UK Company Tax Rates 2026-27: Corporation Tax, VAT & Deadlines

Running a UK limited company means dealing with several taxes at once, each with its own rate, deadline, and authority. Corporation Tax follows your accounting period. VAT follows your sales. Payroll taxes follow every pay run. Miss the difference between them and you can end up paying penalties on a tax you thought was already covered.

This guide brings the 2026-27 rules into one place. You'll see the current rates and thresholds, worked examples, a deadline calendar, the main reliefs, and the mistakes that cost small companies the most. Every key figure links to its official source, so you can check it yourself.

What Taxes Does a UK Limited Company Pay in 2026-27?

A UK limited company typically deals with these taxes:

1. Corporation Tax: 19% on profits up to £50,000, 25% on profits above £250,000, and a marginal relief band in between.
2. VAT: 20% standard rate, 5% reduced rate, and 0% for zero-rated supplies. Registration is compulsory above £90,000 of taxable turnover.
3. PAYE and employer National Insurance: Deducted and paid through payroll if you employ staff, including yourself as a paid director.
4. Business rates: Paid on most commercial premises. They vary by nation and local authority.
5. Dividend tax: Paid personally by shareholders, not by the company, when profits are distributed.

The official sources are HMRC's Corporation Tax rates page, the VAT rates page, and the 2026-27 employer rates and thresholds.

What Is Corporate Taxation in the UK?

Corporate taxation covers the taxes a company pays in its own right. It also covers the taxes a company must collect and pass to the government on behalf of others, such as VAT and PAYE.

That second group matters. VAT is not a cost to the company in the way Corporation Tax is. You collect it from customers and hand it over. Mixing the two up is a common reason small businesses run short of cash at deadline time.

The lead authority is HM Revenue & Customs (HMRC). It handles Corporation Tax, VAT, PAYE, and employer National Insurance. Companies House is separate. It handles incorporation, statutory accounts, and confirmation statements. The two bodies have different deadlines, and satisfying one does not satisfy the other.

The legal foundations are the Corporation Tax Act 2010 and the Value Added Tax Act 1994. Annual Finance Acts update the rates and reliefs each year.

Direct Taxes vs Indirect Taxes

Corporation Tax is a direct tax because it falls on the company's profit. VAT is an indirect tax because it falls on spending and is collected through the supply chain. Our guide on direct vs indirect tax explains why that distinction affects both cash flow and planning.

If any term in this article is unfamiliar, the essential tax terms glossary covers the basics.

Why UK Business Tax Rules Matter in 2026-27

Three things make 2026-27 a year to read the rules carefully rather than assume last year's position still applies.

• Capital allowances changed. The main-pool writing-down allowance fell to 14% from 1 April 2026 for Corporation Tax. Accounting periods that straddle that date need a blended rate.
• Thresholds are frozen. The VAT registration threshold sits at £90,000, and the personal tax thresholds that affect director pay are frozen. Growing turnover pushes more firms over the lines each year.
• Compliance is digital. VAT-registered businesses must keep digital records and file through compatible software under Making Tax Digital.

Getting this right protects you from penalties and from overpaying. Many owners overpay simply because they never claimed a relief they were entitled to.

UK Corporation Tax 2026-27

Corporation Tax is charged on a company's taxable profits. Taxable profit is not the same as the profit in your accounts. You start with accounting profit, add back costs HMRC disallows, and subtract reliefs and allowances.

Corporation Tax Rates for 2026-27

The 25% main rate is set in legislation. The 19% small profits rate and the £50,000 and £250,000 limits are published on HMRC's rates page. The same rates apply across England, Scotland, Wales, and Northern Ireland, because Corporation Tax is a UK-wide tax.

How Marginal Relief Works

Between £50,000 and £250,000, the company pays the main rate and then claims a reduction called marginal relief. The result is a smooth slope from 19% up to 25%.

The formula is:

Marginal relief = 3/200 × (£250,000 − augmented profits) × (taxable profits ÷ augmented profits)

Augmented profits are taxable profits plus certain dividends received from non-group companies. For most small companies there are none, so the last fraction equals one. HMRC explains the calculation in its marginal relief guidance.

In practice, profits in this band are taxed at an effective marginal rate of 26.5% on each extra pound. That is higher than the main rate, which surprises many owners.

Worked Example 1: Profit of £30,000

A small design company has taxable profits of £30,000 and no associated companies.

