Corporation Tax Year-End Planning: 10 Actions to Take Before Your Accounting Date

Corporation tax year-end planning means taking deliberate action before your company's accounting date to legitimately reduce taxable profit and the corporation tax you pay. The corporation tax rates in the UK for 2026 are 19% on profits up to £50,000 (the small profits rate), 25% on profits above £250,000, and an effective marginal rate of 26.5% on profits between those two thresholds. Because the tax charge is fixed on your accounting date, the days before that date are your last real opportunity to influence the bill, and small, well-timed decisions can move a company across a rate boundary. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, sets out ten practical actions to review before the year closes, each grounded in the current 2026/27 rules, with a worked example showing how marginal relief changes the effective rate a company actually pays.

Key Takeaways

• The corporation tax rates in the UK for 2026 are the 19% small profits rate up to £50,000, 25% on profits over £250,000, and a 26.5% effective marginal rate in between.
• Marginal relief applies to profits between £50,000 and £250,000, so reducing profit within that band saves tax at 26.5%, not 25%.
• The £50,000 and £250,000 thresholds are divided by the number of associated companies, so group structures can lose the small profits rate 19% band.
• Bringing forward capital expenditure before your accounting date can secure relief a full year earlier, with the annual investment allowance giving 100% relief on up to £1,000,000 of qualifying plant and machinery.
• Employer pension contributions are deductible for corporation tax in the accounting period they are paid, not when they are accrued.
• Corporation tax is due nine months and one day after the accounting date for companies with profits under £1.5m, so planning must happen before, not after, the year end.

What are the corporation tax rates in the UK for 2026?

The corporation tax rates in the UK for 2026 are 19% on the first £50,000 of profit, 25% on profit above £250,000, and an effective 26.5% on the slice of profit between those figures. The 19% figure is the small profits rate and applies where taxable profits do not exceed the £50,000 lower limit. The 25% main rate applies once profits pass the £250,000 upper limit. Between the two, marginal relief tapers the rate so the additional profit in that band is effectively taxed at 26.5%, higher than the main rate itself. Understanding where your company sits across these thresholds is the foundation of corporation tax planning for a limited company, because the value of reducing profit depends entirely on the band that profit falls into.

How does marginal relief change the tax you pay?

Marginal relief reduces the corporation tax charge for companies with profits between £50,000 and £250,000, producing an effective marginal rate of 26.5% on profit in that band. Consider Meridian Ltd, a single company with taxable profit of £120,000 for the year to 31 March 2027. Its tax before marginal relief, at the 25% main rate, is £30,000. Marginal relief then reduces the bill, giving a total corporation tax charge of £28,050, an overall effective rate of about 23.4%. Now suppose the director makes a £10,000 employer pension contribution before the year end, cutting profit to £110,000. Because that £10,000 sat in the marginal band, it was being taxed at 26.5%, so the contribution saves £2,650 in corporation tax. The same £10,000 spent by a company already under £50,000 would save only £1,900 at the small profits rate 19%. Timing and profit level determine the true value of every deduction.

Which year-end actions genuinely reduce corporation tax?

The most effective year-end actions bring legitimate, evidenced costs into the current accounting period so relief is obtained a year earlier. Ten to review before your accounting date are: bring forward planned capital expenditure to use the annual investment allowance, which gives 100% relief on up to £1,000,000 of qualifying plant and machinery; make employer pension contributions before the year end; pay outstanding director or staff bonuses within nine months of the year end; write off genuinely irrecoverable trade debts; claim Research and Development relief where the company innovates; review stock and work in progress for obsolete items; prepay allowable business expenses where commercially justified; ensure all allowable costs are recorded; consider timing of asset disposals; and check whether dividend and salary extraction is optimised. For the full framework behind these steps, see our guide to corporation tax.

How do associated companies affect your corporation tax rate?

