupt jump to the full main rate.
Where your profits fall within the marginal relief band, HMRC applies the 25% main rate and then reduces the liability using a statutory formula. The result is a blended effective rate between 19% and 25% on total taxable profits.
The effective rate on the additional slice of profit in this band can be 26.5%, whilst the overall average rate remains between 19% and 25%. This is one reason why a small increase in profit can sometimes produce a disproportionately large increase in Corporation Tax.
The calculation can also take account of augmented profits : broadly, taxable profits plus certain distributions : rather than relying only on the figure shown in your accounts. The detailed rules are explained in HMRC’s marginal relief guidance.
The £50,000 and £250,000 limits are divided between a company and its associated companies.
For example:
Associated company rules can apply where companies are under common control. However, the position is not always obvious : ownership, voting rights, commercial links and relationships between shareholders can all be relevant. Dormant companies and companies within wider international structures may also need careful review.
This is where a quick structure review can prevent an unexpected Corporation Tax bill.
Most small and medium-sized companies pay Corporation Tax nine months and one day after the end of their accounting period.
Your Company Tax Return, known as a CT600, is normally due 12 months after the end of the accounting period.
These are separate obligations. You usually pay the tax before you file the return.
If your accounting period ends on 31 March 2027:
Do not wait until the CT600 deadline to think about payment. A company can face interest and penalties if the tax is paid late, even when its tax return is eventually filed on time.
Larger companies may need to pay Corporation Tax through Quarterly Instalment Payments. The relevant thresholds are adjusted where associated companies exist, so growing groups should review this before profits approach the large-company limits.
Corporation Tax planning is not about avoiding tax. It is about making sure your company claims the reliefs available to it and makes commercially sensible decisions at the right time.
For many owner-managed companies, the balance between salary, dividends and pension contributions is central to tax planning.
A director’s salary is generally an allowable business expense, although it creates PAYE and potentially National Insurance obligations. Dividends are not deductible from company profits, and they can only be paid from sufficient distributable reserves.
The most tax-efficient mix depends on your personal tax position, other income, National Insurance, available profits and plans for retaining cash in the company. A strategy that worked when your company was making £40,000 may not be appropriate when profits reach £150,000.
We encourage you to review remuneration several months before your year end : not after the accounts have already been prepared.
If your company buys qualifying equipment, computers, machinery or other plant, the accounting depreciation may not be the tax deduction you receive. Instead, capital allowances determine how much of the cost can be deducted for Corporation Tax purposes.
The Annual Investment Allowance is currently £1 million for most qualifying expenditure, subject to the detailed rules. Companies may also be able to claim full expensing on certain new qualifying assets.
For a technology business, this could be relevant when investing in servers, testing equipment, laboratory assets, specialist hardware or other tools used in the business.
The key is to plan the purchase around genuine operational requirements. Buying equipment you do not need simply to obtain tax relief can damage cash flow rather than improve it.
Many technology founders assume that R&D tax relief is only available to companies developing a completely new invention. That is not the test.
Research and Development relief may be relevant where your project seeks to resolve a genuine technological uncertainty : for example, developing software, improving system performance or creating a solution where the required technical outcome was not readily deducible by a competent professional.
Eligible costs may include parts of staff costs, software, subcontracted work and certain consumables, depending on the applicable scheme and the facts of your project. Relief can reduce your Corporation Tax liability or, for eligible loss-making companies, potentially contribute to a payable credit.
However, an R&D claim needs technical evidence, financial records and a clear explanation of the uncertainty being addressed. It is not simply a reward for operating in the technology sector.
Our R&D Tax Credit service helps eligible businesses assess projects, organise supporting information and prepare claims with greater confidence.
Employer pension contributions can be a valuable way to reward directors and employees whilst reducing taxable company profits.
They can be particularly useful where you want to extract value from the company but do not need all the money personally today. The company contribution may be an allowable expense when it is made for a genuine business purpose, although timing, reasonableness and pension rules still matter.
You also need to consider the individual’s pension allowances and wider personal tax position. A contribution should form part of a properly considered remuneration strategy rather than being treated as an automatic Corporation Tax solution.
For founders, pension planning can support both current tax efficiency and long-term financial security : a vital balance when your focus is understandably on building the business.
The timing of expenditure can affect which accounting period receives the tax deduction.
Before your year end, review:
Your accounts must reflect the period to which costs relate. You cannot bring forward an expense purely to reduce tax, and connected-party or unpaid amounts may have additional rules.
But accurate year-end planning can ensure that genuine costs are recorded in the correct period, whilst delaying non-essential expenditure may preserve cash until it is commercially needed. The objective is not simply to reduce this year’s bill; it is to improve your overall cash position and keep your business moving forward.
The best Corporation Tax planning begins well before the filing deadline. By reviewing remuneration, investments, R&D activity, pensions and expenditure timing throughout the year, you can make decisions based on cash flow and strategy : rather than reacting to an unexpected tax bill.
For technology businesses, this also creates a stronger financial foundation for growth. Clean bookkeeping, reliable management information and properly documented claims can support funding conversations, hiring plans and future due diligence.
Our Advisory & Tax Planning service is designed to help growing companies understand their options and allocate resources with greater clarity. We can also support your company accounts and bookkeeping, so your tax planning is built on accurate information.
Are you approaching your 2026/27 year end, expecting profits to cross a Corporation Tax threshold or preparing for your next stage of growth? Contact Price & Accountants for a consultative review of your company’s position and the practical steps that could help you retain more cash in the business.
