If you’re paying corporate taxes for the first time as a company director, here’s the part that catches almost everyone out: your Corporation Tax payment is due before your tax return. You pay 9 months and 1 day after your accounting period ends, but the return itself isn’t due until 12 months after, which means you’re settling a bill for a return you haven’t technically filed yet. This guide covers the current rates, exactly how to calculate what you owe, the deadlines that actually matter, and how to pay.
Corporation tax rates UK: what you’re actually paying
Since 1 April 2023, the UK has run a two-tier Corporation Tax system rather than the single flat rate that applied for years before that. For 2026/27, the rates remain:
- 19% (the small profits rate) on taxable profits up to £50,000
- 25% (the main rate) on taxable profits above £250,000
- Marginal relief applies to profits falling between those two figures, tapering the effective rate smoothly from 19% up to 25%
These thresholds aren’t fixed per company if you have associated companies, which we’ll cover shortly. For a standalone company with no associated businesses, though, the £50,000 and £250,000 figures apply in full.
How the small profits rate corporation tax works
If your company’s taxable profits sit at or below £50,000 for the accounting period, the calculation is simple: you pay 19% of that figure, with no further adjustment needed. A company with £40,000 in taxable profits pays £7,600 in Corporation Tax, full stop.
This rate has stayed at 19% since April 2023, when it was reintroduced after several years of a single flat rate across all company sizes. It’s worth checking GOV.UK for the current figure each year regardless, since rates can move at any Budget even when they’ve held steady for a while.
Marginal relief corporation tax: the worked calculation
This is where most directors’ eyes glaze over, so it’s worth working through slowly with real numbers rather than just quoting the formula.
Once your profits go above £50,000, you don’t simply jump to paying 25% on the whole amount. Instead, you’re charged at the main rate of 25%, and then marginal relief reduces that bill, producing an effective rate somewhere between 19% and 25% depending on exactly where your profits fall within the band.
The formula HMRC uses is:
Marginal relief = (Upper limit − Profits) × (Profits ÷ Profits) × 3/200
In practice, since the fraction Profits ÷ Profits equals 1 for most owner-managed companies with no exempt distributions, this simplifies to:
Marginal relief = (£250,000 − Profits) × 3/200
Worked example
Say your company has taxable profits of £100,000 for the accounting period, with no associated companies.
- Tax at the main rate: £100,000 × 25% = £25,000
- Marginal relief: (£250,000 − £100,000) × 3/200 = £150,000 × 0.015 = £2,250
- Corporation Tax payable: £25,000 − £2,250 = £22,750
That works out to an effective rate of 22.75%, sitting neatly between the 19% and 25% headline rates, which is exactly what marginal relief is designed to produce. Run the same formula at £150,000 profits and the effective rate climbs to roughly 24.25%; at £200,000 it’s closer to 24.6%. The closer you get to £250,000, the closer the effective rate creeps toward the full 25%.
One quirk worth flagging honestly: within the marginal relief band, each additional pound of profit is effectively taxed at around 26.5%, higher than the 25% main rate itself. That’s a deliberate feature of how the relief tapers off, not an error, but it does mean profits just inside the band can face a steeper marginal cost than profits comfortably above £250,000.
Associated company rules: why your thresholds might be smaller
The £50,000 and £250,000 figures aren’t fixed if your company has associated companies, meaning other companies under common control, whether that’s the same person, the same group of people, or a parent-subsidiary relationship.
Both thresholds are divided by the total number of associated companies, including the company itself. So if you control two associated companies, the small profits threshold drops to £25,000 each, and the upper limit drops to £125,000 each. With three associated companies, it’s £16,667 and £83,333 respectively, and so on.
Dormant companies with no significant assets or activity can generally be excluded from this count, which offers some relief for directors who’ve set up a company that never really got going. If you’re not sure whether a related company counts as associated for this purpose, it’s worth checking with an accountant rather than guessing, since getting it wrong can mean underpaying tax without realising it.
Corporation tax deadline: two dates, not one
This is the single most misunderstood part of paying corporate taxes in the UK, so it’s worth stating plainly: the payment deadline and the filing deadline are different dates, and the payment comes first.
- Payment deadline: 9 months and 1 day after the end of your accounting period
- Company Tax Return (CT600) filing deadline: 12 months after the end of your accounting period
For a company with an accounting period ending 31 March 2026, that means payment is due by 1 January 2027, while the CT600 return itself isn’t due until 31 March 2027, a full three months later. You’re expected to calculate your liability and pay it before you’ve formally filed the return that confirms the figure, which means your bookkeeping needs to be in reasonably good shape well ahead of the payment date, not just the filing one.
There’s no automatic reminder or bill the way PAYE works through payroll. HMRC may send a notice to your Business Tax Account or by post, but the legal responsibility to calculate and pay on time sits with the company regardless of whether a reminder arrives. The safest approach is to diarise the payment date yourself the moment your accounting period ends, rather than waiting for HMRC to prompt you.