Associated companies reduce the profit thresholds that determine your corporation tax rate, because the £50,000 and £250,000 limits are divided by the number of associated companies plus one. A company with one associate sees its small profits rate limit fall from £50,000 to £25,000 and its upper limit from £250,000 to £125,000, meaning profits reach the 25% main rate far sooner. Two companies each making £40,000 might expect the 19% small profits rate, but with the thresholds halved to £25,000 each, part of their profit is dragged into the marginal band at 26.5%. Companies are generally associated where one controls the other, or both are under common control. Reviewing your group structure before the year end, and understanding how many associates you have, is essential corporation tax planning for a limited company, because the number directly changes the rate you pay.

When is corporation tax due and why does timing matter?

Corporation tax is due nine months and one day after the end of your accounting period for companies with taxable profits below £1.5m. A company with a 31 March 2027 year end must pay by 1 January 2028 and file its company tax return with HMRC within twelve months of the year end. The critical point for planning is that almost every action that reduces the charge, such as capital purchases, pension contributions, and bonus decisions, must be completed before the accounting date, not before the payment date. Once the year closes, the taxable profit is largely fixed. Companies with profits above £1.5m pay by quarterly instalments. Diarising your accounting date and reviewing profit forecasts a month or two ahead turns year-end planning from a missed opportunity into a genuine saving.

Frequently Asked Questions

What is the small profits rate of corporation tax for 2026?

The small profits rate of corporation tax for 2026 is 19% and applies to companies with taxable profits up to £50,000. Profits above £250,000 are taxed at the 25% main rate, and profits between £50,000 and £250,000 attract marginal relief, giving an effective rate of 26.5% on the profit in that band. The thresholds are shared between associated companies.

What is the effective corporation tax rate between £50,000 and £250,000?

The effective corporation tax rate on profits between £50,000 and £250,000 is 26.5%. This is because marginal relief tapers the benefit of the lower small profits rate as profits rise, so each extra pound of profit in that band is taxed more heavily than the 25% main rate. Reducing profit within this band therefore delivers the largest tax saving.

How can a limited company legally reduce its corporation tax bill?

A limited company can legally reduce its corporation tax bill by bringing allowable costs into the current accounting period before its year-end date. Common actions include making employer pension contributions, using the annual investment allowance on qualifying equipment, paying bonuses within nine months of the year end, claiming Research and Development relief, and writing off irrecoverable trade debts. All costs must be genuine and evidenced.

When do I have to pay corporation tax?

Corporation tax is due nine months and one day after the end of your accounting period for companies with taxable profits below £1.5m. For a 31 March 2027 year end, payment is due by 1 January 2028, and the company tax return must be filed with HMRC within twelve months of the year end. Larger companies pay by quarterly instalments.

Do associated companies change my corporation tax thresholds?

Yes. The £50,000 and £250,000 corporation tax thresholds are divided by the number of associated companies plus one. If your company has one associate, the small profits rate limit falls to £25,000 and the upper limit to £125,000, so profits reach higher rates sooner. Companies are usually associated where they are under common control.

How Blue Tick Can Help

Blue Tick Accountants helps limited company directors forecast profit ahead of their accounting date, identify which band their profit falls into, and time deductions such as pensions and capital spending to secure the maximum saving. Because marginal relief and associated company rules can quietly change the rate you pay, a short review before your year end often pays for itself many times over. Head to our website and book a meeting now.

Conclusion

Corporation tax is fixed on your accounting date, so the weeks before that date are where real savings are made or lost. Knowing whether your profit sits in the 19% band, the 26.5% marginal band, or the 25% main rate tells you exactly how much each deduction is worth. Review your profit forecast, check your associated company position, and bring forward legitimate costs while there is still time to act before the year closes.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps limited company owners, landlords and the self-employed across the UK. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

Related reading: Small Profits Rate vs Main Rate: Which Applies to Your Limited Company?.

Related reading: Corporation Tax Payments: Deadlines, Penalties and Instalment Options.