A UK marginal relief calculator for Corporation Tax
This marginal relief calculator works out UK Corporation Tax for a company whose profits fall between the £50,000 small profits limit and the £250,000 main rate limit. It follows HMRC’s own formula: tax at the 25% main rate, less marginal relief of 3/200 × (upper limit − augmented profits) × (taxable profits ÷ augmented profits). Below the lower limit it applies the 19% small profits rate; above the upper limit, 25%.
It handles the details that change the answer: associated companies (which divide both limits), short accounting periods (which shrink them), exempt distributions that count towards augmented profits, and close investment-holding companies. You also get the effective rate, the tax on your next £100 of profit and the payment date.
Rules come from HMRC’s Company Taxation Manual and GOV.UK guidance (checked 24 October 2026) and the calculator reproduces HMRC’s worked examples. It runs in your browser. Results are estimates, not tax advice — your CT600 computation is what counts.
How to use the Marginal Relief Calculator
- Enter the company’s taxable total profits for the accounting period.
- Add any exempt distributions — dividends received from companies outside the group — or leave 0.
- Enter the number of associated companies (others under common control, not counting this one).
- Set the accounting period dates. For a period shorter than 12 months, choose whether to reduce the limits by days or whole months.
- Read the tax, marginal relief, effective rate and payment date, then copy the computation.
Marginal Relief Calculator features
HMRC’s exact formula
Main-rate tax less 3/200 × (U − A) × N/A, tested against HMRC’s published examples to the penny.
Associated companies
Divides the £50,000 and £250,000 limits by one plus the number of associated companies.
Short accounting periods
Reduces both limits proportionately — by days ÷ 365 or by whole months ÷ 12.
Effective and marginal rates
Shows your average rate and the 26.5% marginal rate that applies inside the relief band.
Payment date
Gives the 9 months and 1 day deadline, or flags quarterly instalments for large companies.
How marginal relief works
Marginal relief smooths the jump from 19% to 25%. Between the limits the company pays 25% on all profits, then subtracts the relief. With no exempt distributions, the relief is 1.5% of the gap between the upper limit and profits, so every extra pound of profit inside the band costs 26.5p — a higher marginal rate than the main rate. The average rate climbs from 19% at £50,000 to 25% at £250,000.
Worked example: taxable profits of £120,000 for a 12-month period with no associated companies. Tax at 25% is £30,000. Marginal relief is 3/200 × (£250,000 − £120,000) = £1,950. Corporation Tax is £28,050, an effective rate of 23.4%. HMRC’s own example — £90,000 of profits plus £8,000 of exempt distributions — gives relief of £2,094 and tax of £20,406.
Rates, limits and adjustments
| Item | Value (financial years 2023 to 2026) | Adjustment |
|---|---|---|
| Small profits rate | 19% | Augmented profits at or below the lower limit |
| Main rate | 25% | Augmented profits at or above the upper limit |
| Lower limit | £50,000 | ÷ (1 + associated companies), × period length |
| Upper limit | £250,000 | ÷ (1 + associated companies), × period length |
| Marginal relief fraction | 3/200 | Applied to (U − A) × N/A |
| Payment | 9 months and 1 day | Instalments if profits over £1.5 million |
Associated companies and short periods
Companies are associated if one controls the other or both are under the control of the same person or group. With three associated companies the limits are divided by four: £12,500 and £62,500. Dormant companies and certain passive holding companies are ignored. A 9-month accounting period cuts the limits to £37,500 and £187,500; HMRC’s manual says the reduction should strictly be worked in days.
After Corporation Tax, profits paid out as dividends are taxed again on the shareholder — see the UK dividend tax calculator. For a director’s salary, use the UK take-home pay calculator.
Marginal Relief Calculator FAQ
How is marginal relief calculated?
Marginal relief = 3/200 × (upper limit − augmented profits) × (taxable profits ÷ augmented profits). It is taken off tax at the 25% main rate. This marginal relief calculator applies it automatically.
What is the Corporation Tax rate for profits between £50,000 and £250,000?
The 25% main rate less marginal relief, giving an effective rate between 19% and 25% and a marginal rate of 26.5% on each extra pound.
Do associated companies affect marginal relief?
Yes. Both limits are divided by one plus the number of associated companies, so a group can reach the main rate much sooner.
What are augmented profits?
Taxable total profits plus exempt distributions of a qualifying kind received from companies outside the group. Dividends from 51% subsidiaries are excluded.
How do short accounting periods change the limits?
Both limits are reduced in proportion to the length of the period — for example × 9/12 for nine months.
Is this the same as HMRC’s marginal relief calculator?
It uses the same formula and reproduces HMRC’s manual examples, but it is an independent estimate, not an HMRC service or tax advice.