Home / Questions / How Does Corporation Tax Marginal Relief Work?
Last updated 23 October 2026. Written by the Limited Company Accountant UK team, part of Accotax. Figures are for the 2026/27 tax year; always check GOV.UK for the latest rates.
Short answer: Marginal relief smooths the step from 19% to 25% Corporation Tax. For profits between £50,000 and £250,000, tax is 25% minus relief of 3/200 of the amount by which profit is below the £250,000 upper limit.
At a glance
| Formula | Tax = 25% x profit – 3/200 x (£250,000 – profit) |
|---|---|
| Effective marginal rate | 26.5% |
| Limits | Reduced by associated companies |
Worked example
Profit £100,000: 25% is £25,000, less 3/200 x £150,000 = £2,250, so tax is £22,750, an effective 22.75%.
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The bottom line
Marginal relief smooths the step from 19% to 25% Corporation Tax. If you would rather not do it alone, our fixed fees start at £45.83 + VAT a month.
Frequently asked questions
Is marginal relief automatic?
Yes, it is calculated on your CT600.
Do short accounting periods change it?
Yes, the limits are pro-rated for periods under 12 months.
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