Corporation tax rates are set. But that doesn't mean you can ignore what's coming. Between marginal relief traps, associated company rules, and filing penalty hikes, the compliance picture for 2026 is more tangled than you might think.
If you run a limited company, this is the year to get ahead of it—not the year to guess and hope for the best.
What is the corporation tax rate in the UK 2026?
The main corporation tax rate stays at 25% for profits above £250,000. Companies with profits under £50,000 pay 19%. If you're somewhere in the middle, marginal relief applies—which sounds helpful, but only if you claim it correctly.
Here's the catch: these thresholds get divided by the number of associated companies you have. Own two companies under common control? Your £250,000 upper limit just became £125,000 per company. Miss that detail, and you're paying the wrong rate.
Corporation tax rates at a glance
| Taxable profits | Rate |
| Up to £50,000 | 19% |
| £50,001 to £250,000 | Marginal relief applies |
| Over £250,000 | 25% |
(Thresholds divided by 1 + number of associated companies)
HMRC has tightened enforcement around associated company counts. If your ownership structure has changed—new shareholders, new group companies, family holdings—you need to reassess before you file.
What are the tax changes for limited companies in 2026?
The headline rates haven't moved. But the rules around them have sharpened.
Main rate writing-down allowances drop to 14%
From April 2026, the main pool writing-down allowance falls from 18% to 14%. That's a 22% reduction in the annual relief you can claim on plant and machinery that doesn't qualify for full expensing or the annual investment allowance.
If you've been putting off capital purchases, timing matters. Buy before April, and you get 18%. Buy after, and you're stuck with 14%.
New 40% first-year allowance for leased assets
A new 40% first-year allowance applies from January 2026 for qualifying main rate expenditure on new and unused plant and machinery used for leasing within the UK. This is aimed at closing gaps where full expensing doesn't apply—particularly for unincorporated businesses and certain leasing arrangements.
It doesn't cover special rate assets, so check your pool classification before assuming you qualify.
Quarterly instalment payments now use associated companies
If your profits exceed £1.5 million, you pay corporation tax in quarterly instalments. That threshold used to be divided by 51% group companies. Now it includes all associated companies—even those outside your corporate group.
Many businesses missed this change in 2023. HMRC sent "one-to-many" letters in 2025 flagging the issue. If you've been filing based on old rules, expect a review.
Find out more about if you could pay corporation tax return in installments here.
Late filing penalties double from 1 April 2026
Miss your filing deadline after 1 April 2026, and penalties are twice what they used to be. For most companies, that's £200 instead of £100 for a three-month delay, rising to £1,000 for six months, and £1,000 per month after that.
The message is clear: file on time, or pay more.
What happens to tax rates in 2026 in the UK?
Corporation tax rates are frozen. The government confirmed in the Corporate Tax Roadmap that the 25% top rate is capped for this parliament. Full expensing is permanent. R&D relief and Patent Box are staying. So is the Substantial Shareholding Exemption.
But income tax and dividend tax? Those are moving.
Dividend tax rises on 6 April 2026
Dividend tax rates increase by 2% for ordinary and higher-rate taxpayers:
| Tax Rate | Current Rate (2025/26) | New Rate (from 6 April 2026) |
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
| Additional rate | 39.35% | 39.35% |
If you're planning to extract profits via dividends, bring them forward into 2025/26 to save the increase.
Director loan accounts cost more
The s455 tax charge on overdrawn director loan accounts follows the higher rate dividend tax rate. From 6 April 2026, that's 35.75%—up from 33.75%.
The charge is refundable once the loan is cleared, but it ties up cash for at least nine months. If you've got an overdrawn loan account, now's the time to clear it—or at least plan how you will.
What is the tax threshold for 2025 to 2026?
The corporation tax thresholds for 2025/26 (financial year starting 1 April 2025) are:
| Threshold Type | Profit Level |
| Small profit rate threshold | £50,000 |
| Main rate threshold | £250,000 |
| Marginal relief | Applies between £50,000 and £250,000 |
These thresholds are divided by (1 + number of associated companies). So if you have one associated company, the upper threshold becomes £125,000 per company.
