Corporation Tax Rates
UK Corporation Tax Rates 2026/27
UK companies generally pay Corporation Tax on their taxable profits, including trading profits, investment income and chargeable gains. Corporation Tax is calculated before dividends are paid, because dividends paid to shareholders are not normally deductible when calculating taxable profit.
Questions you may have:
- How would running a fleet impact my corporation tax?
- What is best in terms of running a fleet for corporation tax?
- Is there still an expensive car leasing disallowance for corporation tax?
How it works?
The way a business funds its fleet can affect both the amount and timing of Corporation Tax relief. Lease rentals are generally deducted when calculating taxable profits, although 15% of the rental cost is normally disallowed for cars emitting more than 50g/km of CO₂. Separately identified maintenance charges are not normally included in that restriction.
When vehicles are purchased, tax relief is normally obtained through capital allowances. New and unused zero-emission cars can qualify for a 100% first-year allowance, while other cars receive writing-down allowances based on their CO₂ emissions. Vans are generally treated as plant and machinery rather than cars.
The 15% leasing restriction still applies to most cars above 50g/km.
| Profits | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | 2025/26 | 2026/27 |
|---|---|---|---|---|---|---|---|---|---|---|
| Companies with Profits up to £50,000 | 19% | 19% | 19% | 19% | 19% | 19% | 19% | 19% | 19% | 19% |
| Companies with Profits between £50,000 and £250,000 | 19% | 19% | 19% | 19% | 19% | 19% | See table below | |||
| Companies with Profits over £250,000 | 19% | 19% | 19% | 19% | 19% | 19% | *25% | *25% | *25% | *25% |
* Companies with taxable profits between £50,000 and £250,000 pay Corporation Tax at the 25% main rate, reduced by Marginal Relief. This gradually increases the effective overall rate from 19% to 25%. Within this band, the marginal Corporation Tax rate on an additional £1 of profit is normally 26.5%.
Key Notes:
The thresholds are reduced for short accounting periods and divided by the number of associated companies. For example, one company with three associated companies has thresholds of £12,500 and £62,500.
The information provided is based on existing and proposed legislation as at 25th August 2026. Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.