Marginal Relief Calculator
Work out how much corporation tax marginal relief your company can claim, with the formula worked through using your own figures.
- £50k–£250kprofits that qualify
- 3/200standard fraction
- £3,000most relief
- Tax before relief
- £25,000.00
- Marginal relief
- − £2,250.00
- Corporation tax to pay
- £22,750.00
- Effective tax rate
- 22.75%
- Tax on the next £1
- 26.5%
- Your limits
- £50,000 to £250,000
- Augmented profits
- £100,000.00
Tested against ACCA's published worked examples · Rates checked 1 November 2026 · Not affiliated with HMRC · How we calculate
Marginal relief by profit
How much relief a company gets at each level of augmented profits, with yours marked.
- Marginal relief
- Between your lower and upper limits
- Your company
If your company's profit lands between £50,000 and £250,000, you don't pay the full 25% main rate. You work out tax at 25% and then take off marginal relief. Enter your profit above and this corporation tax marginal relief calculator shows the relief, the tax before and after it, and each step of HMRC's formula, so you can check the figure on your return or follow what your accountant has done. It handles associated companies, short accounting periods, dividends received and periods that run over 1 April.
What is marginal relief?
Marginal relief is a reduction in corporation tax for companies whose profits sit between the lower and upper limits. It exists to stop a cliff edge. Without it, a company making £50,000 would pay 19%, and one making a pound more would pay 25% on everything, an extra £3,000 of tax for £1 of profit.
With marginal relief, the bill rises gradually instead. At £50,000 the relief is £3,000, which brings the 25% calculation down to exactly what the small profits rate would charge. As profit grows the relief shrinks, and at £250,000 it reaches nothing.
Why you pay 26.5% in the band
Each extra pound of profit between the limits costs 25p at the main rate, and it also cuts your relief by 1.5p (3/200 of a pound). Together that's 26.5p, so the tax on your next £1 is 26.5%, higher than the main rate itself.
Your average, or effective, rate is lower and creeps up from 19% to 25% across the band. At £100,000 it's 22.75%. The 26.5% figure matters more for decisions: every £1 of allowable spending in the band, such as a pension contribution or new equipment, saves 26.5p of corporation tax.
That's also where 3/200 comes from. Tax at the lower limit is £9,500 and at the upper limit £62,500. The difference, £53,000, spread over the £200,000 band is 26.5%. Take away the 25% main rate and 1.5%, or 3/200, is left.
How to calculate marginal relief
The marginal relief formula HMRC uses is:
Marginal relief = 3/200 × (U − A) × (N ÷ A)
- U is the upper limit: £250,000, reduced for associated companies or a short period
- A is augmented profits: taxable profits plus dividends received from companies outside your group
- N is taxable profits, the figure that is actually taxed
- 3/200 is the standard fraction, which has applied since 1 April 2023
Most small companies don't receive dividends from other companies, so A and N are the same, the last part of the formula is 1, and it becomes 3/200 × (£250,000 − profits). Then you take the relief off tax worked out at 25%.
- 1
Tax at the main rate
£100,000 × 25% = £25,000.
- 2
Work out the relief
3/200 × (£250,000 − £100,000) = 3/200 × £150,000 = £2,250.
- 3
Take it off
£25,000 − £2,250 = £22,750 corporation tax, an effective rate of 22.75%.
A quicker way: the banded method
You get the same answer by taxing the first £50,000 at 19% and everything above it at 26.5%. For £150,000 of profit that's £9,500 + (£100,000 × 26.5%) = £9,500 + £26,500 = £36,000, exactly what the formula gives. It's handy for a quick check, but it only works for a 12-month period with no associated companies and no dividends received.
Marginal relief at different profit levels (2026/27)
| Taxable profits | Tax at 25% | Marginal relief | Corporation tax | Effective rate |
|---|---|---|---|---|
| £50,000 | £12,500 | Not needed | £9,500 | 19% |
| £75,000 | £18,750 | £2,625 | £16,125 | 21.5% |
| £100,000 | £25,000 | £2,250 | £22,750 | 22.75% |
| £125,000 | £31,250 | £1,875 | £29,375 | 23.5% |
| £150,000 | £37,500 | £1,500 | £36,000 | 24% |
| £175,000 | £43,750 | £1,125 | £42,625 | 24.36% |
| £200,000 | £50,000 | £750 | £49,250 | 24.63% |
| £225,000 | £56,250 | £375 | £55,875 | 24.83% |
| £250,000 | £62,500 | £0 | £62,500 | 25% |
For a 12-month accounting period with no associated companies and no dividends received. At exactly £50,000 the 19% rate applies, so no relief is needed. Just above it, at £50,001, the relief is £2,999.98.
