At £200,000 a company sits near the top of the marginal relief band, so most of each extra pound is taxed at 26.5%. That makes the extraction decision matter more than the corporation tax itself. Here is the bill for 2026/27 and what reaches the director under four common strategies.
Written by James Whitfield · Last checked 19 October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
Corporation tax on £200,000 of taxable profit for 2026/27 is £49,250: 25% of £200,000 (£50,000) less marginal relief of £750 (3/200 of the £50,000 gap below £250,000). That is an effective rate of 24.625%.
If the £200,000 is before a £12,570 director's salary, taxable profit falls to £186,294.50 and corporation tax to £45,618.04. Paying out all £140,676.46 left as dividends gives a single director £105,765.05, an overall tax rate of 47%.
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For a standalone company with a 12-month accounting period, HMRC's marginal relief formula is: tax = 25% × profit − 3/200 × (£250,000 − profit).12
| Taxable profit × 25% | £50,000.00 |
| Less marginal relief: 3/200 × (£250,000 − £200,000) | −£750.00 |
| Corporation tax | £49,250.00 (24.625%) |
If the company has one associated company, the limits halve to £25,000 and £125,000, so £200,000 is above the upper limit and the full 25% applies: £50,000.
The effective rate keeps rising through the band. Each £1 of profit between £50,000 and £250,000 costs 26.5p, which is why deductions are worth more here than above £250,000.
| £50,000 | £9,500 (19%) |
| £100,000 | £22,750 (22.75%) |
| £150,000 | £36,000 (24%) |
| £200,000 | £49,250 (24.625%) |
| £250,000 | £62,500 (25%) |
These figures start from £200,000 of profit before a £12,570 salary (employer NI £1,135.50), so corporation tax is £45,618.04 and £140,676.46 is available for dividends. Single director, no other income, England, 2026/27.
| Take everything as dividendsDividend tax £47,481.41; nothing retained | £105,765.05 |
| Stop at £100,000 of income (£87,430 dividend)£53,246.46 retained in the company | £78,222.53 |
| Stop at £50,270 (£37,700 dividend)£102,976.46 retained in the company | £46,271.00 |
| Two 50/50 directors, all paid outCombined, with the Employment Allowance | £129,082.32 |
Taking everything costs £47,481.41 of dividend tax because £25,140 of the dividend falls in the £100,000 to £125,140 taper zone and £28,106.46 above it at 39.35%. Retaining profit defers the personal tax; it is not a saving unless you later draw it at a lower rate.
An employer pension contribution is a deductible expense with no National Insurance. On £200,000 of profit, a £40,000 contribution reduces taxable profit from £186,294.50 to £146,294.50 and corporation tax by exactly £10,600 (26.5%), because the whole contribution comes out of the marginal relief band.1
The contribution must be within the director's annual allowance: £60,000 for 2026/27, plus any unused allowance from the previous three tax years, and less if your adjusted income is over £260,000.3
A company with taxable profits of £1.5 million or less pays its corporation tax 9 months and 1 day after the end of the accounting period. For a year ending 31 March 2027 that is 1 January 2028. The Company Tax Return is due 12 months after the period ends.4
£49,250 for 2026/27 for a standalone company with a 12-month period: 25% of £200,000 less £750 of marginal relief, an effective rate of 24.625%.
Not quite. Profits between £50,000 and £250,000 get marginal relief, so the bill is £49,250 rather than £50,000. With one associated company the upper limit halves to £125,000 and the full 25% applies.
£105,765.05 if a single director takes a £12,570 salary and all the rest as dividends in 2026/27. Two 50/50 directors would take £129,082.32 between them.
No. Dividends are paid out of profit after corporation tax. Salary, employer NI and employer pension contributions are deductible; dividends are not.
No. Quarterly instalments apply to large companies with profits over £1.5 million (divided between associated companies). Otherwise the tax is due 9 months and 1 day after the year end.
The rates and rules on this page are drawn from the official UK government sources below, using the confirmed 2026/27 figures. Each link opens the relevant HMRC, GOV.UK or Companies House page in a new tab.
The limited company tax calculator turns this guidance into a concrete estimate for corporation tax, dividends and personal take-home, based on 2026/27 HMRC rates.