• Tax: £30,000 × 19% = £5,700

Worked Example 2: Profit of £150,000

A consultancy has taxable profits of £150,000 and no dividends received.

• Tax at 25%: £37,500
• Marginal relief: 3/200 × (£250,000 − £150,000) = £1,500
• Tax payable: £36,000, an effective rate of 24%

You can check the result a second way. The first £50,000 at 19% is £9,500. The next £100,000 at 26.5% is £26,500. The total is the same £36,000.

Worked Example 3: Profit of £400,000

A manufacturer has taxable profits of £400,000.

• Tax: £400,000 × 25% = £100,000

No marginal relief applies above £250,000.

When the Limits Shrink

The £50,000 and £250,000 limits are not fixed for every company. Two situations reduce them:

• Associated companies. Divide each limit by the number of associated companies, including your own. Two associated companies means limits of £25,000 and £125,000 each. Companies under common control are generally associated, so check this if you own more than one business.
• Short accounting periods. The limits are reduced in proportion. A six-month period halves them.

This is the point where a careless estimate goes wrong. If you own several companies, work out the association position before you calculate anything.

What Counts as Taxable Profit?

Start with your accounting profit, then adjust:

• Add back disallowable expenses: client entertainment, fines and penalties, and accounting depreciation.
• Deduct capital allowances on qualifying equipment and machinery.
• Deduct reliefs, such as R&D relief where eligible.
• Apply losses brought forward from earlier periods.

Many everyday business costs are allowable, including staff costs, rent, utilities, software, marketing, insurance, and professional fees. The test is that the expense was incurred wholly and exclusively for the trade. Our guide to business income tax calculation walks through the logic.

Trading Losses

A company that makes a trading loss can usually carry it forward against future profits. In many cases it can also carry it back against the previous 12 months of profit and claim a refund. Capital losses follow different rules and can only be set against chargeable gains. Restrictions apply to large loss claims, so check the current guidance for bigger figures.

UK VAT Rules for Businesses in 2026-27

VAT is a tax on the value a business adds when it sells goods or services. Registered businesses charge VAT on sales (output tax) and reclaim VAT on purchases (input tax). The difference goes to HMRC, or comes back to you as a refund.

VAT Rates for 2026-27

The current table is on GOV.UK's VAT rates page.

Zero-Rated vs Exempt: Why the Difference Matters

Both categories mean the customer pays no VAT. For you, the difference is large.

• Zero-rated sales are still taxable, at 0%. You can reclaim input VAT on related costs.
• Exempt sales are outside the VAT charge. You generally cannot reclaim input VAT on costs linked to them.

A business making mostly exempt supplies may face partial exemption rules, which limit how much input VAT it recovers. The detail sits in VAT Notice 700.

VAT Registration Threshold

You must register for VAT if your taxable turnover goes above £90,000 in any rolling 12-month period. You must also register if you expect to exceed that figure within the next 30 days alone. The deregistration threshold is £88,000.

Taxable turnover means sales that are standard-rated, reduced-rated, or zero-rated. Exempt sales do not count towards it.

If you pass the threshold at the end of a month, you generally have 30 days from the end of that month to notify HMRC. Late registration can mean you owe VAT on sales you never charged it on. Register through the HMRC VAT registration service.

Voluntary Registration

You can register below the threshold. It helps if your customers are VAT-registered businesses, because they can reclaim the VAT you charge. It also lets you reclaim input VAT on start-up costs.

It can hurt if your customers are the public. They cannot reclaim VAT, so your prices effectively rise unless you absorb the cost.

VAT Returns and Making Tax Digital

Most businesses file a VAT return every quarter and pay HMRC within one month and seven days of the period end. All VAT-registered businesses must keep digital records and file using compatible software under Making Tax Digital for VAT.

VAT Schemes for Smaller Businesses

Three schemes can simplify things:

• Flat Rate Scheme: You pay a fixed percentage of gross turnover and cannot reclaim most input VAT. It suits low-cost service businesses.
• Cash Accounting Scheme: You account for VAT when customers pay you, not when you invoice. It helps if customers pay slowly.
• Annual Accounting Scheme: You file one return a year and pay in instalments.

Each scheme has an entry limit and conditions. Check the linked pages before you join, because the Flat Rate Scheme in particular can cost more than standard accounting for businesses with heavy purchases.

Worked Example: VAT on an Invoice

A consultant invoices a client £2,400 plus VAT.

