UK Business Taxes & Corporation Tax Guide 2026/27
A practical guide to the main taxes and statutory obligations affecting UK companies, including Corporation Tax, VAT, employer National Insurance, PAYE, dividend tax and company tax filing deadlines.
Key Takeaways for 2026/27 Tax Year
- Corporation Tax Brackets: 19% small profits rate (£50,000 or less) and 25% main rate (above £250,000) for non-ring-fence profits.
- Marginal Relief (3/200 Fraction): Available for profits between £50,000 and £250,000, proportionately reduced for associated companies or short accounting periods.
- VAT Threshold: £90,000 taxable turnover on a rolling 12-month or prospective 30-day basis.
- Employer Class 1 NIC (15%): Standard 15% rate on employee earnings above the £5,000 Secondary Threshold (£417/month).
- Employment Allowance: Up to £10,500 annual relief for eligible small business employers.
- Dividend Tax Rates: 10.75% basic rate, 35.75% higher rate, and 39.35% additional rate on dividends exceeding the £500 allowance.
2026/27 UK Business Tax Rates Quick Reference
| Tax / Duty | 2026/27 Rate | Statutory Threshold | Key Note |
|---|---|---|---|
| Corporation Tax — Small Profits Rate | 19% | Profits of £50,000 or less | Threshold can be reduced for short accounting periods and associated companies. |
| Corporation Tax — Main Rate | 25% | Profits above £250,000 | Applies to non-ring-fence profits above the main-rate threshold. |
| Corporation Tax — Marginal Relief | 19% to 25% effective | Between £50,000 and £250,000 | Statutory calculation uses 3/200 fraction, augmented profits and associated companies. |
| VAT Registration Threshold | 20% standard rate | £90,000 taxable turnover | Mandatory registration on rolling 12-month turnover or prospective 30-day test. |
| Employer Class 1 NIC | 15% | Above £5,000 Secondary Threshold | Special 0% categories apply for under-21s, apprentices under 25, and veterans. |
| Employment Allowance | Up to £10,500 | 2026/27 tax year | Reduces employer Class 1 NIC liability for eligible small businesses. |
| Dividend Tax — Basic Rate | 10.75% | Above £500 allowance | Increased from 8.75% effective 6 April 2026. |
| Dividend Tax — Higher Rate | 35.75% | Above £500 allowance | Increased from 33.75% effective 6 April 2026. |
| Dividend Tax — Additional Rate | 39.35% | Above £500 allowance | Applies to dividend income falling into the additional-rate band (£125,140+). |
Statutory Corporation Tax & Marginal Relief Estimator
Estimate Corporation Tax liability under HMRC rules. Incorporates statutory adjustments for short accounting periods, associated companies, and augmented profits.
£12,150
Marginal Relief Band (19%–25%)20.25%
On £60,000 profit£2,850
Standard 3/200 fractionCritical UK Company Tax Deadlines
9 Months + 1 Day After Year-End
Electronic payment of Corporation Tax must clear into HMRC's bank account (e.g. accounting year ending 31 March 2026 ➔ payment due 1 January 2027).
12 Months After Year-End
Company Tax Return (Form CT600) with detailed tax computations and statutory accounts must be filed electronically with HMRC.
Practical UK Business Tax Compliance Checklist
📌 Monthly / Payroll Cycle
- Run PAYE payroll under Real Time Information (RTI).
- Calculate employee deductions and 15% employer Class 1 NIC above £5,000.
- Submit Full Payment Submission (FPS) to HMRC on or before payday.
- Pay PAYE and NIC liability to HMRC by the 22nd (electronically).
📌 Quarterly (VAT Period)
- Maintain digital VAT records under Making Tax Digital (MTD).
- Calculate output VAT charged and input VAT reclaimable.
- Submit digital VAT Return via MTD-compatible software.
- Pay VAT balance to HMRC by 1 calendar month and 7 days after period end.
📌 Annual Year-End (Accounts & Tax)
- Prepare statutory annual accounts for Companies House (due 9 months after year-end).
- Calculate taxable total profits adjusting for disallowable expenses.
- Pay Corporation Tax to HMRC (due 9 months and 1 day after accounting year-end).
- Submit Form CT600 Company Tax Return to HMRC (due 12 months after year-end).
📌 When Declaring Dividends
- Verify the company has sufficient retained distributable profits.
- Hold a formal board meeting and draft dividend minutes.
- Issue dividend vouchers to shareholders detailing gross distribution.
- Remind directors/shareholders of personal dividend tax obligations (10.75% / 35.75% / 39.35%).
Common UK Business Tax Pitfalls
Correction: From 6 April 2026, the ordinary/basic dividend rate increased to 10.75% and the higher dividend rate to 35.75%. The additional rate remains 39.35%.
Correction: Companies in the Marginal Relief range (£50k to £250k) have an effective rate between 19% and 25%. Associated companies and short accounting periods proportionately reduce the thresholds.
Correction: The £90,000 VAT threshold relates strictly to gross taxable turnover, not net trading profit.
Correction: A business must also register under the prospective test if it expects its taxable turnover to exceed £90,000 in the next 30 days alone.
Correction: Employer Class 1 NIC (15% above £5,000) is a direct company cost, while Employee NIC is deducted from gross employee pay.
Correction: Corporation Tax payment is due 9 months and 1 day after the accounting year-end, whereas the CT600 Company Tax Return is due 12 months after year-end.
Correction: Dividends are distributions of post-tax profits and are NOT tax-deductible when calculating Corporation Tax.