Marginal relief fractions in earlier years
Marginal relief isn't new. It existed under the old small profits rate until 31 March 2015, with different limits and fractions. From 1 April 2015 to 31 March 2023 every company paid one rate, so there was no relief at all. You'll only need the older fractions if you're checking a historic return.
| Financial year | Small profits rate | Main rate | Limits | Fraction |
|---|---|---|---|---|
| 2023/24 onwards | 19% | 25% | £50,000 – £250,000 | 3/200 |
| 2015/16 to 2022/23 | One rate for all companies, no marginal relief | |||
| 2014/15 | 20% | 21% | £300,000 – £1,500,000 | 1/400 |
| 2013/14 | 20% | 23% | £300,000 – £1,500,000 | 3/400 |
| 2012/13 | 20% | 24% | £300,000 – £1,500,000 | 1/100 |
| 2011/12 | 20% | 26% | £300,000 – £1,500,000 | 3/200 |
Marginal relief worked examples
The basic formula is easy. These are the cases that catch people out, each checked with the calculator above.
Dividends received · Ashworth Holdings Ltd
£80,000 profit plus £20,000 of dividends
The company owns a small stake in another company and received £20,000 of dividends. They aren't taxed, but they push augmented profits to £100,000. Relief is 3/200 × (£250,000 − £100,000) × (£80,000 ÷ £100,000) = £1,800. Tax is £80,000 × 25% = £20,000, less relief: £18,200. Without the dividends the relief would have been £2,550.
One associated company · Millbrook Trading Ltd
£100,000 profit, director owns a second company
Both limits are halved, to £25,000 and £125,000. Relief is 3/200 × (£125,000 − £100,000) = £375, so the company pays £24,625. On its own it would have had £2,250 of relief, so the second company costs £1,875 a year.
Short accounting period · Fernside Studio Ltd
£60,000 profit over 183 days
A first accounting period from 1 April to 30 September 2026. The limits are cut to 183/365 of the full amount: £25,068.49 and £125,342.47. Relief is 3/200 × (£125,342.47 − £60,000) = £980.14, so tax is £15,000.00 − £980.14 = £14,019.86.
Period straddling 1 April 2023 · Kestrel Labs Ltd
£100,000 profit, year to 31 December 2023
The first 90 days fall in the year to 31 March 2023, taxed at a flat 19% with no relief: £24,657.53 × 19% = £4,684.93. The other 275 days get the new rules, with limits of £37,671.23 and £188,356.16 and relief of £1,695.21. The total bill is £21,825.34. HMRC's calculator only covers profits from 1 April 2023, so it can't do the first part.
Who can claim marginal relief?
A company can claim if all of these apply:
- It is resident in the UK for tax purposes
- Its augmented profits are above the lower limit and below the upper limit
- It is not a close investment-holding company
A close investment-holding company is, roughly, a company controlled by five or fewer people whose main business is holding investments rather than trading or letting property to unconnected tenants. Those companies, and non-resident companies, pay the 25% main rate on all their profits. Ring fence profits from oil and gas have their own rates and limits.
Associated companies and short periods
Companies are associated if one controls the other, or the same people control both, at any time in the accounting period. Dormant companies don't count. The limits are divided by the number of associated companies plus one, which also shrinks the most relief you can get.
| Associated companies | Lower limit | Upper limit | Most relief |
|---|---|---|---|
| 0 | £50,000 | £250,000 | £3,000 |
| 1 | £25,000 | £125,000 | £1,500 |
| 2 | £16,667 | £83,333 | £1,000 |
| 3 | £12,500 | £62,500 | £750 |
| 4 | £10,000 | £50,000 | £600 |
For an accounting period shorter than 12 months, both limits are cut by the number of days in the period divided by 365. Starting on 1 April 2026:
| Period | Days | Lower limit | Upper limit |
|---|---|---|---|
| 3 months | 91 | £12,465.75 | £62,328.77 |
| 6 months | 183 | £25,068.49 | £125,342.47 |
| 9 months | 275 | £37,671.23 | £188,356.16 |
| 12 months | 365 | £50,000.00 | £250,000.00 |
Common marginal relief mistakes
Most wrong marginal relief figures come from the inputs, not the formula. These are the usual culprits.
Adding group dividends to augmented profits
Only dividends from companies outside your group count. Dividends from a 51% subsidiary, or from a company in the same group, are left out.
Dropping the profit ÷ augmented profits step
If you received dividends, the relief is scaled down by taxable profits ÷ augmented profits. Skip it and you over-claim.
Using full limits for a short period
A 6-month first period has limits of about £25,068 and £125,342, not £50,000 and £250,000.
Getting the associated companies count wrong
Count every company under common control at any point in the period, even for a day. Leave out dormant ones and don't count your own company.
