Marginal Relief Calculator for Corporation Tax
From 1 April 2023, companies with profits between £50,000 and £250,000 can claim Marginal Relief to reduce their Corporation Tax bill. Use this calculator to determine your potential tax savings.
Corporation Tax Marginal Relief
From April 1, 2023, the UK introduced a dual Corporation Tax rate system. Companies with profits under £50,000 pay the small profits rate of 19%, while those with profits over £250,000 pay the main rate of 25%. For companies with profits between these thresholds, Marginal Relief provides a gradual increase in the tax rate, helping businesses transition between the two rates.
The Marginal Relief system ensures that companies just above the £50,000 threshold don’t face a sudden significant tax increase. Instead, the effective tax rate gradually increases from 19% to 25% as profits approach £250,000. This calculator helps determine exactly how much relief you’re entitled to based on your company’s specific circumstances.
How to Use the Marginal Relief Calculator
Step 1: Enter Your Company’s Taxable Profits
Input the total taxable profits for your accounting period in the “Taxable Profits” field. This is your profit after allowable deductions but before Corporation Tax.
Step 2: Specify Your Accounting Period
If your accounting period is less than 12 months, adjust the “Accounting Period” field accordingly. The calculator will proportionally reduce the threshold limits.
Step 3: Indicate Associated Companies
Enter the number of associated companies your business has. The threshold limits will be divided by the total number of associated companies plus one.
Step 4: Check Eligibility Factors
Select whether your company is a close investment holding company or a non-UK resident company, as these factors affect eligibility for Marginal Relief.
Step 5: Review Your Results
After clicking “Calculate Marginal Relief,” review the detailed breakdown of your tax calculation, including the adjusted threshold limits, tax amount, and effective tax rate.