What limited company tax do you need to pay in 2026/27?

For practitioners advising corporate clients in the 2026/27 financial year, the tax landscape features updated payroll burdens, harmonised capital gains rules, and newly structured local property taxes. To maintain compliance and optimise tax efficiency, you must map out exactly what limited company tax you need to pay across profits, payroll, property, and profit extraction.

This guide breaks down the core tax obligations and rates for UK limited companies operating in 2026/27.

Corporation Tax and Chargeable Gains

A limited company pays Corporation Tax on its taxable trading profits and chargeable gains. For the 2026/27 financial year (Financial Year 2026), section 13 of the Finance Act 2025 sets the main rate at 25%.

However, a tiered system applies depending on the company’s augmented profits:

• Small Profits Rate (19%): Companies with profits below the £50,000 lower limit pay Corporation Tax at 19%.
• Marginal Relief (19% – 25%): For companies with profits between £50,000 and £250,000, tax applies at the 25% main rate, but you deduct Marginal Relief to provide a gradual, blended effective tax rate bridging the gap.
• Main Rate (25%): Profits exceeding the £250,000 upper limit are charged strictly at 25%.

“The lower and upper limits will be proportionately reduced for short accounting periods and where there are associated companies.”

Unlike individuals who pay Capital Gains Tax, companies pay Corporation Tax on their chargeable gains. A company’s net chargeable gains (after allowable losses) simply form part of its total profits for the accounting period and are taxed at the applicable 19% or 25% Corporation Tax rate.

Value Added Tax (VAT)

You must monitor the company’s rolling turnover to determine its VAT obligations. From 1 April 2024 (and maintained for 2026/27), the statutory registration threshold is £90,000.

A limited company must register for VAT if:

1. Historic Test: Its total taxable turnover for the preceding 12 months exceeded £90,000.
2. Future Test: There are reasonable grounds to believe its taxable turnover will exceed £90,000 in the next 30 days alone.

Conversely, if the company’s taxable turnover falls and you expect it to remain below the deregistration threshold of £88,000, you may apply to deregister the company.

Payroll Taxes: Employer National Insurance (NICs)

If the company employs staff or pays directors a salary, it must operate PAYE and pay secondary Class 1 National Insurance Contributions (Employer NICs). The Autumn Budget 2024 significantly increased this burden from 6 April 2025.

For the 2026/27 tax year, you must apply the following rules:

• The Rate: The secondary Class 1 NICs rate is 15%.
• The Threshold: The Secondary Threshold (the point at which the employer starts paying NICs on an employee’s earnings) is heavily reduced to £5,000 per year.

To mitigate this, eligible companies can claim the Employment Allowance, which shelters the first £10,500 of the company’s Employer NICs liability for the tax year.  Mechanism: If a company has three employees earning £35,000 each, the liable earnings per employee are £30,000 (£35,000 – £5,000 threshold). The 15% NICs charge on £90,000 total liable earnings equals £13,500. You deduct the £10,500 Employment Allowance, leaving a net Employer NICs bill of £3,000.

Profit Extraction: Dividend Tax

While the company pays Corporation Tax on its profits, extracting those profits via dividends triggers personal Income Tax for the shareholders. The government increased dividend tax rates from 6 April 2026 to narrow the gap between taxes on work and taxes on assets.

When you extract profits in 2026/27, the following dividend tax rates apply to the shareholders (after the £500 tax-free dividend allowance):

• Dividend Ordinary Rate (Basic Rate Taxpayers): 10.75%
• Dividend Upper Rate (Higher Rate Taxpayers): 35.75%
• Dividend Additional Rate (Additional Rate Taxpayers): 39.35%

Business Rates

If the company occupies commercial premises in England, it must pay Business Rates. For 2026/27, the government operates a five-multiplier system based on the property’s Rateable Value (RV) and its designated use category.

For properties in the Retail, Hospitality, and Leisure (RHL) sectors:

• Small Business RHL Multiplier: 38.2p (applies to properties with an RV below £51,000).
• Standard RHL Multiplier: 43.0p (applies to properties with an RV between £51,000 and £499,999).
• High Value Multiplier: Applies to all properties with an RV of £500,000 and above.

Offsetting Liability: R&D Tax Relief

Innovative companies can substantially reduce their Corporation Tax bill using Research & Development (R&D) Tax Relief. Under the simplified merged scheme, qualifying companies claim the Research and Development Expenditure Credit (RDEC).

“The new merged scheme RDEC only applies to accounting periods beginning on or after 1 April 2024. The new RDEC rates (CTA09/S1042G) are… 20%”.

This scheme provides a 20% taxable expenditure credit.  Alternatively, if the company is an R&D-intensive loss-making SME (where its qualifying R&D expenditure meets the intensity threshold), it can claim Enhanced R&D Intensive Support (ERIS) instead, securing a payable tax credit at a rate of 14.5%.

Summary Table: Limited Company Tax Rates 2026/27

For completeness, audit the company’s associated corporate structures, as the existence of associated companies will proportionately reduce the £50,000 and £250,000 Corporation Tax thresholds, pushing the entity into the 25% marginal or main rate much faster.