Corporation Tax marginal relief
A practical reference to the UK Corporation Tax marginal-relief formula, augmented profits, short periods and associated-company limits for financial years 2023/24–2026/27.
When the standard marginal relief applies
For a standard UK-resident non-ring-fence company, the small-profits rate is 19% and main rate is 25% for financial years beginning 1 April 2023 through 1 April 2026. The annual lower and upper limits are £50,000 and £250,000, with marginal relief between them.
The band test uses augmented profits (A), not taxable total profits (N) alone. A is N plus qualifying exempt distributions that are not excluded. These distributions affect the band and relief ratio, but the tax charge is on N, not on the exempt distributions.
For a short accounting period, reduce each limit by the period's days divided by days in the relevant financial year. Then divide by one plus the number of other associated companies. The count may include a company associated for only part of the period; HMRC has exclusions that must be checked.
Where A is above the adjusted lower limit but below the adjusted upper limit, start with 25% × N and deduct relief of 3/200 × (U − A) × (N / A), where U is the adjusted upper limit. At or below the lower limit, use 19% × N; at or above the upper limit, use 25% × N.
Rule summary
Published non-ring-fence rules: financial years 2023/24–2026/27
The annual limits are £50,000 and £250,000 before short-period and associated-company adjustments. At or below the lower limit, the standard small-profits rate is 19%; at or above the upper limit, the main rate is 25%.
Only a Corporation Tax accounting period wholly within one financial year is supported here. Periods crossing 1 April may require financial-year apportionment; the calculator stops rather than guessing.
| Band selected by augmented profits | Standard tax treatment |
|---|---|
| At or below adjusted lower limit | 19% of taxable total profits |
| Above lower and below upper | 25% of taxable total profits, less 3/200 × (U − A) × (N / A) |
| At or above adjusted upper limit | 25% of taxable total profits |
Worked examples
How the rule behaves in practice
- HMRC's distributions example, shown to pence: For a full-year standard case with £90,000 taxable total profits and £8,000 qualifying exempt distributions, augmented profits are £98,000; there are no other associated companies. Tax at 25% is £22,500. Relief is 3/200 × (£250,000 − £98,000) × (£90,000 / £98,000) = £2,093.88. Resulting tax is £20,406.12 (HMRC's published example rounds to whole pounds).
- One other associated company: For a full-year standard case with £50,000 taxable total profits, no qualifying distributions and one other associated company, the limits divide by two to £25,000 and £125,000. Tax at 25% is £12,500. Relief is 3/200 × (£125,000 − £50,000) = £1,125. Resulting tax is £11,375.
Practical consequences
- Do not use £50,000/£250,000 unchanged for a short period or a company with associates. Likewise, do not test the band using N while ignoring qualifying distributions.
- An accounting period crossing 1 April may need financial-year apportionment. The companion calculator does not compute a split period and will request review instead of giving a precise-looking number.
- The Corporation Tax payment deadline is a separate question from the amount of the liability. Use the payment-deadline tool only after the relevant accounting period and liability are clear.
Important limits
- Periods crossing 1 April, pre-1 April 2023 periods, and financial years after 2026/27 return review required.
- The tool does not determine which distributions qualify, which companies are associated, or how other reliefs and special tax regimes affect the filed liability.
- Rules and sources checked on 25 September 2026; recheck HMRC before using a later financial year.
Primary sources and review date
Reviewed on . Preserved source review from the accepted scoped statutory repair; this contract migration does not re-date that review.
Applies to: Non-ring-fence financial years 2023 through 2026; period and associated-company threshold adjustments.
Reviewed scope: Standard UK-resident company, not a close investment-holding company; supplied taxable/augmented profits, dates and associations; specialist regimes excluded.
- GOV.UK Corporation Tax rates and allowances (verified 25 September 2026)Supports: GOV.UK Corporation Tax rates and allowances
- HMRC CTM03925: marginal relief formula (verified 25 September 2026)Supports: marginal relief formula
- HMRC CTM03915: augmented profits (verified 25 September 2026)Supports: augmented profits
- HMRC CTM03930: short accounting periods (verified 25 September 2026)Supports: short accounting periods
- HMRC CTM03935: associated-company threshold division (verified 25 September 2026)Supports: associated-company threshold division
- HMRC CTM03955: financial-year boundary (verified 25 September 2026)Supports: financial-year boundary
Review basis and change triggers
Reviewed model: marginal-relief-calculator: non-ring-fence-fy2023-to-fy2026-reviewed-25 September 2026
- A cited source or statutory regime changes.
- Reviewed content, runtime adapter or domain implementation changes.
- A new effective period falls outside the supported scope.
Turn the result into an action plan
- Check the distribution classification and associated-company count against HMRC guidance before entering them.
- Use the linked calculator for a single-financial-year standard case; review crossing periods, close investment-holding companies, ring-fence profits and other specialist cases professionally.
- Confirm the payment date separately; this guide explains the tax amount, not when it is due.
Use the tool
Marginal Relief Calculator
Calculate standard UK Corporation Tax marginal relief using accounting-period dates, taxable total profits, qualifying distributions and other associated companies.