Introduction
The headline Corporation Tax rates haven't changed for 2026 — but the way UK businesses are required to interact with HMRC has shifted meaningfully, with the free filing portal gone and Making Tax Digital moving from a future requirement to a current one. This guide covers both the unchanged rate structure and the genuinely new administrative obligations.
Note: This is educational information, not tax advice. UK tax rules and digital filing requirements are detailed and change frequently — confirm your specific obligations with a qualified UK accountant.
Table of Contents
- The 2026 Corporation Tax Rates
- Marginal Relief, Explained
- Associated Companies and Shared Thresholds
- The End of Free HMRC Filing
- Making Tax Digital for Income Tax
- Other 2026 Changes Worth Knowing
- A Practical Readiness Checklist
- FAQ
- Conclusion
The 2026 Corporation Tax Rates
UK Corporation Tax for 2026 follows the same two-tier structure introduced in April 2023, with no rate changes announced:
| Profit Level | Rate |
|---|---|
| Up to £50,000 | 19% (small profits rate) |
| £50,000 - £250,000 | Marginal relief (effective rate between 19% and 25%) |
| Over £250,000 | 25% (main rate) |
For many small, owner-managed companies, the 19% small profits rate is the same percentage that applied as a flat rate from April 2015 through March 2023 — meaning smaller companies genuinely haven't seen a rate increase, even though the overall system became more tiered for larger companies in 2023.
Marginal Relief, Explained
Marginal relief smooths the transition between the two rates rather than applying the full 25% the instant profits cross £50,000. It's calculated using a standard HMRC formula, producing a gradual increase in effective rate as profits rise toward £250,000.
Concretely: a company with £150,000 in profits does not simply pay 25% on the full amount — its effective rate sits somewhere between 19% and 25%, calculated via the marginal relief formula rather than a flat percentage. This detail matters for accurate tax planning and cash flow forecasting — assuming the higher rate applies the moment a company crosses £50,000 in profit overstates the actual liability.
Associated Companies and Shared Thresholds
A detail that's easy to miss for group structures: if a company has associated companies, the £50,000 and £250,000 thresholds are divided among them (technically, divided by 1 plus the number of associated companies). This can push a company into a higher effective rate sooner than its standalone profit figure alone would suggest — a genuinely important consideration for businesses under common ownership or control with multiple entities, where each individual company's threshold shrinks based on the total group structure.
The End of Free HMRC Filing
This is one of the most consequential practical changes for 2026: HMRC's free CT600 online filing service closed permanently on 31 March 2026. Companies must now file Corporation Tax returns using HMRC-approved commercial software or through an accountant — direct, free filing through HMRC's own portal is no longer available.
This shift is described as part of a broader alignment with the Economic Crime and Corporate Transparency Act's push toward more standardized, verifiable digital filing infrastructure. Practically, this means every UK company now needs either a commercial filing software subscription or an accountant relationship to file Corporation Tax returns — a real, if modest, added cost and process change for companies that previously filed directly and for free.
Even a dormant company or one that made no profit during the period is not exempt — if HMRC issues a notice to file, a CT600 must still be submitted through one of these two paths.
Making Tax Digital for Income Tax
Making Tax Digital (MTD) for Income Tax becomes mandatory from April 2026 for sole traders and landlords with combined gross income over £50,000. This is a genuinely significant shift in how affected taxpayers interact with HMRC:
- Digital record-keeping becomes mandatory, replacing paper or basic spreadsheet-only records
- Quarterly updates must be submitted to HMRC using MTD-compatible software, providing income and expense totals four times a year
- An end-of-period statement must still be submitted by 31 January following the end of the tax year, which can include accounting adjustments and claims for reliefs or allowances
This replaces the traditional model of one annual tax return with a more continuous, in-year reporting cycle — HMRC's stated goal is a more accurate, ongoing projection of tax due, rather than a single once-a-year reconciliation.
