Why does my Corporation Tax show 25%? Reading the Corporation tax due line
Short version. The Corporation tax due card shows tax on your taxable total profits. From 1 April 2023 the rate is set by those profits and the £50,000 and £250,000 limits for the return’s dates, not by turnover. Profit of £50,000 or less is taxed at 19%. Profit between £50,000 and £250,000 shows 25% with marginal relief, so the tax you pay works out lower, shown as the effective rate. A return shorter than 12 months, or associated companies, lowers both limits.
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Review & fileRate, band and limitsPeriods of any lengthWhere you see it: Review & file › Corporation tax due
The Corporation tax due card shows tax on your taxable total profits. From 1 April 2023 the rate is set by those profits and the £50,000 and £250,000 limits for the return’s dates, not by turnover.
- SimpleCompanyTax works out the tax from the figures you enter. Turnover is not taxed. Taxable total profits are your profit after allowable costs and tax adjustments, the figure in CT600 box 315.
- Profit of £50,000 or less is taxed at the 19% small profits rate. Profit of more than £250,000 is taxed at the 25% main rate. In between, tax is worked out at 25% and then reduced by marginal relief. Why the card shows 25%
- Both limits are reduced in proportion to the number of days when a return covers less than 12 months, and divided when the company has associated companies. Short and one-day returns
- The words "limits applied" appear when the return has an answer in box 326 Associated companies, which starts at 0, and the filing has one CT600. A filing with two CT600s shows the combined total without limits, because each return has its own. Periods longer than 12 months
- These rates apply from 1 April 2023. Before that date a single rate applied to all profits. A close investment-holding company pays the main rate on all profits. Close investment-holding company
How to read the Corporation tax due line
For Juniper Example Ltd, with £100,000 of profit for the 12 months 1 April 2025 to 31 March 2026, the card on Review & file shows:
- On taxable total profits of £100,000
- The profit the tax is charged on, after costs and tax adjustments. It is not your turnover.
- at 25.0%
- The rate for the band. With marginal relief this is the 25% main rate, before the relief is taken off.
- marginal relief
- The band: small profits, marginal relief or main rate. It depends on where the profit sits between the two limits.
- effective 22.75%
- The tax on the card divided by the profit: £22,750 on £100,000. It appears only with marginal relief.
- limits applied £50,000 to £250,000
- The lower and upper limits used for this return, after any reduction for a short period or associated companies.
The company and all figures on this page are fictional.
If you add director's loans with section 455 tax, the card is headed Total tax reported and its amount includes that tax. If you enter tax already paid, it is headed Corporation Tax liability. The line underneath reads the same way.
More help: Section 455 tax and CT600A · GOV.UK: Corporation Tax rates
Is this the right guide for you?
Use it if all of these are true
- The Corporation tax due card shows a rate or an amount you did not expect.
- Your company is a standard company, so the small profits rate and marginal relief can apply.
- The return covers dates from 1 April 2023 onwards.
Do not use it if
- The line reads “main rate: close investment-holding company”.Use instead: Close investment-holding company
- You chose File only the remaining CT600 and entered the whole year’s figures.Use instead: The remaining CT600 common mistake
- The tax is £0 but a rate still shows beside it.Use instead: A rate label beside £0 tax
- You want to know which filing option to choose.Use instead: Which filing option do I need?
Common mistake: a full year's figures on a one-day CT600
This is a common reason for an unexpected 25%. When your accounts period ends more than 12 months after it starts, even by one day, HMRC needs two CT600s. File only the remaining CT600 files only the second one and taxes every figure you enter as earned in its dates. For a one-day return the limits fall to £136.99 and £684.93, so a full year's profit is above the upper limit and is taxed at the main rate.
Whole year’s figures in a one-day return (31 May 2026)
- Turnover entered
- £142,350
- Profit taxed in one day
- £9,125
- Limits applied
- £136.99 to £684.93
- Tax at 25%
- £2,281.25
Figures for that one day only
- Turnover entered
- £389
- Profit for the one day
- £25
- Band
- Small profits
- Tax at 19%
- £4.75
If neither CT600 has been filed, choose Standard return instead and enter the figures for the whole accounts period. Both returns are filed and the figures are shared between them by days. If HMRC already has the first CT600, enter figures for the second return's dates only.
More help: The remaining CT600 mistake, worked through · Standard return
Why the card shows 25% with marginal relief
Between the two limits, tax is first worked out at the main rate on the whole profit. Marginal relief then reduces it, so the rate rises gradually from 19% to 25% instead of jumping. The card shows the main rate because that is the starting point, and the effective rate after the relief.
- Company and dates
- Juniper Example Ltd, 1 April 2025 to 31 March 2026 (12 months)
- Taxable total profits
- £100,000
- Tax at 25%
- £25,000
- Less marginal relief
- £2,250
- Corporation tax due
- £22,750, an effective rate of 22.75%
The company and all figures on this page are fictional.
The tax computation in your documents shows the same steps, with the lines "Tax at main rate", "Less: Marginal relief" and "Effective tax rate". The limits are tested on augmented profits, which can include dividends received from companies outside your group, so dividends can move a company into marginal relief even though they are not taxed.
