Limited companies pay Corporation Tax on their profits. For 2025/26 the small profits rate is 19 percent up to £50,000, the main rate is 25 percent above £250,000, and marginal relief tapers between the two — giving an effective rate that rises smoothly across that band. Associated companies and short accounting periods reduce those thresholds.
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Frequently asked questions
What is marginal relief?
It smooths the jump between the 19 and 25 percent rates so profits between £50,000 and £250,000 face a gradually increasing effective rate rather than a cliff edge.
Do associated companies change this?
Yes. If your company has associated companies, the £50,000 and £250,000 thresholds are divided between them, which can push you to a higher effective rate.