Other 2026 Changes Worth Knowing
Beyond Corporation Tax and MTD specifically, several other 2026 changes affect UK business owners:
- Dividend tax increases (from April 2026): standard rate rising from 8.75% to 10.75%, upper rate from 33.75% to 35.75% — directly affecting company directors who pay themselves through dividends, a common structure for owner-managed limited companies
- Business Asset Disposal Relief (BADR): the Capital Gains Tax rate on qualifying business disposals increases to 18% from 6 April 2026, affecting business owners selling qualifying shares, buildings, equipment, or vehicles
- Capital allowances: the main rate of writing-down allowance (WDA) for plant and machinery drops from 18% to 14% from April 2026, offset by a new 40% first-year allowance (FYA) for qualifying expenditure incurred from 1 January 2026
A Practical Readiness Checklist
- Confirm your Corporation Tax filing method — commercial software subscription or accountant relationship, since free direct HMRC filing is no longer available
- Check whether MTD for Income Tax applies to you — sole traders/landlords with combined gross income over £50,000 need MTD-compatible software in place before April 2026
- Review dividend strategy ahead of the April 2026 rate increase, particularly for company directors who structure compensation primarily through dividends
- Confirm associated company status if your structure includes multiple entities, since this affects your actual Corporation Tax thresholds
- Time significant asset disposals or equipment purchases with the BADR rate change and new capital allowance structure in mind, ideally with an accountant's input on the specific timing implications
FAQ
The small profits rate is 19% for companies with taxable profits up to £50,000. The main rate is 25% for profits over £250,000. Companies with profits between these two thresholds pay an effective rate calculated through marginal relief, which tapers smoothly between 19% and 25% rather than jumping abruptly at either threshold. These rates are unchanged from those introduced in April 2023.What are the UK Corporation Tax rates for 2026?
Marginal relief reduces a company's effective Corporation Tax rate gradually as profits rise from £50,000 toward £250,000, using a standard HMRC formula, rather than applying the full 25% rate the moment profits cross £50,000. This means a company with £150,000 in profits does not simply pay 25% on the full amount — its effective rate sits somewhere between 19% and 25%, closer to the middle of that range.What is marginal relief and how does it work?
HMRC's free CT600 online filing portal closed permanently in 2026 as part of a shift toward mandatory commercial software use, partly to align with the Economic Crime and Corporate Transparency Act's push toward more standardized digital filing infrastructure. Companies must now file Corporation Tax returns using HMRC-approved commercial software or through an accountant — free, direct HMRC filing for CT600 is no longer an option.Why did HMRC's free Corporation Tax filing service close?
Making Tax Digital (MTD) for Income Tax becomes mandatory from April 2026 for sole traders and landlords with combined gross income over £50,000. Affected taxpayers must keep digital accounting records and submit quarterly updates to HMRC using MTD-compatible software, replacing the traditional single annual tax return with four in-year updates plus a year-end statement.What is Making Tax Digital for Income Tax and who does it apply to?
If a company has associated companies, the £50,000 and £250,000 profit thresholds are divided by the total number of associated companies (technically, divided by 1 plus the number of associated companies). This can push a company into a higher effective Corporation Tax rate sooner than its standalone profit figure would suggest, and is a commonly overlooked detail for group structures or companies under common control.How do associated companies affect Corporation Tax thresholds?
Dividend tax rates are rising from April 2026 — the standard rate from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%, directly affecting company directors who pay themselves via dividends. Business Asset Disposal Relief's Capital Gains Tax rate is increasing to 18% from 6 April 2026, and the main rate of writing-down allowance for plant and machinery is dropping from 18% to 14%, offset by a new 40% first-year allowance for qualifying expenditure from 1 January 2026.What other 2026 tax changes affect UK business owners?
Already registered for VAT? See our UK VAT registration threshold guide for the complementary compliance picture.
Conclusion
The Corporation Tax rates themselves are the most stable part of the 2026 picture — it's the surrounding infrastructure that's genuinely changed, from the end of free HMRC filing to the start of mandatory quarterly digital reporting under MTD. Businesses that get ahead of these administrative shifts, rather than discovering them at the next filing deadline, avoid the scramble that comes with adapting to a new compliance process under time pressure.
If you'd like help getting MTD-ready or setting up compliant Corporation Tax filing, get in touch for a free consultation.