For the 2026/27 tax year, a UK limited company pays 19% Corporation Tax on profits up to £50,000. If your profit is over £250,000, you pay the 25% main rate. Profit between £50,000 and £250,000 gets Marginal Relief, which works out to an effective tax rate between 19% and 25%.
On top of corporation tax, your company may also owe VAT, employer’s National Insurance, and PAYE if you run payroll.
And if you take money out as dividends, you’ll pay personal tax on that too. This is entirely separate from what the company pays.
This guide explains how it all works for 2026/27!
What Tax Does a Limited Company Actually Pay?
The main tax most trading companies need to think about is Corporation Tax.
However, depending on what the company does, it may also have other tax obligations. So most UK limited companies will deal with some or all of the following:
| Tax | Who pays it? | When it may apply |
| Corporation Tax | The company | On taxable business profits |
| VAT | The company | If VAT registered or required to register |
| Employer’s National Insurance | The company | When it pays salaries above relevant thresholds |
| Income Tax | Directors and employees | On salary and other taxable income |
| Employee National Insurance | Directors and employees | On salary above the relevant threshold |
| Dividend Tax | Shareholders | On dividends above available allowances |
| Business rates | The company | If it occupies commercial premises |
| Capital Gains Tax or Corporation Tax on gains | Company or individual | When selling certain business assets or shares |
For most owner-managed businesses, the main focus is usually Corporation Tax, salary, dividends and National Insurance.
How Much Corporation Tax Does a Limited Company Pay?
As discussed above, the most important tax for a limited company to pay is Corporation Tax. How much you pay depends entirely on where your profits land.
For the 2026/27 tax year (1 April 2026 to 31 March 2027), here’s how the rates break down.
| Taxable profit | Corporation tax rate |
| Up to £50,000 | 19% (small profits rate) |
| £50,001 to £250,000 | Marginal relief applies (effective rate rises from 19% to 25%) |
| Over £250,000 | 25% (main rate) |
1. The Small Profits Rate (19%)
If your limited company makes a profit of £50,000 or less, you fall into the Small Profits Rate. You will pay 19% tax on those profits. For example, if your profit is £30,000, your tax bill will be £5,700.
2. The Main Rate (25%)
If your company is doing very well and brings in profits over £250,000, you hit the Main Rate. You will pay 25% on the entire amount of your taxable profits.
3. The Marginal Relief Band (19% to 25%)
If your profits are between £50,000 and £250,000, things get a bit more complex. You do not instantly jump to a flat 25% tax rate. Instead, you get something called Marginal Relief.
HMRC applies a sliding scale formula. The closer your profit is to £50,000, the closer your tax rate stays to 19%. As your profit climbs toward £250,000, your effective tax rate creeps closer to 25%.
Note: If you own multiple active companies, these profit thresholds (£50,000 and £250,000) are split between them.
What Happens After Paying Corporation Tax: Taking Money Out
After a limited company has paid Corporation Tax, the profit which is left can stay in the business. Or the profit can be paid to you. As a director, you can pay yourself legally through salary, dividends, or a mix of both.
Salary is deducted before profit is calculated, so it reduces your corporation tax bill, but it’s subject to Income Tax and National Insurance in the usual way.
Dividends come out of profit that’s already been taxed, and they’re taxed again, but at lower personal rates than salary. The dividend allowance is £500 for 2026/27. Dividends above this amount may be subject to dividend tax depending on the shareholder’s Income Tax band.
Read More: How Do Dividends Work in a Small Business and Limited Company?
What Are The Other Taxes A Limited Company Might Owe?
As we discussed above, Corporation Tax gets the most attention for limited companies, but depending on business size and setup, a limited company often handles other taxes too.
1. Value Added Tax (VAT)
Your company does not legally “bear” this tax, but it is responsible for calculating, collecting, and paying it.
If your taxable turnover goes over £90,000 in any 12-month rolling period, you must register for VAT.
You can choose to register voluntarily before this if it benefits your business setup. Once registered, you collect VAT on your sales and pay it over to HMRC, minus any VAT you reclaim on your business purchases.
2. Employer’s National Insurance (Payroll)
Even if you are the sole director of your company, you are technically an employee if the business pays you a salary. For 2026/27, the standard employer Class 1 NIC rate is 15% on earnings above the £5,000 Secondary Threshold, subject to applicable thresholds, categories and reliefs. Eligible employers may also benefit from the Employment Allowance.
For that, the business must set up a PAYE (Pay As You Earn) scheme.
The company will deduct Income Tax and employee National Insurance from the salaries. The company must also pay Employer National Insurance Contributions (NICs) on top of those wages.
3. Business Rates
These are only relevant if you have commercial premises.
If you rent or own an office, shop, or warehouse, your local council charges Business Rates.
If you work from a home office, you usually do not pay this unless you welcome visiting clients or convert the space purely for commercial use.
When Does A Limited Company Pay Corporation Tax?
There are two deadlines many directors need to remember:
| Requirement | Usual deadline |
| Pay Corporation Tax | 9 months and 1 day after the accounting period ends |
| File the Company Tax Return | 12 months after the accounting period ends |
For example, if your company year end is 31 March 2027, Corporation Tax is usually due by 1 January 2028. The Company Tax Return is normally due by 31 March 2028.www+1
Your statutory accounts have their own filing deadline with Companies House. Your VAT returns and payroll reporting also run to separate deadlines.
Quick Summary: How Much Tax Does A Limited Company Pay
- A limited company pays Corporation Tax on taxable profits, not simply on turnover.
- The 2026/27 Small Profits Rate is 19% for qualifying profits of £50,000 or less.
- The main Corporation Tax rate is 25% for profits above £250,000.
- Profits between £50,000 and £250,000 can qualify for Marginal Relief.
- Associated companies can reduce the £50,000 and £250,000 thresholds.
- VAT, employer’s NIC, and PAYE can all apply on top of corporation tax
- Corporation Tax is normally due 9 months and 1 day after the accounting period ends.
- The Company Tax Return is generally due 12 months after the accounting period ends.
The Bottom Line
How much tax a limited company pays depends on profit, salary, dividends, and VAT status.
For 2026/27, expect corporation tax between 19% and 25%, plus National Insurance and dividend tax when profits are withdrawn.
With good planning, running a limited company could be one of the most tax-efficient ways to do business in the UK.
How Accotax Can Help
At Accotax, we deal with corporation tax calculations, marginal relief, and dividend planning for limited companies every single day.
Our expert Limited Company Accountants prepare your annual accounts and Company Tax Return, calculate Corporation Tax, manage payroll, support VAT reporting, and help you plan tax-efficient salary, dividends and pension contributions.
Get in touch if you’d like a hand with any part of this; we’re happy to talk it through.
Disclaimer: Tax rates and thresholds in this article are based on the UK rules for 2026/27 available at the time of writing. Individual circumstances can change the amount of tax due, so specific calculations should be checked against the latest HMRC guidance.
