How marginal relief works
A company with augmented profits of £50,000 or less pays the 19% small profits rate. Above £250,000 it pays the 25% main rate. In between, it pays 25% and takes off marginal relief: 3/200 × (upper limit − augmented profits) × taxable profit ÷ augmented profits. On £100,000 of profit that’s £2,250, so the tax is £22,750, an effective rate of 22.75%.
marginal relief = 3/200 × (£250,000 − A) × N ÷ A
Augmented profits are taxable profit plus dividends received from companies outside a 51% group. Those dividends aren’t taxed, but they can move the company into a higher band. More on rates and marginal relief.
Associated companies and short periods
The two limits are shared between associated companies. Divide them by one plus the number of companies associated with yours at any time in the period: with one associated company, the limits are £25,000 and £125,000. Broadly, companies are associated if one controls the other or the same people control both. Dormant companies and passive holding companies don’t count. Associated companies explained.
For a period shorter than 12 months, the limits are cut by the days in the period. A period of exactly 12 months keeps the full limits, even if it has 366 days.
When to pay and file
Corporation tax is due 9 months and 1 day after the accounting period ends: for a year to 31 March 2027, that’s 1 January 2028. The company tax return is due 12 months after the period ends.
Large companies, with augmented profits over £1.5 million, pay in four quarterly instalments instead, and very large ones, over £20 million, start paying during the period itself. A company isn’t caught in its first large year if its profits are £10 million or less. If your accounts cover more than 12 months, the company has two accounting periods for tax, the first 12 months and the rest, each with its own tax, payment date and return. Payment and filing dates in full.