• Output VAT: £2,400 × 20% = £480
• Invoice total: £2,880
• Input VAT on a laptop bought in the same quarter: £200
• VAT paid to HMRC for that quarter: £280

For other sales tax calculations, our guide on how to calculate sales tax shows the underlying method. If you are comparing systems, what is GST explains how a similar tax works elsewhere.

Employer Taxes: PAYE and National Insurance in 2026-27

If your company pays anyone, including a director through payroll, it must operate PAYE. That means deducting income tax and employee National Insurance from pay, adding employer National Insurance, and reporting everything to HMRC in real time.

Employer National Insurance

For 2026-27, employer National Insurance is charged at 15% on employee pay above the secondary threshold of £5,000 a year (about £417 a month). Employers reduce the bill using the Employment Allowance where eligible.

HMRC publishes the full set of payroll figures on its 2026-27 employer rates and thresholds page. Check it before running payroll, because thresholds and category letters matter.

Employment Allowance

The Employment Allowance lets eligible employers reduce their employer National Insurance bill by up to £10,500 in the tax year. It is claimed through payroll software.

A company with a single director and no other employees paid above the secondary threshold generally cannot claim it. Public bodies and businesses that mainly do public work are also excluded. Verify your position before you rely on it.

Employee National Insurance and Income Tax

Employees pay their own National Insurance and income tax through PAYE. If you want to estimate take-home pay for a team member, try our UK National Insurance calculator and read what is National Insurance. For the difference between the two charges, see income tax vs National Insurance in the UK. Current personal tax bands are covered in our UK income tax bands 2026-27 guide.

Apprenticeship Levy

Employers with an annual pay bill above £3 million pay the Apprenticeship Levy at 0.5%, with a £15,000 annual allowance. Most small companies never reach this level.

Dividends, Salary and Director Pay

A director who owns shares can take money out of the company as salary, as dividends, or as a mix. The two routes are taxed very differently.

• Salary is a deductible company expense, so it reduces Corporation Tax. It is subject to PAYE, and employer National Insurance can apply above the secondary threshold.
• Dividends are paid from profits that have already borne Corporation Tax. They are not deductible. The shareholder pays dividend tax personally, after a £500 dividend allowance.

For 2026-27, the ordinary and upper dividend tax rates rose by two percentage points, to 10.75% and 35.75%. The additional rate stays at 39.35%. Confirm the current figures on GOV.UK's dividend tax page before you plan payments.

Salary vs Dividends: How to Think About It

There is no universal best mix. A common approach is a modest salary that preserves National Insurance record credits and uses the personal allowance, with the rest taken as dividends. The right split depends on your other income, your company's profit level, and whether you have employees.

Do not treat dividends as a free alternative to salary. The company needs sufficient distributable profits, and dividends must be properly declared and documented. Illegal dividends can be reclaimed.

Compare your options with our salary tax calculator and our income tax calculator. For the difference between pay before and after deductions, read gross pay vs net pay.

Limited Company vs Sole Trader: Tax Differences

A sole trader pays income tax and Class 4 National Insurance on profits through Self Assessment. A limited company pays Corporation Tax on its own profits, and the owner is then taxed again on any money taken out.

A company often becomes more tax-efficient as profits rise, because retained profits stay taxed at company rates. At low profit levels, the extra admin may outweigh the benefit. See self-employment tax vs income tax for the sole-trader side, and side hustle taxes 2026 if you are deciding whether to formalise a small business.

Capital Allowances, AIA and R&D Relief

Reliefs are the main legal way to reduce a company's tax bill. They work by lowering taxable profit, not by changing the rate.

Capital Allowances

When a company buys equipment, it cannot deduct the cost as an ordinary expense. Instead it claims capital allowances, which are a tax deduction set by statute. Accounting depreciation is ignored for tax.

The main routes are:

• Annual Investment Allowance (AIA): A 100% deduction for qualifying plant and machinery up to £1 million a year.
• Full expensing: A 100% first-year deduction for companies on most new main-rate plant and machinery.
• Writing-down allowances: An annual percentage deduction on the pool balance. The main pool rate is 14% from 1 April 2026, and the special rate pool is 6%.

If your accounting period crosses 1 April 2026, you apply a blended rate. Land, buildings, and cars have their own rules. The detail sits on HMRC's capital allowances guidance.

Research and Development Relief

Companies that spend on solving scientific or technological uncertainty may qualify for R&D relief. For accounting periods beginning on or after 1 April 2024, most claims run through a merged scheme that works as an expenditure credit. A separate enhanced route supports certain loss-making R&D-intensive SMEs.

