What is Marginal Relief for Corporation Tax?

Definition of Marginal Relief for Corporation Tax

Marginal Relief is a gradual reduction in the rate of Corporation Tax for companies whose taxable profits fall between the lower limit of £50,000 and the upper limit of £250,000. 

Who is entitled to Marginal Relief?

From 1st April 2023, the main rate for Corporation Tax rate will increase from 19% to 25%. Companies with annual profits of less than £50,000 will continue to pay Corporation Tax at 19%. 

Companies with taxable profits between £50,000 (the lower limit) and £250,000 (the upper limit) will pay tax at the main rate of 25% but may be able to apply Marginal Relief to their tax calculation to reduce their Corporation Tax bill.

The lower and upper limits may be adjusted if your company’s accounting period is more or less than a calendar year, or if your company has any associated companies.

You can find more information about Marginal Relief for Corporation Tax on the government’s website.

How much relief you may be entitled to

You can calculate the amount of relief your company could be entitled to using the Marginal Relief calculator on the government’s website.

Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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