More help: GOV.UK: Marginal Relief · Marginal relief explained · Dividends received and your rate
Short and one-day returns: the limits are reduced
For a return shorter than 12 months, HMRC reduces the £50,000 and £250,000 limits in proportion to its number of days. The same profit can then fall into a higher band. Sycamore Example Ltd and Poplar Example Ltd both have £30,000 of profit. Sycamore Example Ltd's return covers 12 months. Poplar Example Ltd's covers six.
| Company and dates | Limits applied | Band | Corporation tax due |
|---|---|---|---|
| Sycamore Example Ltd, 1 April 2025 to 31 March 2026 | £50,000 to £250,000 | Small profits, 19% | £5,700 |
| Poplar Example Ltd, 1 April 2025 to 30 September 2025 | £25,068.49 to £125,342.47 | Marginal relief, effective 20.23% | £6,069.86 |
Neither figure is wrong. Both follow HMRC's rules for the return's dates. The six-month card reads:
A one-day return, such as the second CT600 of a 366-day accounts period, has limits of £136.99 and £684.93. If the return's dates are right but look short, check them against your HMRC business tax account or your CT603 notice.
More help: GOV.UK: limits reduced for short periods · Corporation Tax Act 2010, section 18D · Matching your dates to HMRC
Associated companies divide the limits
If another company was associated with yours at any time in the period, both limits are divided by the number of associated companies plus one. Sycamore Example Ltd, with the same £30,000 profit and one associated company, sees:
That is £6,075 instead of £5,700. You enter the number in 326 Associated companies under Tax adjustments. Which companies count is for you or your accountant to decide.
More help: What counts as associated · How the limits are divided
Periods longer than 12 months
An accounts period that ends more than 12 months after it starts, even by one day, is filed as two CT600s. The first covers 12 months and has the full limits. The second covers the rest and has limits reduced to its days. The card shows the total for both returns and the combined effective rate, without limits. Larch Example Ltd's accounts run from 1 January 2025 to 30 June 2026, with £100,000 of profit shared by days:
- CT600 1: 1 January 2025 to 31 December 2025
- Profit £66,850, limits £50,000 to £250,000, tax £13,965.25
- CT600 2: 1 January 2026 to 30 June 2026
- Profit £33,150, limits £24,794.52 to £123,972.60, tax £6,925.16
The company and all figures on this page are fictional.
Each return's tax computation shows its own "Lower / upper limit applied". An amount that belongs to one date, such as a dividend received, is assigned to one return on the allocation panel and can change that return's band.
More help: How the dates are split · Amounts that belong to one date
Before you start
- The return’s dates
- From your accounts, and for HMRC's dates your business tax account or CT603 notice. Matching your dates to HMRC
- Your profit and costs
- From your accounts. Which costs are allowable is for you or your accountant to decide. GOV.UK: Corporation Tax rates
- Associated companies
- The number of other companies associated with yours at any time in the period, often 0. What counts
- Company tax type
- Standard company for most companies. When a company is a CIHC
The company and all figures on this page are fictional.
Step by step: check what sets your rate
Company Profile & Period
- Accounting period
- 1 April 2025 to 31 March 2026 in this exampleCheck the dates. A period shorter than 12 months has reduced limits. A period longer than 12 months is filed as two CT600s.
- Filing purpose
- Standard returnIf you chose File only the remaining CT600, enter figures for the second return's dates only. The common mistake
- Trading status
- ActiveThe form starts on Dormant, so make sure you change it for a company with income.
- What the company does
- Trading
Click Next →.
Financial Data
- Previous year
- Last year’s figures, from your previous accountsRequired before you continue. Figures from Companies House fill in where available. Check them, and enter 0 where a line had no amount.
- Turnover
- 80000The £30,000 example. Turnover is not taxed on its own. Costs are taken off first.
- Cost of raw materials and consumables
- 0
- Staff costs
- 30000
- Other charges
- 20000
- Balance sheet
- Your balance sheet at the end of the period
- Average number of employees
- Your average number, or 0
- Company tax type
- Standard companyChoose Close investment-holding company only if it applies. It removes the small profits rate and marginal relief.
- + Show all adjustment options
- Click it under Tax adjustments
- Associated companies and quarterly instalments
- Click it to open the rows
- 326 Associated companies
- 0 in this exampleWhere to enter it
Click Next →.
Review & file
Read the Corporation tax due card. For Sycamore Example Ltd, a 12-month return with £30,000 of profit:
Corporation tax due£5,700 .00On taxable total profits of £30,000 at 19.0% · small profits · limits applied £50,000 to £250,000- Help icon
- Beside the card headingIt explains the line and links back to this guide.
- Preview your documents (free)
- Open the tax computationIt shows the band, the limits applied and any marginal relief for each return.
Sample outcomes
Related guides
Open the guide for the part of the line you want to check.
Looking for a different field or step? See all filing wizard guides →
Official sources
- GOV.UK: Corporation Tax rates
- GOV.UK: Marginal Relief for Corporation Tax
- Corporation Tax Act 2010, section 18B: marginal relief
- Corporation Tax Act 2010, section 18D: the lower and upper limits
- GOV.UK: Corporation Tax accounting periods
Whether this route matches your filings is for you to decide, yourself or with your accountant.
Example companies and figures are fictional. Field names match the filing wizard as of 12 October 2026.