Companies with profits between £50,000 and £250,000 pay corporation tax at the main rate of 25%, but may qualify for marginal relief that effectively reduces their tax rate.

The UK tax system implements a marginal relief mechanism for companies whose profits fall between the £50,000 and £250,000 thresholds. This relief ensures a gradual increase in tax liability from 19% to 25%, preventing sudden jumps in effective tax rates as profits grow. The precise calculation adjusts taxable profits by apportioned thresholds, accounting for associated companies and short accounting periods, adding complexity to tax planning.