Pay & Tax

Corporation Tax Calculator

Tax on company profit, with editable rates.

What it does. Corporation tax is charged on taxable profit, which is accounting profit adjusted for tax purposes — some accounting expenses are not deductible, and capital allowances replace depreciation. Several systems apply a lower rate to small profits with a tapered band between.

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How to use Corporation Tax Calculator

Enter turnover and allowable costs, or a taxable profit directly.
Set the rates and thresholds, or use a preset.
Read the tax, the effective rate and any taper.

Taxable profit is not accounting profit

The starting point is the profit in your accounts, but several adjustments follow. Depreciation is added back and replaced with capital allowances, client entertaining is typically disallowed, and some fines and penalties are never deductible.

The two figures can differ substantially, and the tax is charged on the adjusted one.

Capital allowances are the biggest of these in most years. They set their own schedule for writing down assets, and generous first-year allowances can make the taxable profit far lower than the accounting profit in a year of heavy investment.

Small profits rates and the taper

Where a lower rate applies to small profits, there is usually a tapered band between the small-profits threshold and the main rate threshold rather than a cliff.

Inside the taper, the marginal rate on each extra pound of profit is higher than the main rate — which is a genuine and often surprising effect.

It matters for timing decisions. Bringing expenditure forward into a year where profit sits inside the taper relieves it at that higher marginal rate rather than the headline one.

Losses and associated companies

Trading losses can generally be carried forward against future profits, and sometimes carried back against the previous year for a refund. The rules on how far and against what vary considerably.

Where a group has several companies, thresholds are usually divided between them, so the small-profits rate is not available to each separately.

That division catches people who set up multiple companies expecting each to get the full allowance. In most systems the thresholds are shared, and structuring around it is exactly what the rule exists to prevent.

Frequently asked questions

Is corporation tax charged on turnover or profit?

On taxable profit — accounting profit adjusted for tax. Depreciation is replaced with capital allowances, and some expenses like client entertaining are disallowed.

What is the marginal relief taper?

The band between the small-profits threshold and the main rate threshold. Inside it the effective marginal rate on extra profit is higher than the main rate, which surprises people and matters for timing expenditure.

Why is my taxable profit different from my accounts?

Mainly capital allowances replacing depreciation, plus disallowed items. In a year of heavy investment the taxable figure can be much lower than the accounting one.

Can I split profits across several companies to get the lower rate?

Generally no. Thresholds are usually divided between associated companies precisely to prevent that, so each does not get a full allowance.

What happens to a loss?

Trading losses can usually be carried forward against future profits and sometimes carried back against the prior year for a refund. The specifics vary considerably by jurisdiction.