# How UK Corporation Tax Works: Rates and Marginal Relief

> UK corporation tax is 19% up to £50,000 of profit and 25% from £250,000, with marginal relief tapering in between. Here's how it works.

- URL: https://www.pyalm.com/blog/uk-corporation-tax-calculator-guide
- Author: Fadhil Abdulla
- Category: Free Tools
- Published: 2026-06-20
- Updated: 2026-06-20

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## The UK corporation tax bands

Corporation tax on company profits is tiered:

- **Small profits rate (19%)** — taxable profits up to £50,000.
- **Main rate (25%)** — taxable profits of £250,000 or more.
- **Marginal relief** — for profits between £50,000 and £250,000, an effective rate that tapers smoothly from 19% up to 25%.

The [UK Corporation Tax Calculator](https://www.pyalm.com/free-tools/corporation-tax-calculator-uk) applies the right band and the marginal relief automatically.

## Why marginal relief exists

Without it, a company just over £50,000 would jump straight to 25% — a cliff edge. Marginal relief smooths the transition so the effective rate rises gradually across the band.

## A quick example

A company with £100,000 taxable profit falls in the marginal band, so its effective rate sits between 19% and 25% — not a flat 25%. The calculator does the relief maths for you.

## Watch for associated companies

The £50,000 and £250,000 limits are divided by the number of associated companies, which can push profits into a higher band. Factor that in before relying on an estimate.

## How to use it

1. Enter your company's taxable profit.
2. The tool applies the band and marginal relief.
3. Read off your estimated corporation tax.

[Open the UK Corporation Tax Calculator](https://www.pyalm.com/free-tools/corporation-tax-calculator-uk) | [More free finance tools](https://www.pyalm.com/free-tools)