How to Calculate Corporation Tax
What is Corporation Tax?
Corporation Tax (CT) is charged on the taxable profits of limited companies trading in the UK. From April 2023, the UK introduced a new two-rate system: 19% for small profits and 25% for large profits, with marginal relief for profits between £50,000 and £250,000.
Formula
- MR
- (upper limit − profit) × (upper − lower) / upper × (main rate − small rate) — (upper limit − profit) × (upper − lower) / upper × (main rate − small rate)
Step-by-Step Guide
- 1Small profits rate: 19% on profits up to £50,000
- 2Main rate: 25% on profits above £250,000
- 3Marginal relief applies between £50,000 and £250,000 — effective rate between 19% and 25%
- 4Marginal relief formula: MR = (upper limit − profit) × (upper − lower) / upper × (main rate − small rate)
- 5CT return must be filed within 12 months of year end; CT paid within 9 months
Worked Examples
Frequently Asked Questions
What is Corporation Tax?
Corporation Tax (CT) is charged on the taxable profits of limited companies trading in the UK. From April 2023, the UK introduced a new two-rate system: 19% for small profits and 25% for large profits, with marginal relief for profits between £50,000 and £250,000
How accurate is the Corporation Tax calculator?
The calculator uses the standard published formula for corporation tax. Results are accurate to the precision of the inputs you provide. For financial, medical, or legal decisions, always verify with a qualified professional.
What units does the Corporation Tax calculator use?
This calculator works with inches, British pounds, percentages. You can enter values in the units shown — the calculator handles all conversions internally.
What formula does the Corporation Tax calculator use?
The calculator applies the standard formula for this type of calculation. See the 'How It Works' steps above for the detailed formula breakdown.
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