For income tax (tax year starting 6 April 2025):
| Tax Band | Income Range | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 - £50,270 | 20% |
| Higher Rate | £50,271 - £125,140 | 40% |
| Additional Rate | Above £125,140 | 45% |
(Scotland has different rates and bands)
The personal allowance reduces by £1 for every £2 of income over £100,000. Earn £125,140 or more, and your personal allowance disappears entirely.
How to calculate your corporation tax in 2026
Step 1: Work out your taxable profit
Start with your company's profit before tax. Add back any disallowable expenses: entertaining, depreciation, fines, and personal costs. Then deduct capital allowances and any other qualifying reliefs.
What you're left with is your taxable profit.
Step 2: Count your associated companies
Associated companies include any company under common control, whether or not they're in the same corporate group. Count them all. Then divide your thresholds by (1 + number of associated companies).
If you have two associated companies, your thresholds become:
- Small profit rate: £16,667 per company
- Main rate: £83,333 per company
Step 3: Apply the right rate
- Profits under the small profit threshold: 19%
- Profits over the main rate threshold: 25%
- Profits in between: marginal relief applies
Step 4: Claim marginal relief if eligible
Marginal relief reduces the effective rate for profits between £50,000 and £250,000 (or your adjusted thresholds).
The formula is:
(Upper limit – Taxable profit) × 3/200
Example:
Taxable profit: £100,000
Upper limit: £250,000
Marginal relief: (£250,000 – £100,000) × 3/200 = £2,250
Tax at main rate: £100,000 × 25% = £25,000
Less marginal relief: £2,250
Final tax: £22,750 (effective rate 22.75%)
Step 5: Pay on time
Payment is due nine months and one day after your accounting period ends. If you're liable for quarterly instalment payments, the deadlines are earlier.
Miss the deadline, and you'll pay interest. Miss it by a lot, and you'll pay penalties too.
What you need to do before your 2026 year-end
Review your associated company position
Has your ownership structure changed? Have you set up new companies, brought in new shareholders, or restructured your group? If yes, recalculate your thresholds. Do it before you close your accounts, not after you've filed.
Model your marginal relief impact
If your profits are between £50,000 and £250,000, forecast your final position. Small changes in timing—accelerating expenses, deferring income—can move you into or out of marginal relief.
It's not about manipulation. It's about making informed decisions while you still can.
Decide what to do with losses
Carry them back? Surrender as group relief? Retain for future use? Each option has cash flow implications. Run the numbers before you file.
Time your bonuses and pension contributions
Bonuses are deductible when the liability is established and paid within nine months of the year-end. Employer pension contributions are deductible when paid.
Both are useful levers for managing your taxable profit—but only if you plan ahead.
Confirm your filing deadlines
Your corporation tax return is due 12 months after your accounting period ends. Other obligations—CIR returns, Pillar 2 filings, SAO certificates—have their own deadlines.
Penalties for late filing double from 1 April 2026. Get your dates in the diary now.
Key takeaways
- Corporation tax rates are 19% (profits under £50,000), 25% (profits over £250,000), and marginal relief in between.
- Thresholds are divided by 1 + number of associated companies—miss this, and you'll pay the wrong rate.
- Main pool writing-down allowances drop from 18% to 14% from April 2026.
- A new 40% first-year allowance applies to qualifying leased assets from January 2026.
- Dividend tax rises by 2% for ordinary and higher rate taxpayers on 6 April 2026.
- Late filing penalties double from 1 April 2026—£200 instead of £100 for a three-month delay.
- Quarterly instalment thresholds now use associated companies, not just 51% groups.
- Marginal relief can save thousands—but only if you claim it correctly.
How Debitam can help
At Debitam, we work with small business owners who need clear answers, not confusing jargon. We handle your corporation tax returns, year-end accounts, and all the compliance pieces that come with running a limited company.
No hidden fees. No last-minute surprises. Just reliable, online support from accountants who actually know what they're doing.
If you're tired of guessing whether you've got it right, get in touch. We'll make sure your 2026 filing is accurate, on time, and as tax-efficient as it can be.
