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Uk CORPORATE Tax Calculator

How much are you going to pay?

Until a while ago this was a reasonable and easy question that big and small businesses could easily answer: how much are you going to pay in taxes this year? If you are based in the UK, this year it will be more challenging for small business to understand exactly how much they are going to pay.

This is because if under £50,000 you pay 19% and over £250,000 you pay 25%, in between £50,000 and £250,000 things are not really straightforward. In this bracket you will need to apply a Marginal Relief that will proportionally increase your Tax Rate from 19% to 25%. 

New Rates - New Rules

HMRC defines the new tax rates as follows:

  • Small Profit Rate: 19% for taxable profits below £50,000 (the so-called Lower Limit)
  • Main Rate: 25% for taxable profits above £250,000 (the Upper Limit)

The Marginal Relief provides a gradual increase in Corporation Tax rate between the small profits rate and the main rate. But how can you calculate your Marginal Relief?

Easy Math But Difficult Explanation

If you try to read HMRC’s guidance on the matter it might take a while to get a hold of a proper explanation, but once you get to it the math is not too difficult.

In order to calculate how much tax you will owe with taxable profits between the Upper and the Lower Limit, you have to multiply your profit by the Main Rate (25%) and then subtract the Marginal Relief. 

At the same time, in order to calculate the Marginal Relief you use the so-called Standard Fraction. This is used to proportionally scale down your tax rate. The formula to calculate your taxes is:

(Taxable Profits x Main Rate) – ((Upper Limit – Taxable Profits) * Standard Fraction)

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Our Calculator

Alternatively, you can use our calculator here below:

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A SMALL DISCLAIMER

Always talk to your accountant!

This calculator can inform you in your decisions but it will never substitute expert and professional advice… Not happy with your accountant or advisors? Reach out, we can help!

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