What is the small profits rate of corporation tax?
Answered 11 March 2026
What the law says
The standard small profits rate of corporation tax is 19%, applicable to profits that are not ring fence profits.
This rate was introduced with effect from 1 April 2023 by Finance (No. 2) Act 2023. It has been confirmed at 19% for financial years 2024, 2025, and 2026.
Statutory conditions (CTA 2010, s.18A)
A company's taxable total profits (excluding ring fence profits) are charged at the standard small profits rate if all three conditions are met:
- The company is UK resident in the accounting period;
- It is not a close investment-holding company in the period; and
- Its augmented profits do not exceed the lower limit.
The limits (CTA 2010, s.18D)
For a company with no associated companies in a 12-month accounting period:
- Lower limit: £50,000 — profits at or below this are charged at the 19% small profits rate.
- Upper limit: £250,000 — profits above this are charged at the main rate of 25%.
- Profits between £50,000 and £250,000 attract marginal relief (CTA 2010, s.18B), reducing the effective rate gradually between 19% and 25%.
Where a company has associated companies, both limits are divided by (1 + N), where N is the number of associated companies. Both limits are also proportionately reduced for accounting periods of less than 12 months.
Marginal relief fraction
The standard marginal relief fraction is 3/200ths for financial years 2023–2026. The marginal relief formula under s.18B is: F × (U − A) × N/A, where F = 3/200, U = upper limit, A = augmented profits, N = taxable total profits.
Ring fence profits (special case)
For ring fence profits (oil & gas), the small ring fence profits rate is separately set at 19% under CTA 2010, s.279A(4), with a main ring fence profits rate of 30%.
HMRC guidance / practice
HMRC's Corporate Tax Manual confirms the rates, limits and fractions in tabular form:
| Financial Year | Small Profits Rate | Lower Limit | Upper Limit | Marginal Relief Fraction |
|---|---|---|---|---|
| 2023 | 19% | £50,000 | £250,000 | 3/200 |
| 2024 | 19% | £50,000 | £250,000 | 3/200 |
| 2025 | 19% | £50,000 | £250,000 | 3/200 |
HMRC explains the derivation of the 3/200 fraction: where the small profits rate is 19% and the main rate is 25%, the effective marginal rate on profits between the two limits is 26.5%, and the difference between 26.5% and 25% expressed as a fraction is 3/200.
Citation sources
Part 1 Income tax, corporation tax and capital gains tax Corporation tax charge and rates Standard small profits rate and fraction for financial year 2024 6 1 For the purposes of Part 3A of CTA 2010, for the financial year 2024— a the standard small profits rate is 19%, and b the standard marginal relief fraction is 3/200ths.
PART 3A Companies with small profits The lower limit and the upper limit The lower limit and the upper limit 18D 1 This section gives the meaning in this Part of “the lower limit” and “ the upper limit ” in relation to an accounting period of a company (“C”). 2 If C has no associated company in the accounting period— a the lower limit is £50,000, and b the upper limit is £250,000. 3 If C has one or more associated companies in the accounting period— a the lower limit is— £ 50,000 ( 1 + N ) b the
PART 1 Income tax, corporation tax and capital gains tax Corporation tax charge and rates Small profits rate chargeable on companies from 1 April 2023 7 1 Schedule 1 contains the following provision (with effect from 1 April 2023)— a provision for corporation tax to be charged at the standard small profits rate on profits that are not ring fence profits, b provision for marginal relief to be given by reference to the standard marginal relief fraction, c provision making corresponding amendments
Part 1 Income tax, capital gains tax and corporate taxes Corporation tax charge and rates Standard small profits rate and fraction for financial year 2026 14 For the purposes of Part 3A of CTA 2010, for the financial year 2026— a the standard small profits rate is 19%, and b the standard marginal relief fraction is 3/200ths.
The lower rates of CT, and relevant limits and fractions, applicable are as follows: Financial year (commencing 1 April) Rate Lower limit where no associated company* Upper limit where no associated company* Marginal relief standard fraction 2023 19% £50,000 £250,000 3/200 2024 19% £50,000 £250,000 3/200 2025 19% £50,000 £250,000 3/200 *based on a 12-month accounting period. For a table with the rates, limits and fractions for the small profits relief from Financial year 1989 to Financial year 2
Part 8 Oil activities CHAPTER 3A Rates at which corporation tax is charged on ring fence profits The rates Corporation tax rates on ring fence profits 279A 1 Corporation tax is charged on ring fence profits at the main ring fence profits rate. 2 But subsection (3) provides for tax to be charged at the small ring fence profits rate instead of the main ring fence profits rate in certain circumstances. 3 Corporation tax is charged at the small ring fence profits rate on a company's ring fence profi
Corporation tax charge and rates etc Standard small profits rate and fraction for financial year 2025 13 For the purposes of Part 3A of CTA 2010, for the financial year 2025— a the standard small profits rate is 19%, and b the standard marginal relief fraction is 3/200ths.
Where in any accounting period of twelve months: a company has no associated companies, and its augmented profits for the accounting period exceed the lower limit but do not exceed the upper limit the CT charged at the main rate on its total taxable profits is reduced by an amount of marginal relief calculated using the following formula: (F x (U – A)) x (N ÷ A) Where F = the standard marginal relief fraction (set by Parliament for each financial year) U = the upper limit A = the amount of augme
PART 3A Companies with small profits The standard small profits rate for non-ring fence profits Profits charged at the standard small profits rate 18A 1 Corporation tax is charged at the standard small profits rate on a company's taxable total profits of an accounting period which are not ring fence profits if— a the company is UK resident in the accounting period, b it is not a close investment-holding company in the period, and c its augmented profits of the accounting period do not exceed the