Home / Guides / Corporation Tax on £50,000 Profit 2026/27 | 19% or Marginal?
For a limited company with £50,000 in taxable profit, the 2026/27 position sits right at the boundary between the small profits rate and the marginal relief band. A company with exactly £50,000 in taxable profit pays 19%, but if profit exceeds this by even £1, marginal relief begins. This makes the £50,000 threshold a significant planning point for director salary and pension decisions.
Last updated May 2026. Written by the LimitedCompanyTaxCalculator.co.uk editorial team and reviewed against current GOV.UK and HMRC guidance. Results are estimates for planning only and are not tax, accounting or financial advice.
The small profits rate of 19% applies to companies with taxable profits at or below £50,000 for 2026/27. A company with exactly £50,000 in taxable profit pays 19% × £50,000 = £9,500. This is the cleanest calculation in the corporate tax system, no marginal relief formula required.
However, taxable profit is calculated after deducting director salary, employer NI and company pension contributions from company revenue. A company generating £50,000 in profit before salary does not have £50,000 in taxable profit, it has whatever remains after the director's salary and associated costs are deducted. The distinction matters enormously for planning.
If a company generates £50,000 before salary and the director takes a £12,570 salary (plus £1,139 employer NI), the taxable profit falls to £50,000 − £12,570 − £1,139 = £36,291. Corporation tax at 19%: £6,895. The effective total tax is much lower than £9,500, even though the revenue figure is the same.
For companies with profits just above £50,000, the marginal relief formula kicks in. The effective rate on profits between £50,000 and £250,000 is higher than 19% and the marginal rate is approximately 26.5%. This means that reducing taxable profit to below £50,000, by increasing director salary or making a pension contribution, has a disproportionately large tax effect.
Example: a company with £55,000 in taxable profit (after salary). Marginal relief applies: (£55,000 × 25%) − (3/200 × (£250,000 − £55,000)) = £13,750 − (3/200 × £195,000) = £13,750 − £2,925 = £10,825. Effective rate: 19.7%. Compare with £50,000: £9,500. The additional £5,000 of profit costs £1,325 in corporation tax, that is an effective marginal rate of 26.5% on those last £5,000.
A company pension contribution of £5,001 (reducing profit from £55,001 to just below £50,000) would save £1,325 in corporation tax, at a saving rate of 26.5p per pound contributed. This is significantly more efficient than contributing at the small profits rate (19p saving) or taking the same amount as salary (employer NI cost reduces the net benefit).
Company profit before salary: £65,000. Director takes £12,570 salary. Employer NI: £1,139. Taxable profit: £65,000 − £12,570 − £1,139 = £51,291. This is just above the £50,000 small profits threshold, so marginal relief applies.
Corporation tax: (£51,291 × 25%) − (3/200 × (£250,000 − £51,291)) = £12,823 − (3/200 × £198,709) = £12,823 − £2,981 = £9,842. Effective rate: 19.2%.
If the director instead makes a £2,000 pension contribution, taxable profit falls to £49,291, below the £50,000 threshold. Corporation tax at 19%: £9,365. Corporation tax saving from the £2,000 pension: £9,842 − £9,365 = £477 on a £2,000 contribution. Saving rate: 23.9%. This is better than the 19% pure small profits rate savings but lower than the 26.5% deep marginal rate, because the company is only marginally inside the marginal band.
Sole trader at £50,000 profit for comparison (England, 2026/27): income tax on (£50,000 − £12,570) = £37,430 at 20% = £7,486. Class 4 NI: 9% × £37,700 = £3,393 (capped). Total tax: approximately £10,879. Take-home: £39,121.
Limited company, £50,000 profit before salary, director takes £12,570 salary and all available dividends: employer NI £1,139. Taxable profit: £36,291. Corporation tax at 19%: £6,895. Post-tax dividends: £29,396. Total personal income: £12,570 + £29,396 = £41,966. Dividend tax: £500 allowance, then £28,896 at 8.75% = £2,528. Total tax: £6,895 + £1,139 + £2,528 = £10,562. Personal take-home: approximately £39,438.
The limited company saves approximately £317 at this profit level compared with sole trader, before accounting for extra accountancy costs of typically £1,200–£2,000 per year. The tax advantage at £50,000 profit is real but narrow, which is why incorporation on tax grounds alone is generally only clearly worthwhile above £60,000–£70,000.
Exactly £50,000 in taxable profit attracts the small profits rate of 19%, giving a corporation tax bill of £9,500. Any profit above £50,000 moves into the marginal relief band, where the effective rate starts at 19% and rises towards 25%. Even £50,001 triggers marginal relief on that extra pound.
The main tools are: director salary (deducted before corporation tax, though it may trigger employer NI above £5,000); company pension contributions (no NI, fully deductible); and any other allowable business expenses that reduce the profit figure.
Approximately 19.7%, using the marginal relief formula. Corporation tax: (£55,000 × 25%) − (3/200 × £195,000) = £13,750 − £2,925 = £10,825.
The limited company saves approximately £300 in total tax at this profit level, but the extra accountancy cost (typically £1,200–£2,000 per year) often outweighs this saving. The limited company advantage becomes more convincing above £60,000–£70,000 in profit.
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.