Corporation tax is the tax your limited company pays on its profits, and for 2026/27 the rate is 19% on profits up to £50,000, 25% above £250,000, and an effective 26.5% on every pound in between. At Total Books we plan, compute and file corporation tax for owner-managed limited companies and their directors as a year-round job, not a year-end scramble. That means the reliefs are claimed before the year closes, the payment date is in your cash flow months ahead, and your CT600 goes to HMRC with nothing left on the table.
This page is the hub for everything corporation tax at Total Books: the rates and how the marginal band really works, when payment and filing fall due, the reliefs that legitimately reduce the bill, and how we run the whole cycle for you.
Key takeaways
- Two rates and a band. 19% up to £50,000, 25% above £250,000, and marginal relief in between, where each extra pound is effectively taxed at 26.5%.
- Payment comes before filing. Most companies pay 9 months and 1 day after the year end, but the CT600 is not due until 12 months after.
- Thresholds are shared. Associated companies split the £50,000 and £250,000 limits between them, which catches many director-owned groups.
- Reliefs are the difference. Capital allowances, R&D under the merged scheme, pension contributions and loss claims all reduce the bill legitimately.
- Planned with your personal tax. Corporation tax and director pay are one decision, so we plan them together, never in isolation.
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The corporation tax rates for 2026/27
Since April 2023 the UK has had a two-rate system. Companies with taxable profits up to £50,000 pay the small profits rate of 19%. Companies with profits above £250,000 pay the main rate of 25%. Profits between the two qualify for marginal relief, which tapers the effective rate from 19% up to 25% as profits rise.
The marginal band is the expensive stretch: each pound between £50,000 and £250,000 costs an effective 26.5%.
The part directors miss is what happens inside the band. Because relief is withdrawn as profits grow, each additional pound between £50,000 and £250,000 is taxed at an effective 26.5%, which is higher than the main rate itself. A company making £100,000 pays around £22,750, an effective rate of 22.75%, but the last pound of that profit cost 26.5p in tax. That single fact drives most of the planning on this page: reliefs and pension contributions are worth the most to companies sitting inside the band.
One more rule with teeth: the £50,000 and £250,000 thresholds are divided between associated companies. Two companies under common control get £25,000 and £125,000 each. Control by spouses and close family can count, so a director whose partner runs a company of their own may be sharing thresholds without realising it. We check the associated company position as standard. If your profits sit in the band, our guide to corporation tax marginal relief works through the calculation in full.
When corporation tax is due
For most owner-managed companies, corporation tax is payable 9 months and 1 day after the end of the accounting period, and the CT600 return is due 12 months after. So the money leaves before the return is filed, which surprises many first-year directors. Take a company with a 31 March 2026 year end:
- 31 March 2026 · Year endThe accounting period closes and the tax position is set.
- 31 December 2026 · Accounts to Companies HouseStatutory accounts are due at Companies House first, nine months after the year end.
- 1 January 2027 · Corporation tax paymentPayment is due 9 months and 1 day after the year end, before the return is filed.
- 31 March 2027 · CT600 filedThe corporation tax return is due 12 months after the period ends.
Companies with profits above £1.5 million move onto quarterly instalments, and above £20 million the instalments accelerate further, with both thresholds shared between associated companies. Late payment attracts HMRC interest from the first day, so we put the payment date into your rolling cash flow plan months ahead rather than letting it arrive as a surprise. Our full guide to when corporation tax is due sets out the instalment rules and the interest position.
The reliefs that legitimately reduce the bill
The rate is set by law, but the profit it applies to is shaped by the reliefs you claim. These are the ones that do the heavy lifting for our clients.
We have been doing this long enough to know that reliefs are decided during the year, not discovered at the end of it. Foxton B., the director of a start-up recruitment business who uses us for tax planning and annual accountancy, put it plainly in March 2019: the advice was "both specific to this type of business and its stage of development". That is the difference between claiming what is left and planning what is possible.
Foxton B., start-up recruitment director, March 2019Capital allowances
Spending on equipment, vans, machinery and computers qualifies for the Annual Investment Allowance or full expensing, which can deduct the full cost in the year of purchase. New zero-emission cars carry a 100% first year allowance for expenditure up to 31 March 2027, which is one reason an electric company car keeps stacking up. Timing matters: a purchase brought forward into the current year gives relief a year earlier, and at 26.5% in the marginal band the timing is worth real money.
R&D relief under the merged scheme
Companies developing new products, software or processes may qualify for the merged R&D expenditure credit. The claim standards have tightened, so the work has to be genuine and the records have to hold up, which is exactly how we prepare them. Creative sector companies have their own expenditure credits filed through the CT600P, which we cover in our guide to CT600P for creative industries.
Employer pension contributions
A pension contribution made by the company for a director is usually an allowable expense, reducing profit before the rate is applied. For a company in the marginal band, £10,000 into a pension can take £2,650 off the corporation tax bill while moving value to the director. The mechanics are in our guide on using pensions in a business tax plan.
Losses
A loss-making year is not wasted. Trading losses can be carried back against the previous year for a refund, or carried forward against future profits. Which route is worth more depends on the rates in each year, so it is a calculation, not a default.
Loans, assets and the charges directors trigger
Two charges that arrive with the CT600
Corporation tax does not stop at trading profit. If you borrow from the company and the loan is still outstanding 9 months and 1 day after the year end, a separate section 455 charge arrives with the CT600, refundable once the loan clears. The rules are in our guide to the director's loan account and s455.
Moving company assets to yourself has a real tax cost on both sides, which we set out in our guide on moving company assets to shareholders. If either applies to you, plan it before the year end, not after.
What we file, and how
We prepare your statutory accounts, compute the tax with every relief considered, and file the CT600 with HMRC and the accounts with Companies House, all through proper software from records kept current in Xero. As a Companies House authorised agent we handle the company side of the filings too, so nothing falls between two stools. Filing through software also means the move to software-only accounts filing at Companies House in April 2028 changes nothing about how your filings reach the register.
After ten years of doing that for the same company, it stops looking like a process and starts looking like a relationship. Gareth J. has had us managing his limited company accounts since 2015, and in March 2025 he wrote that the thing which sets the work apart is the personalised approach: they "always take the time to understand my business needs and provided tailored advice to help optimise my finances". There are more of these in our published client reviews.
Gareth J., limited company client since 2015, March 2025Corporation tax and your pay are one decision
Every pound of salary, pension or dividend you take changes the corporation tax picture, and the other way round. That is why our corporation tax work sits inside a whole-picture service for limited company directors: the company return, your director pay and your personal return planned together. Growth-stage companies that want that thinking at board level can add our Virtual Finance Director service.
Directors feel that join before they can name it. Jack S., who runs a property lettings and management company alongside an inventory company in Bristol, has both his limited company accounts and his personal tax return prepared here, and told us the work has been "extremely efficient and clear" and "saves me vast amounts of time". One set of numbers, two returns, and no contradiction between them.
Jack S., property lettings and inventory company director, BristolGet the tax position checked before your year end
If your year end is coming and nobody has looked at the tax yet, we will tell you what is worth doing while there is still time to act, from reliefs to pension timing to the marginal band.
Corporation tax guides
Frequently asked questions
Get your corporation tax planned, not just filed
Year end approaching and the tax not yet looked at?
Book your free 15-minute callThis page is general information, not advice for your specific situation. Tax rates, thresholds and reliefs change, and the right steps depend on your circumstances. Filing remains the responsibility of the company and its directors; please take professional advice before acting.
