Corporation Tax Rates
The main corporation tax rate structure remains unchanged for both 2025/26 and 2026/27:
| Profits | Rate |
|---|---|
| Up to £50,000 (Small Profits Rate) | 19% |
| £50,001 – £250,000 (Marginal Relief) | Tapered 19%–25% |
| Over £250,000 (Main Rate) | 25% |
Note: The £50,000 and £250,000 thresholds are divided by the number of associated companies.
Marginal Relief
Companies with profits between £50,000 and £250,000 benefit from Marginal Relief, effectively tapering the rate between 19% and 25%. The Marginal Relief fraction is 3/200.
Capital Allowances
- Annual Investment Allowance (AIA): £1,000,000 — 100% first-year deduction on qualifying plant and machinery
- Full Expensing: 100% first-year deduction for main rate assets (permanent from April 2023)
- 50% First-Year Allowance: for special rate assets
- Main Pool writing down allowance: 18%
- Special Rate Pool: 6%
R&D Tax Relief
- SME R&D Relief: 186% deduction (net benefit approximately 21.5p per £1 spent)
- RDEC (large companies): 20% above-the-line credit
- Merged R&D scheme: Now applies for accounting periods beginning on or after 1 April 2024
Key Planning Points for Companies
- Review associated company status — each associated company reduces the profit thresholds
- Consider timing of investment expenditure to maximise AIA and full expensing
- Ensure R&D claims are properly documented following HMRC’s increased scrutiny
- Close companies should review director salary/dividend mix with the new dividend tax rates
Speak to Rob Tax Solutions to plan your corporate tax position for 2026/27.
