For accounting periods in the financial year starting 1 April 2026, HMRC sets three positions for non-ring-fence profits.

• Profits up to £50,000: the small profits rate of 19%.
• Profits over £250,000: the main rate of 25%.
• Profits between the two: the main rate, reduced by marginal relief.

Those limits have been in place since 1 April 2023, when the single corporation tax rate was withdrawn. Nothing about the rates themselves changed on 1 April 2026, which makes life easier if your year end straddles that date. There is no apportionment between two different rate sets this year.

Two specialist rates sit outside this. Unit trusts and open-ended investment companies pay 20%. Ring fence companies, meaning oil and gas extraction, have their own small profits rate of 19% and a main rate of 30%, with a ring fence fraction of 11/400. If you are reading this as a consultancy, a contractor company or a construction business, neither applies to you.

You can check the published figures on the HMRC rates and allowances page, last updated for 2026 to 2027 on 1 April 2026.

Marginal relief is the mechanism that bridges 19% and 25%, and it produces a figure higher than both.

The calculation takes the main rate, then deducts relief using the standard fraction of 3/200 applied to the gap between your profits and the £250,000 upper limit. Work it through and the effect is consistent: every pound of profit between £50,000 and £250,000 is taxed at 26.5%.

An illustration on round numbers. A company with £100,000 of profit pays 19% on the first £50,000 and 26.5% on the next £50,000, giving £22,750. The same company earning another £10,000 of profit pays £2,650 more tax on it. That is the number to use when you are pricing a job or deciding whether to bring a cost forward, not 25%.

This is also why the middle band rewards timing. Pension contributions, equipment purchases and bonus decisions taken before the year end come off profit sitting in the 26.5% slice. Taken a month after the year end, they come off next year’s profit instead. Same spend, different value, and the only thing separating the two outcomes is whether anyone told you in time.

The two limits are not fixed per company. Two things shift them, and both catch owners out.

First, associated companies. If you control another trading company, or you and your associates do, the limits are divided between them. Two associated companies means a small profits limit of £25,000 each and an upper limit of £125,000 each. A director with a second company holding a side venture can find profits that looked like 19% territory sitting in the marginal band instead.

Second, short accounting periods. If you shorten your year end, the limits are pro-rated. A nine-month period carries three quarters of each limit. Changing a year end for commercial reasons is fine, and worth checking against the tax position before you file the change at Companies House.

Neither rule is new, and neither is obvious from the headline rate tables. They are the sort of thing that comes out of looking at a group of companies properly once, rather than preparing each set of accounts in isolation. If nobody has asked you whether you hold shares in anything else, that question has not been asked.

The rates held steady for 2026 to 2027. Several things around them did not.

The loans to participators charge went up. Where a director’s loan account is overdrawn nine months after the year end, the company pays tax on the balance, and that rate rose from 33.75% to 35.75% following Budget 2025. It is refundable once the loan is repaid, and it is still cash leaving the company in the meantime. If your loan account runs overdrawn, the repayment date matters more than it used to.

Dividends got more expensive. HMRC’s February 2026 newsletter confirms a dividend rate moving from 8.75% to 10.75% for 2026 to 2027. That changes the salary and dividend arithmetic for owner-directors, and it is worth a fresh calculation rather than repeating last year’s split. We cover the detail in dividend tax 2026 to 2027 how it works.

Capital allowances on electric vehicles are changing shape. A 40% first-year allowance is being introduced for zero-emission cars and electric vehicle charge points, with two new boxes appearing on the CT600 from April 2027. If a vehicle decision is coming up, see company car or car allowance through a limited company.

You can know every rate in this article and still be caught out, because the rate is only half the problem.

Corporation tax is due nine months and one day after the year end, and plenty of owners first hear the number a few weeks before that. By then the planning window has closed. Pension contributions, timing of purchases, dividend headroom, all of it had to be decided before the year end, not after it.

So the useful work happens earlier. Before your year end, you should know roughly what the taxable profit will be, which band it lands in, and whether moving a decision forward changes the answer. Every Nexus client gets that forecast, with their dividend position, a month before the bill lands. The money is there and the decision is theirs.

That is also why the set-up review exists. Structure, VAT scheme, salary and dividends and software get checked when a client joins, including whether there are associated companies affecting the limits. Sometimes the answer is that nothing needs to change, and we say so.