What is corporation tax?

In a nutshell

Corporation tax is the money you pay to the UK government for any profits you make as a business. At the time of writing (August 2025), this is:

• 25% for profits exceeding £250,000.
• 25% for profits between £50,000 and £250,000 but you may be entitled to ‘Marginal Relief‘.
• 19% for profits less than or equal to £50,000

You can reduce the amount of corporation tax you pay by ensuring you record all your expenses (e.g., equipment purchases, business trips, software licenses, etc).

Sources

• What is corporation tax and who has to pay it? – BBC
• Marginal relief calculator
• Corporation tax rates – gov.uk
• Corporation Tax – gov.uk