Corporation Tax Calculator

What Is a Corporation Tax Calculator?

A Corporation Tax Calculator estimates how much Corporation Tax a UK company may have to pay on its taxable profits. It can be useful for limited company directors, contractors, consultants, freelancers and business owners who want to estimate their company's tax liability before preparing their formal accounts and Company Tax Return.

The UK Corporation Tax system uses different rates depending on the level of taxable profit. Qualifying companies with lower profits can generally benefit from the 19% small profits rate, while companies with profits above the main-rate threshold are generally taxed at 25%. Marginal relief applies between the relevant thresholds, creating a gradual transition between the rates.

Why Use the Corporation Tax Calculator?

Corporation Tax can be more complicated than simply applying one percentage to a company's accounting profit. This calculator takes the main Corporation Tax rate structure and threshold adjustments into account to provide a useful estimate for financial planning.

How to Use the Corporation Tax Calculator

Enter your estimated taxable company profit and provide the accounting-period information requested by the calculator.

1. Enter taxable profit — Enter the estimated taxable profit of the company before Corporation Tax. This is not necessarily the same as turnover or accounting profit.
2. Select the accounting period — Choose the number of months in the accounting period. A standard 12-month period uses the full £50,000 and £250,000 thresholds.
3. Enter associated companies — Select the number of associated companies in addition to the company being calculated.
4. Calculate Corporation Tax — Click the calculation button to see the estimated Corporation Tax, effective rate, marginal relief and profit remaining after tax.

UK Corporation Tax Calculator

UK Corporation Tax is charged on the taxable profits of companies and certain other organisations. For non-ring fence profits, the current Corporation Tax structure has a 19% small profits rate and a 25% main rate. Companies with taxable profits between the relevant lower and upper limits may receive marginal relief, which reduces the amount of tax due compared with simply applying the 25% rate to the whole profit.

For a company with no associated companies and a standard 12-month accounting period, the small profits threshold is £50,000 and the main-rate threshold is £250,000. These thresholds can be reduced where a company has associated companies or where its accounting period is shorter than 12 months.

How Much Corporation Tax Will a Limited Company Pay?

The amount of Corporation Tax depends on taxable profit rather than simply on revenue. For example, a company may have significant turnover but comparatively modest taxable profit after allowable business costs and other tax adjustments. Conversely, a company with high taxable profits can have a substantially larger Corporation Tax liability.

At or below the applicable small profits threshold, a qualifying company generally pays Corporation Tax at 19%. Above the applicable main-rate threshold, the main rate is 25%. Between those thresholds, marginal relief reduces the liability so that the effective rate increases gradually.

Corporation Tax Marginal Relief

Marginal relief is designed to prevent a company from facing a sudden increase in its effective Corporation Tax rate when its profits move just above the small profits threshold. The amount of relief depends on the company's taxable profits and the relevant lower and upper limits.

The standard marginal relief fraction for non-ring fence profits is 3/200. The calculation can become more complicated where there are associated companies, short accounting periods or other circumstances affecting the company's taxable profits. This calculator models the standard threshold adjustment for these inputs but does not reproduce every part of a formal Corporation Tax computation.

Understanding Your Corporation Tax Calculation

The taxable profit entered into the calculator is the starting point for the estimate. If the profit is at or below the applicable small profits threshold, the calculator applies the 19% small profits rate. If the profit is at or above the applicable main-rate threshold, it applies the 25% main rate. Where the profit falls between the two thresholds, the calculator estimates marginal relief.

The thresholds are adjusted when you select a short accounting period or associated companies. For example, the standard £50,000 and £250,000 limits are reduced proportionately for a short accounting period, while associated companies generally cause the thresholds to be divided between the relevant companies.

The resulting figure is an estimate of Corporation Tax on the taxable profit entered. It should not be interpreted as the final amount payable to HMRC. A real Corporation Tax computation may need to account for capital allowances, trading losses, research and development relief, non-deductible expenses, group relief, chargeable gains and other tax rules.

This calculator also does not calculate VAT, PAYE, employer National Insurance, dividend tax, personal Income Tax or other taxes that may apply to company directors and shareholders.

Frequently Asked Questions