Setting aside 25% of all profit
A company with £110,000 profit that reserves 25% puts by £27,500, but the real bill is £25,400. That's cash tied up for no reason.
Leaving box 329 blank
On the CT600 you tick box 329 to say the company is entitled to marginal relief, then enter the relief in box 435. Software usually ticks it for you, but it's worth checking.
Paying less tax in the marginal relief band
Because each extra pound in the band is taxed at 26.5%, allowable spending there saves more than it would above £250,000. Say a company expects £150,000 of profit and the director makes a £20,000 employer pension contribution before the year end. Profit falls to £130,000 and corporation tax drops from £36,000 to £30,700, a saving of £5,300, which is 26.5% of the contribution.
The same applies to equipment covered by the Annual Investment Allowance and to bringing forward costs you'd pay anyway. Spending money just to save tax rarely makes sense, though: every £1 still costs the company 73.5p. Our corporation tax calculator has a year-end planner that shows the effect of any amount on your own figures.
How to claim marginal relief on your CT600
Marginal relief isn't applied for you. You claim it on the Company Tax Return (form CT600) for the accounting period. These are the boxes involved:
- Box 326: the number of associated companies, not counting yours. For a period spanning two financial years where the number changed, use boxes 327 and 328 instead
- Box 329: tick it if the company pays the small profits rate or is entitled to marginal relief
- Box 430: corporation tax before relief
- Box 435: the marginal relief
- Box 440: corporation tax chargeable, box 430 minus box 435
Tax return software usually works it out once you've entered profits, associated companies and any dividends received. It's still worth checking the figure against this calculator, because a wrong associated companies count or a missing short-period adjustment changes the relief. If you find a mistake on a return you've already filed, you have 12 months from the filing deadline to amend it.
The tax itself is due 9 months and 1 day after the end of the accounting period, before the return is due. Our corporation tax calculator shows both dates for your period.
Changes to marginal relief in April 2023
For eight years every company paid the same rate, 20% and then 19%, and marginal relief disappeared. On 1 April 2023 three things changed at once:
- The main rate rose to 25% for profits over £250,000
- A 19% small profits rate came back for profits up to £50,000
- Marginal relief returned in between, with a standard fraction of 3/200
The way limits are shared also changed. The old test of "related 51% group companies" was replaced by associated companies, which counts companies under common control even if they aren't in a group, such as two companies owned by the same director. If your accounting period ran across 1 April 2023, it's split by days, as in the Kestrel Labs example above.
HMRC's marginal relief calculator vs this one
HMRC has its own marginal relief calculator on gov.uk. Both follow the same legislation, so for a straightforward 12-month period they give the same answer. Gov.uk says its tool should only be used for profits from 1 April 2023. This one is built for the cases around that, and for showing its working:
- Accounting periods that straddle 1 April 2023, split by days between the flat 19% year and the new rules
- The formula worked through with your own figures, for each financial year in the period
- A chart of where your profit sits in the band and how much relief you'd get at other levels
- A shareable link and a PDF of the result to send to your accountant or keep with your records
This calculator is independent and isn't affiliated with HMRC. It's tested against ACCA's published worked examples, and you can see the checks on our methodology page.
Notes and assumptions
The calculator works out marginal relief on the figures you enter. A few things are worth knowing before you rely on the result:
- Taxable profits, not accounting profit. Enter profit after capital allowances and disallowed expenses, and after any losses brought forward or group relief. The calculator doesn't work those out for you.
- Dividends received. Enter only dividends from companies outside your group. Leave out dividends from a 51% subsidiary or from a company that owns 51% of yours.
- Associated companies. One number is used for the whole period. If the number changed in a period that spans two financial years, work out each year separately, as you would on CT600 boxes 327 and 328.
- Period length. Limits for a short period are cut by days ÷ 365. A full 12-month period keeps the full limits, even with 29 February in it.
- Not covered. Ring fence profits from oil and gas, patent box profits and carrying losses back. Non-resident and close investment-holding companies can be marked in the advanced options, and pay the main rate on everything.
- Pennies. Results are shown to the penny. Your software may round differently, so a difference of under £1 is normal.
When to speak to an accountant
For a single trading company with a normal year end, the calculator should match your return. It's worth getting advice if:
- You own several companies, or one joined or left your group during the year
- Your company holds investments or lets property to people connected with you, so it might be a close investment-holding company
- The company receives dividends from other companies, or is part of a group
- Your accounts run longer than 12 months, or a period with losses spans two financial years
- You think an earlier return over- or under-claimed relief. You have 12 months from the filing deadline to amend it
- Profit is near £50,000 or £250,000 and you're deciding on pension contributions, bonuses or equipment before the year end
This page explains the rules and gives an estimate. It isn't tax advice for your company.
Frequently asked questions
Quick answers about corporation tax marginal relief.