Eligibility depends on whether the work genuinely seeks an advance in science or technology, not just a new product for your business. Claims need a clear technical narrative and cost breakdown. In many cases you must notify HMRC in advance or submit an additional information form before the claim. Read HMRC's R&D relief guidance before you file, because HMRC reviews weak claims closely.

UK Company Tax Deadlines 2026-27

Deadlines are where most penalties begin. The key point is that Corporation Tax payment comes before the return, which surprises many first-time directors.

Corporation Tax and Accounts Deadlines

HMRC's Company Tax Returns page sets out the filing rules, and you can pay through the Pay Corporation Tax service. Companies House explains its side in the annual accounts guidance.

Worked Deadline Example

A company with a year end of 31 March 2027 has these dates:

• Corporation Tax payment: 1 January 2028
• Company Tax Return (CT600): 31 March 2028
• Accounts to Companies House: 31 December 2027

Notice how the accounts deadline falls between the tax payment and the return. Accountants usually prepare the accounts first, then compute tax from them.

Other Recurring Deadlines

• VAT returns: One month and seven days after each return period.
• PAYE: Report each payday in real time. Pay HMRC by the 22nd of the following month if paying electronically.
• Large companies: Companies with profits above £1.5 million generally pay Corporation Tax in quarterly instalments instead. The threshold is shared across associated companies.

See tax filing deadlines by country 2026 for a wider comparison.

What Happens If You Miss a Deadline?

• Late Company Tax Return: A flat penalty applies immediately, and further penalties build up at three, six, and twelve months. Tax-geared penalties can follow for returns that are very late.
• Late payment: HMRC charges interest from the due date on any unpaid tax.
• Late accounts at Companies House: Penalties escalate the longer accounts are overdue, and directors can face further action.

If you are already behind, contact HMRC early. Reaching out before enforcement starts usually gives you more options than waiting.

Business Rates and Regional Differences

Corporation Tax and VAT are UK-wide. Business rates and some property taxes are not.

• England: Local authorities collect business rates on non-domestic properties. Reliefs and multipliers change, so check GOV.UK's business rates guide.
• Scotland, Wales, and Northern Ireland: Each nation runs its own business rates system with separate reliefs.
• Director pay in Scotland: Scottish taxpayers use Scottish income tax bands, which can change the result of a salary and dividend plan.

Do not assume that a relief available in England applies elsewhere. A company based in London, Manchester, Birmingham, Edinburgh, Glasgow, Cardiff, Belfast, Bristol, or Leeds pays the same Corporation Tax and VAT, but its rates bill depends on its location and property.

Compare personal tax with council tax vs income tax in the UK to see how local charges differ from national ones.

Overseas Owners and Non-UK Companies

A company is UK tax resident if it is incorporated in the UK, or if its central management and control sits here. Resident companies pay Corporation Tax on worldwide profits.

Non-resident companies can also owe UK tax. Examples include trading through a UK permanent establishment and receiving UK property income. For VAT, a non-UK business supplying taxable goods or services in the UK generally has no registration threshold and may need to register immediately.

Cross-border cases involve treaties, transfer pricing, and permanent establishment rules, so this is the point to involve an adviser. If you work across borders as a freelancer, our guide to cross-border tax compliance for freelancers is a useful starting point.

How to Reduce Your Company's Tax Bill Legally

Tax planning means using rules as Parliament intended. It does not mean aggressive avoidance schemes. These steps are low-risk and often overlooked:

1. Claim every allowable expense. Keep receipts for software, travel, training, and home-working costs.
2. Use capital allowances. Time equipment purchases to use the AIA or full expensing.
3. Check R&D eligibility. Many technical businesses never consider it.
4. Make employer pension contributions. These are generally deductible if they meet the "wholly and exclusively" test.
5. Plan director pay. Balance salary and dividends against your personal tax position.
6. Carry losses sensibly. Claim loss relief in the way that best fits your cash flow.
7. Watch the association rules. Owning several companies can quietly cut your small-profits limits.
8. Review before year end. Many reliefs are easier to use before the accounting period closes than after.

Use our guide to calculating your tax before meeting an accountant so that your first conversation is focused and cheaper.

UK Company Tax Compliance Checklist for 2026-27

Use this as a yearly routine:

• Confirm your accounting period dates and year end.
• Keep digital records for VAT and a separate record of expenses.
• Check your VAT turnover monthly against the £90,000 threshold.
• Run payroll in real time and pay HMRC on schedule.
• Prepare accounts early and file them with Companies House.
• Compute Corporation Tax and set cash aside before the payment date.
• Submit the CT600 with the accounts and computations.
• Store everything safely. Our guide to combining tax documents into one PDF can help.

