Corporation tax rate UK 2025
Corporation tax is one of the main taxes your limited company pays. Knowing the rate, when it applies, and how it is calculated helps you plan and avoid surprises. This article explains the corporation tax rate in the UK for 2025 and how it applies to small companies, including the small profits rate and the main rules that affect what you pay.
We cover the main rate and the small profits rate, what counts as profit for tax, and how payments work. This is for directors and owners of UK limited companies who want a clear overview without reading the legislation.
What is the corporation tax rate in the UK for 2025?
For the financial year beginning 1 April 2025, the main corporation tax rate is 25% for companies with profits over £250,000. Companies with profits of £50,000 or less (the "small profits rate" band) pay 19%. Between £50,000 and £250,000, there is a taper: marginal relief applies so that the effective rate increases gradually between 19% and 25%. These thresholds are divided by the number of associated companies (companies under common control); if you have more than one company, the bands are shared.
Why it matters
Your company's accounting period is aligned to the financial year for tax purposes (with rules for periods that span rate changes). Knowing the rate and the bands helps you forecast tax and plan distributions. For more on corporation tax and year-end, see our Statutory Accounts & Tax service.
How profit is calculated for corporation tax
Taxable profit is not the same as accounting profit. You start with the profit in your accounts and then apply tax adjustments: add back disallowable expenses (e.g. depreciation, entertainment, some legal fees), deduct capital allowances instead of depreciation, and apply reliefs (e.g. R&D, certain allowances). The result is the taxable profit that is charged at the relevant rate(s). HMRC guidance on corporation tax explains the calculation in more detail.
When and how you pay
Corporation tax is due 9 months and 1 day after the end of your accounting period. So for a year end of 31 March 2026, the tax is due by 1 January 2027. You must pay on time even if the return is not yet filed; many companies estimate and pay, then true up when the return is submitted. The return itself is due 12 months after the period end.
Associated companies and the small profits rate
If you have more than one company under the same control (e.g. you own two limited companies), they are "associated". The £50,000 and £250,000 limits are divided by the number of associated companies. So with two companies, each has a £25,000 lower limit and a £125,000 upper limit for the small profits rate and taper. This can push one or both into a higher effective rate.
UK tax and legal accuracy
Rates and thresholds are set by Parliament and can change. The information here reflects the position for the financial year from 1 April 2025. This article is for informational purposes only and does not constitute professional tax or financial advice. Please speak to a qualified accountant before taking action.
Frequently asked questions
What is the small profits rate?
The small profits rate is 19% for companies with taxable profits of £50,000 or less (before dividing by associated companies). It is designed to support small companies.
When did the main rate go to 25%?
The main rate increased to 25% for the financial year starting 1 April 2023 and remains at 25% for 2025/26. The small profits rate and marginal relief apply as described above.
Do I pay corporation tax on turnover?
No. You pay on taxable profit (income minus allowable expenses and after adjustments). Turnover is just the top line.
What if my accounting period is not 12 months?
Short or long periods are still charged to corporation tax. The limits for the small profits rate and taper are pro-rated for the length of the period.
Can I reduce my corporation tax bill legally?
Yes. Claim all allowable expenses and reliefs (e.g. capital allowances, R&D if you qualify). Structure remuneration (salary and dividends) efficiently. Do not try to hide profit or invent fake expenses; HMRC have strong anti-avoidance rules.
Summary and next steps
The corporation tax rate in the UK for 2025 is 25% for profits over £250,000 (main rate) and 19% for profits of £50,000 or less (small profits rate), with marginal relief in between. Associated companies share the limits. Tax is due 9 months and 1 day after the period end. Getting the calculation and payment right keeps you compliant and avoids interest and penalties.
If you would like help with corporation tax, year-end accounts, or tax planning, we would be glad to help. At Figures Chartered Accountants we work with UK limited companies on accounts and tax. You can book a discovery call or look at our Statutory Accounts & Tax service.