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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