Limited company corporation tax calculator

Corporation tax is a band, a relief and two limits pretending to be one rate: nineteen percent at or below the lower limit, twenty-five percent at or above the upper, and between them the main rate less marginal relief of three two-hundredths of the gap between the upper limit and the profit. This calculator works that from the profit you type, cuts the limits for a short accounting period and divides them by the number of associated companies as gov.uk says to, and prints the relief and the effective rate as their own lines.

The limits move before the rate does

The £50,000 and £250,000 limits belong to a twelve month period and one company. A nine month period has limits of £37,500 and £187,500, and a company with one associate halves both. Because the band you fall in depends on the reduced limits, the calculator prints them, and you choose the band against those figures rather than the headline ones.

Marginal relief is a fraction of the gap, not a rate

Between the limits, tax is the main rate on the whole profit less three two-hundredths of the difference between the upper limit and the profit. That makes the effective rate climb from nineteen to twenty-five percent as profit rises, and the marginal rate on each extra pound in the band is 26.5 percent, which is why a pension contribution or a capital purchase timed into a marginal year saves more than the headline rate suggests.

The profit is the tax profit, not the accounts profit

Depreciation is added back and capital allowances taken instead; entertaining, fines and some legal costs come out; a loss brought forward comes off. The figure that goes into this calculator is the profit chargeable to corporation tax after those adjustments, which is the figure the CT600 computation arrives at, not the profit line in the accounts.