What is marginal relief for Corporation Tax?

Marginal relief reduces tax at the 25% main rate for eligible companies whose augmented profits are between the adjusted lower and upper limits. The normal 12-month limits are £50,000 and £250,000 before associated-company adjustments.

What is the standard marginal relief fraction?

The standard fraction is 3/200 (0.015). Marginal relief is F × (U − A) × (N ÷ A), where U is the adjusted upper limit, A is augmented profits and N is taxable total profits. This calculator assumes a 12-month period and A = N.

How do associated companies affect marginal relief?

Divide the normal limits by one plus the number of other associated companies. With one other company, the 12-month limits are £25,000 and £125,000. With two others, divide by three. Short periods reduce limits further.

Is the effective rate really 26.5% in the marginal band?

26.5% is the marginal rate on an extra pound within the relief band when augmented profits equal taxable profits. It is not the average rate on all profits: that rises from 19% to 25%. At £100,000 with no other associated companies, the average rate is 22.75%.

Do I need to claim marginal relief on the CT600?

Calculate any eligible relief in the Corporation Tax computation and report it in the relevant CT600 entries. Check the calculation and the supported scope of your filing software; a simple public estimate is not a completed return.

Guides

Corporation Tax Marginal Relief Calculator (2025/26)

Work out your Corporation Tax bill when profits fall between the small-profits rate (£50,000) and the main rate (£250,000) — with the official HMRC formula explained.

3 min read·Updated 28 October 2026

If your company's taxable profits fall between £50,000 and £250,000, you pay Corporation Tax somewhere between the small-profits rate (19%) and the main rate (25%) — sliding smoothly thanks to marginal relief.

This guide explains the formula, walks through worked examples, and embeds a live calculator so you can plug in your own numbers.

Marginal Relief Calculator

Estimate for a UK company eligible for the small profits rate, with a 12-month accounting period, no exempt distributions (augmented profits equal taxable profits), and an unchanged associated-company count. Short periods and other cases need a full calculation.

Taxable profits (£)

Other associated companies (excluding this company)

Lower limit: £50,000
Upper limit: £250,000
Marginal relief: £2,250
Corporation Tax due: £22,750
Effective rate: 22.75%

Profits fall within the marginal relief band — taper between 19% and 25%.

The 2025/26 Corporation Tax rates

Profits	Rate
Up to £50,000	19% (small-profits rate)
£50,001 – £250,000	25% with marginal relief (average effective rate rises from 19% to 25% when augmented profits equal taxable profits)
Over £250,000	25% (main rate)

The thresholds are divided by the number of "associated companies" (broadly, companies under common control) plus one. Two companies under common control each have one other associated company, giving each £25k/£125k limits for a 12-month period.

How marginal relief works

You pay tax at the main rate (25%) on all profits, then subtract a marginal relief:

MR = F × (U − A) × (N ÷ A)

Where:

U = the upper limit, adjusted for other associated companies and short accounting periods
A = augmented profits: taxable total profits plus relevant exempt distributions
N = taxable total profits
F = the standard fraction, 3 ÷ 200

The formula applies when augmented profits fall between the adjusted limits. This calculator assumes a 12-month period and A = N; it does not calculate exempt distributions or short periods. See HMRC CTM03925.

So CT due = (Profits × 25%) − MR.

Worked example — £100,000 profit, one company

Tax at main rate: £100,000 × 25% = £25,000
Marginal relief: (£250,000 − £100,000) × (£100,000 ÷ £100,000) × 3/200 = £150,000 × 1 × 0.015 = £2,250
CT due: £25,000 − £2,250 = £22,750
Effective rate: 22.75%

Worked example — £180,000 profit

£180,000 × 25% = £45,000
(£250,000 − £180,000) × 1 × 3/200 = £70,000 × 0.015 = £1,050
CT due = £45,000 − £1,050 = £43,950
Effective rate: 24.42%

The marginal-relief band creates a smooth ramp between 19% and 25% — there is no cliff edge. The marginal rate on each extra £1 of profit between £50,001 and £250,000 is actually 26.5% (because relief tapers as profits rise).

Associated companies — the gotcha

If you control two companies (e.g. a trading company and a property company), the limits are split:

One associated company → £25,000 lower / £125,000 upper
Two associated companies → £16,666 lower / £83,333 upper
And so on.

This catches a lot of small group structures. Dormant companies and certain passive holdings are excluded — see HMRC's CTM03900 manual.

File CT600 with marginal relief auto-calculated

Use this estimate to understand the rates, then check the full computation for your circumstances. Unfiled prepares accounts and CT600 returns and lets you file supported returns directly with HMRC after review and declaration. It checks your company and accounting period before payment; this public calculator does not establish filing eligibility.

Try Unfiled for your CT600 →

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