If your deadline falls on a weekend or bank holiday, make sure your payment actually clears by the last working day before it, unless you’re using Faster Payments, which typically clears the same or next working day even close to the deadline.
How to pay corporation tax: methods and what you’ll need
You pay Corporation Tax electronically; there’s no cheque-in-the-post option in the way there once was for some HMRC payments. According to GOV.UK, accepted methods include:
- Faster Payments online or by phone banking, usually clearing the same or next day
- CHAPS, also same-day, generally used for larger payments where certainty matters
- Bacs, which typically takes three working days to clear
- Direct Debit, if you’ve already set one up with HMRC
- Debit card or corporate credit card through HMRC’s online service
Whichever method you choose, you’ll need your company’s Corporation Tax payment reference, a 17-character code specific to that particular accounting period, not your company’s Unique Taxpayer Reference (UTR). This reference changes every accounting period, so reusing an old one from a previous year is a common mistake that can leave your payment sitting unallocated, which makes it look like you still owe tax even after you’ve genuinely paid.
Give your payment a few working days to appear before assuming something’s gone wrong, and check your Business Tax Account to confirm it’s landed correctly against the right period.
Quarterly instalments: when large companies pay differently
Most small and medium companies pay their entire Corporation Tax bill in one go, 9 months and 1 day after the period ends. That changes once your company’s taxable profits go above £1.5 million, adjusted for associated companies and the length of your accounting period, at which point you fall into the Quarterly Instalment Payments (QIPs) regime.
Under QIPs, a company with a standard 12-month accounting period pays in four equal instalments, due:
- 6 months and 13 days after the first day of the accounting period
- 9 months and 13 days after the first day of the accounting period
- 12 months and 13 days after the first day of the accounting period
- 3 months and 14 days after the last day of the accounting period
Notice that the first two instalments fall before your accounting period has even ended, which means large companies are estimating their liability and paying against that estimate, then adjusting in later instalments once the real figures firm up.
Companies with profits above £20 million, described as “very large” for this purpose, follow an even earlier schedule: four equal instalments on the 14th day of months 3, 6, 9 and 12 of the accounting period. There’s generally no grace period the first time a company crosses the very large threshold, unlike the £1.5 million threshold, where the first year of exceeding it doesn’t require instalment payments.
For the vast majority of small companies reading this, none of the above applies, but it’s worth knowing the trigger point exists if you’re planning for genuine growth.
What if you can’t pay on time
If cash flow is tight and you’re not going to make the payment deadline, contact HMRC before the deadline rather than after. HMRC can agree a Time to Pay arrangement, spreading the bill over an agreed period rather than demanding it all at once.
Interest continues to accrue on the outstanding balance throughout a Time to Pay arrangement, so it’s not free borrowing, but it does generally suspend more aggressive enforcement action while you keep to the agreed schedule. Reaching out proactively, ideally weeks rather than days before the deadline, tends to get a more constructive response than waiting until the payment’s already overdue.
FAQs
What is the corporation tax rate in the UK for 2026?
The small profits rate is 19% on profits up to £50,000, and the main rate is 25% on profits above £250,000. Profits between those figures are taxed at 25% with marginal relief applied, producing an effective rate somewhere between 19% and 25%.
When is corporation tax due?
Corporation Tax must be paid 9 months and 1 day after the end of your accounting period, which is earlier than the Company Tax Return filing deadline of 12 months after the period ends. This applies to companies below the £1.5 million profit threshold for quarterly installments.
How do I pay corporation tax to HMRC?
You pay electronically using Faster Payments, CHAPS, Bacs, Direct Debit or a debit or corporate credit card through HMRC’s online service. You’ll need your 17-character Corporation Tax payment reference for the specific accounting period, not your company’s Unique Taxpayer Reference.
What is marginal relief for corporation tax?
Marginal relief tapers the effective Corporation Tax rate between 19% and 25% for companies with taxable profits between £50,000 and £250,000. It’s calculated as (£250,000 minus profits) multiplied by 3/200, then deducted from tax charged at the 25% main rate.
Do all companies pay corporation tax in one payment?
No. Companies with taxable profits above £1.5 million, adjusted for associated companies, must pay through quarterly instalments rather than a single lump sum, with the first instalment falling before the accounting period even ends. Companies below that threshold pay in one payment, 9 months and 1 day after the period end.
What happens if my company has associated companies?
The £50,000 and £250,000 thresholds are divided by the total number of associated companies, including your own. Two associated companies each face a £25,000 small profits threshold and a £125,000 upper limit instead of the standard figures.
What happens if I miss the corporation tax payment deadline?
HMRC charges interest on the outstanding balance from the day after the deadline until you pay in full. If you know in advance you’ll miss the deadline, contact HMRC before it passes to discuss a Time to Pay arrangement rather than waiting until the payment is already overdue.
Is the corporation tax deadline the same as the filing deadline?
No, and this is one of the most common points of confusion. Payment is due 9 months and 1 day after your accounting period ends, while your Company Tax Return (CT600) isn’t due until 12 months after the period end, a full three months later.
