Question 1

How much corporation tax does a limited company pay in 2026/27?

Accepted Answer

Corporation tax rates for 2026/27 are 19% on profits up to £50,000 (small profits rate), 25% on profits over £250,000 (main rate), and a marginal relief rate of approximately 26.5% on profits between £50,000 and £250,000.

Question 2

What is the optimal director salary for 2026/27?

Accepted Answer

For most sole-director limited companies, the optimal salary is £12,570 per year (equal to the personal allowance) to avoid income tax on salary. Some directors prefer £5,000 (NI secondary threshold) to eliminate employer NI entirely.

Question 3

What are the dividend tax rates for 2026/27?

Accepted Answer

Dividend tax rates from 6 April 2026 are 10.75% basic rate, 35.75% higher rate, and 39.35% additional rate. The dividend allowance is £500 per year.

Question 4

How much tax will my limited company pay on £75,000 profit?

Accepted Answer

On £75,000 profit your limited company pays approximately £16,375 in corporation tax (marginal relief applies between £50,000 and £250,000). Your personal tax depends on how you extract the remaining profit as salary and dividends.

Question 5

Is it worth having a limited company for tax purposes?

Accepted Answer

For most business owners earning above £35,000 net profit, a limited company is more tax-efficient than sole trading. You pay corporation tax at 19-25% plus dividend tax, which is typically less than income tax plus Class 4 National Insurance as a sole trader.

Question 6

Can I claim the Employment Allowance as a sole director?

Accepted Answer

No. Single-director companies where the only employee is the director cannot claim the Employment Allowance. You need at least one other employee on payroll to qualify for the £10,500 EA in 2026/27.

Profit Band	Rate
Up to £50,000	19% (small profits rate)
£50,001 – £250,000	Marginal relief (~26.5% effective)
Over £250,000	25% (main rate)

Band	Rate
Basic rate (up to £50,270)	10.75%
Higher rate (£50,271 – £125,140)	35.75%
Additional rate (over £125,140)	39.35%
Dividend Allowance	£500 tax-free

Limited Company Tax Calculator

How Limited Company Tax Works in 2026/27

Corporation Tax Rates 2026/27

Optimal Director Salary

Dividend Tax Rates 2026/27

Who Should Use This Calculator?