UK Marginal Relief Corporation Tax Calculator
Calculate your Corporation Tax liability with marginal relief for profits between £50,000 and £250,000
Calculate Your Marginal Relief
Corporation Tax Rates 2025-26
| Profit Band | Tax Rate | Description |
|---|---|---|
| £0 – £50,000 | 19% | Small Profits Rate |
| £50,001 – £249,999 | 19% – 25% | Main Rate with Marginal Relief |
| £250,000+ | 25% | Main Rate |
Important: Marginal relief provides a gradual increase in Corporation Tax rate between 19% and 25%, preventing sudden tax increases as profits grow.
How Marginal Relief Works
Marginal Relief reduces your Corporation Tax liability if your company’s taxable profits fall between £50,000 and £250,000. The relief amount is calculated using the formula:
Marginal Relief = (3/200) × (Upper Limit – Taxable Profits)
Your final Corporation Tax liability is then:
Tax Due = (Taxable Profits × 25%) – Marginal Relief
Example Calculation
For a company with £100,000 taxable profits:
- Corporation Tax at 25%: £25,000
- Marginal Relief: (3/200) × (£250,000 – £100,000) = £2,250
- Final tax liability: £25,000 – £2,250 = £22,750
- Effective tax rate: 22.75%
Eligibility Requirements
Who Can Claim Marginal Relief
- UK resident companies
- Companies with taxable profits between £50,000 and £250,000
- Trading companies (not close investment holding companies)
- Companies that file Corporation Tax returns
Who Cannot Claim
- Non-UK resident companies
- Close investment holding companies
- Companies with total profits exceeding £250,000 (including distributions from unrelated companies)
Associated Companies Impact
If your company has associated companies, the profit thresholds are divided equally between all companies in the group:
| Associated Companies | Lower Limit | Upper Limit |
|---|---|---|
| 0 | £50,000 | £250,000 |
| 1 | £25,000 | £125,000 |
| 2 | £16,667 | £83,333 |
| 3 | £12,500 | £62,500 |
| 4 | £10,000 | £50,000 |
Frequently Asked Questions
What is marginal relief in Corporation Tax?
Marginal relief is a tax relief that reduces Corporation Tax for companies with profits between £50,000 and £250,000. It creates a gradual increase in tax rates rather than a sudden jump from 19% to 25%.
How do I know if my company qualifies for marginal relief?
Your company qualifies if it’s UK resident, has taxable profits between £50,000 and £250,000, and is not a close investment holding company. The limits may be reduced if you have associated companies.
What are associated companies?
Associated companies are businesses where one company controls another, or both are controlled by the same person or group. This includes subsidiaries, parent companies, and sister companies under common control.
When did marginal relief start?
The current marginal relief system started on 1 April 2023, when Corporation Tax rates changed from a flat 19% to the current tiered system with 19%, 25%, and marginal relief rates.
How is marginal relief calculated for short accounting periods?
For accounting periods shorter than 12 months, both the upper and lower profit limits are reduced proportionally. For example, a 6-month period would have limits of £25,000 and £125,000.
Can I claim marginal relief if I have overseas income?
Yes, as long as your company is UK resident and your total worldwide profits (including overseas income) fall within the marginal relief bands. However, you cannot claim if you’re a non-UK resident company.
References
- HM Revenue and Customs. (2023). “Marginal Relief for Corporation Tax.” Gov.uk. Available at: https://www.gov.uk/guidance/corporation-tax-marginal-relief
- HM Revenue and Customs. (2025). “Rates and allowances for Corporation Tax.” Gov.uk. Available at: https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax
- Companies House. (2023). “Corporation Tax for Limited Companies.” Gov.uk. Available at: https://www.gov.uk/corporation-tax
- HM Revenue and Customs. (2023). “Associated Companies and Corporation Tax.” Gov.uk. Available at: https://www.gov.uk/guidance/corporation-tax-associated-companies