What is marginal relief?
Marginal relief is a reduction in corporation tax for companies with profits between £50,000 and £250,000. Without it, a company would jump from the 19% small profits rate to the 25% main rate the moment profit passed £50,000. With it, the bill rises gradually: you work out tax at 25% and then take off the relief.
How do you calculate marginal relief?
Marginal relief = 3/200 × (upper limit − augmented profits) × (taxable profits ÷ augmented profits). If the company received no dividends from outside its group, augmented profits equal taxable profits and the last part is 1, so it becomes 3/200 × (£250,000 − profits). For 2026/27, £100,000 of profit gives £2,250 of relief.
What is the marginal relief fraction?
It is 3/200, which HMRC calls the standard fraction. It has applied since 1 April 2023. The fraction is what makes each extra pound of profit in the band cost 26.5p in tax: 25p at the main rate plus 1.5p of relief you lose.
What is the most marginal relief a company can get?
£3,000, for a company with no associated companies and profits just over £50,000 in a 12-month period. The relief then shrinks by 1.5p for every extra pound of profit and reaches nothing at £250,000. With associated companies or a short period, the maximum is smaller because the limits are smaller.
Who can claim marginal relief?
UK resident companies with augmented profits between the lower and upper limits. It is not available to non-UK resident companies or close investment-holding companies. The limits are £50,000 and £250,000 for a 12-month period with no associated companies.
How do I claim marginal relief?
You claim it on your Company Tax Return. The relief goes in box 435 of the CT600 and is taken off the tax in box 430. HMRC does not add it automatically, so if your profit is in the band, check your return or accounting software includes it.
Is marginal relief the same as the small profits rate?
No. The small profits rate is the 19% rate for profits up to £50,000. Marginal relief is a deduction for profits between £50,000 and £250,000: you work out tax at 25% and then take the relief off. Both apply to the same companies, and neither is available to close investment-holding companies or non-UK resident companies.
What are augmented profits?
Taxable profits plus dividends (exempt distributions) received from companies that are not in the same group. Those dividends are not taxed themselves, but they count towards augmented profits, which decide whether marginal relief applies and how much you get.
How do associated companies affect marginal relief?
The limits are divided by the number of associated companies plus one. With one associated company they become £25,000 and £125,000, so £100,000 of profit gets £375 of relief instead of £2,250.
Do dividends my company pays out reduce its profits for marginal relief?
No. Dividends paid to shareholders come out of profit after tax, so they are not deducted and do not change the relief. Only dividends the company receives from companies outside its group affect marginal relief, by increasing augmented profits.
How do losses affect marginal relief?
If the company makes a loss there is no corporation tax and nothing to relieve. Losses brought forward from earlier years reduce taxable profits, and so augmented profits, which can move a company into the band or increase its relief. Use the profit after losses in the calculator.
Can I amend my CT600 if I got marginal relief wrong?
Yes. You can amend a Company Tax Return within 12 months of its filing deadline, which is usually 24 months after the end of the accounting period. If you under-claimed, amending gets the overpaid tax back. If you over-claimed, correct it quickly to limit interest and avoid a penalty for a careless error.
What changed with marginal relief in April 2023?
From 1 April 2015 to 31 March 2023 every company paid a single rate, so there was no marginal relief. On 1 April 2023 the main rate rose to 25%, the 19% small profits rate came back for profits up to £50,000, and marginal relief returned for profits in between, with a new standard fraction of 3/200. The old "related 51% group company" test was also replaced by associated companies.
Is this the HMRC marginal relief calculator?
No. HMRC has its own marginal relief calculator on gov.uk, which only covers profits from 1 April 2023. This one is independent and uses the same rules, and it also handles accounting periods that straddle 1 April 2023, earlier years, short periods and dividends received, showing every step of the working.
Do I get marginal relief if my profit is under £50,000?
No, and you don't need it. Profit at or below the lower limit is taxed at the 19% small profits rate, which is already lower than 25% minus relief. For 2026/27, £50,000 of profit pays £9,500.
Related calculators
Other free calculators for limited companies and their directors:
Software engineer with 10 years of experience, including building loan management software for a UK alternative lender.
Last updated 2 November 2026 · Rates checked against gov.uk on 1 November 2026 · LinkedIn (opens in new tab)
- Marginal Relief for Corporation Tax – gov.uk (opens in new tab)
- Corporation Tax rates and allowances – gov.uk (opens in new tab)
- CTM03654, short accounting period example – HMRC Company Taxation Manual (opens in new tab)
- Associated companies corporation tax examples – ACCA (opens in new tab)
This calculator gives estimates for guidance only and is not tax advice. Business Tax Calc is independent and not affiliated with HMRC. See our methodology for how calculations are made and tested.