Marginal rate will be charged at 26.5%
As of 14 October 2022 it has been re-announced the Corporation Tax main rate will increase to 25% from 1 April 2023 for companies with profits over £250,000.
A rate of 19% will be available for business with profits of up to £50,000. A marginal rate of Corporation Tax will apply that bridges the gap between the lower (£50,000) and upper limits (£250,000).
The official break down of this is the amount of tax you pay will be found by multiplying your profits by the main rate of 25% and deducting marginal relief. For the fiscal year 2023, the marginal relief fraction is 3/200.
However, there is a easier way to look at this but it does mean that profits over £50,000 and below £250,000 are actually taxed at 26.5%.
| Profit Band | Marginal Rate |
| £0 to £50,000 | 19% |
| £50,001 to £249,999 | 26.5% |
| £250,000 plus | 25% |
So if you were to make profits of £60,000; they will be taxed as follows:
- £50,000 at 19% = £9,500
- £10,000 at 26.5% = £2,650
- Total tax = £12,150
Alternatively using HMRC’s method – Profits of £60,000 x 25% = £15,000 less marginal rate relief (3/200 x (£250,000 – £60,000)) = £2,850 = £12,150, the same as above
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