Limited Company Tax Calculator (UK)
Running a limited company means paying Corporation Tax on your profits before extracting money. The main rate is 25% for profits over £250,000, with a small profits rate of 19%.
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Many company directors assume they can simply take all profits as dividends. While dividends are taxed at lower rates, you still pay Corporation Tax first. A common mistake is not taking enough salary to qualify for State Pension credits.
Understanding your total tax position helps you plan the most efficient way to extract profits. Enter your company's expected profit below to see your Corporation Tax bill.
Company Details
Your company's gross profit before any deductions
Uses 2026/27 rates: 19%/25% Corporation Tax, 15% employer NI above £5,000.
Salary is a tax-deductible expense for the company
Employer pension contributions reduce taxable profit
Tax Calculation Results
Corporation Tax Due
Based on 2026/27 rates
Employer's NI on Salary
15% above £5,000
Post-Tax Profit
After corporation tax
Available for Dividends
Profit after all taxes
Corporation Tax Rates (2026/27)
• Small profits (up to £50,000): 19%
• Main rate (over £250,000): 25%
• Marginal relief applies between thresholds (26.5% marginal rate)
What this means for your company
For 2026/27, profits up to £50,000 are taxed at the small profits rate of 19%, profits over £250,000 at the main rate of 25%, and anything in between attracts marginal relief — giving an effective rate that climbs from 19% to 25%. Once your company has paid Corporation Tax, you'll then pay personal tax on whatever you extract via salary or dividends.
If your profits are nudging £50,000, deliberate timing of expenses, capital allowances (AIA covers up to £1m of qualifying spend) or pension contributions can keep you in the small profits band and save real money. Worth modelling the optimum salary/dividend split before year-end.
Corporation Tax Explained
Corporation Tax is the tax that UK limited companies pay on their profits. Unlike personal income tax, it applies to the company as a separate legal entity. The current rates depend on your profit level:
The marginal relief system means companies with profits between £50,000 and £250,000 pay an effective rate somewhere between 19% and 25%. This prevents a cliff edge where crossing the threshold would suddenly increase your tax bill significantly.
What Happens After Corporation Tax
Understanding what you can do with post-tax profits
Once your company has paid Corporation Tax, the remaining profit belongs to the company. As a director and shareholder, you have several options:
- Retain profits in the company: Keep funds for future investment, working capital, or to build reserves
- Pay dividends: Distribute profits to shareholders, which are then subject to personal dividend tax
- Make pension contributions: Company contributions are tax-efficient and don't count towards your personal allowance
- Invest in business assets: Equipment, property, or other investments that may qualify for capital allowances
Remember: dividends are paid from post-tax profits and then taxed again in your hands as personal income. This "double taxation" is why the dividend tax rates are lower than income tax rates on employment income.
How Directors Pay Themselves
Understanding the salary vs dividends strategy
Most director-shareholders use a combination of salary and dividends to extract profits tax-efficiently. The optimal strategy depends on your circumstances:
Salary
- • Tax-deductible for the company
- • Subject to Income Tax and NI
- • Employer's NI at 15% above £5,000
- • Builds state pension entitlement
- • Common to pay £12,570 (Personal Allowance)
Dividends
- • Not tax-deductible (paid from profits)
- • No National Insurance payable
- • £500 tax-free dividend allowance
- • 2026/27 rates: 10.75% / 35.75% / 39.35%
- • Flexible timing of payments
A common tax-efficient approach is to pay a salary at the Personal Allowance level (£12,570) and take the rest as dividends. However, the "optimal" strategy varies based on whether you have other income, your spouse's tax position, and company profits.
Worked Example
Let's say your limited company makes £80,000 profit before any salary:
The director would then pay personal dividend tax when extracting this as dividends, but would benefit from the £500 dividend allowance and lower dividend tax rates compared to employment income.
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