Records should generally be kept for at least six years. Our freelance tax checklist offers a simple version for solo operators.

Common Mistakes UK Companies Make

• Using accounting profit as taxable profit. Add-backs and allowances change the figure.
• Forgetting marginal relief. Many owners assume a flat 25% above £50,000.
• Ignoring associated companies. This can push you into a higher band without warning.
• Registering for VAT late. You may owe tax you never collected.
• Treating VAT as income. It belongs to HMRC, so keep it separate.
• Missing the payment date. Corporation Tax is due nine months and one day after the period end, long before the return.
• Claiming an exempt supply as zero-rated. The input VAT consequences differ.
• Skipping records for reliefs. An undocumented R&D or capital allowance claim is easy to challenge.

Our article on income tax calculator mistakes lists similar errors on the personal side. Rising wages and frozen thresholds can also drag you into higher bands, which we cover in bracket creep and inflation.

Why Choose Free Calculator for Your Tax Questions

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Guides are written to inform and do not replace advice from a qualified tax professional.

Frequently Asked Questions

What is the UK Corporation Tax rate for 2026-27?

The main rate is 25%, and the small profits rate is 19%. Companies with profits up to £50,000 pay 19%. Those with profits above £250,000 pay 25%. Profits in between pay the main rate less marginal relief.

How much profit can a company make before paying the main Corporation Tax rate?

A standalone company pays the full main rate once profits exceed £250,000. Between £50,000 and £250,000, marginal relief reduces the bill. If the company has associated companies or a short accounting period, these limits fall.

What is the VAT registration threshold in the UK?

You must register for VAT if taxable turnover exceeds £90,000 in any rolling 12-month period. You can deregister if turnover falls below £88,000. You can also register voluntarily below the threshold.

When must a company pay Corporation Tax?

Payment is usually due nine months and one day after the accounting period ends. The Company Tax Return (CT600) is due twelve months after the period ends. Large companies may need to pay in quarterly instalments.

What is the difference between zero-rated and VAT-exempt sales?

Zero-rated sales are taxable at 0%, so you can reclaim related input VAT. Exempt sales sit outside the VAT charge, so you generally cannot reclaim input VAT on linked costs. The two categories have very different effects on cash flow.

How is employer National Insurance calculated?

For 2026-27, employers pay 15% on employee earnings above £5,000 a year. The Employment Allowance can reduce the bill by up to £10,500 where the employer is eligible. Check HMRC's current employer rates before running payroll.

Are dividends taxed separately from company profits?

Yes. The company pays Corporation Tax on its profits first. The shareholder then pays personal dividend tax on dividends received above the annual dividend allowance. Dividends are not a deductible company expense.

Where can I check official UK business tax rates?

Start with GOV.UK. The Corporation Tax rates page, the VAT rates page, and the employer rates and thresholds page are the official sources. Professional bodies such as the Chartered Institute of Taxation and ICAEW add practical guidance.

Conclusion:

UK corporate taxes become manageable once you separate them by type. Corporation Tax follows your profit and your year end. VAT follows your turnover. Payroll taxes follow every pay run. Each has its own deadline, and each can be planned for.

Here is what to do now:

1. Confirm your accounting period and write down the Corporation Tax payment date.
2. Check associated companies before estimating your small-profits limit.
3. Track VAT turnover monthly against the £90,000 threshold.
4. Review reliefs such as capital allowances, the AIA, and R&D before year end.
5. Plan director pay using a calculator before you declare dividends.
6. Set cash aside each month so deadlines do not become surprises.
7. Book a review with a qualified accountant if your case involves several companies, overseas income, or large R&D claims.

Ready to go further? Visit the Free Calculator tools hub and book a seat at Advance Free Tools offered by Free Calculator to get more from our free tax tools and guides. The tools can shorten the math, and your records decide the outcome.

Last reviewed: 9 October 2026. This guide covers UK business tax rules for 2026-27. Rates, thresholds, reliefs, and filing requirements can change, so confirm the latest guidance with HMRC and the relevant official authority before making tax or financial decisions. Corporation Tax deadlines depend on a company's accounting period, while VAT and payroll obligations follow their own rules.

Written for Free Calculator. This article is general information and not personal tax advice.