GP corporation tax is the tax an incorporated GP or medical company pays on its profits. If you run private medical work through a limited company, or are weighing up incorporation, the headline question is usually the same: what rate of corporation tax will the company pay, and how much of the profit reaches you after dividend tax. This guide sets out the 2026/27 corporation tax rates, marginal relief, the current dividend rates, and the one issue that decides most GP cases: NHS pension accrual.

One point matters before anything else. A limited company cannot hold an NHS GMS or PMS contract, and income routed through a company is not NHS-pensionable. So GP corporation tax is a private-work conversation: insurance medicals, medico-legal and expert-witness work, occupational health, cosmetic and self-pay clinics, and locum work taken outside IR35. Your core NHS partnership or salaried income stays in your own name and is taxed as trading or employment income, not through a company. For the wider incorporation decision and the pros and cons, see our guides on GP limited company tax benefits and drawbacks and medical practice incorporation step by step.

GP Corporation Tax Rates 2026/27

Corporation tax is charged on company profits at rates that depend on how much profit the company makes, not on your profession. For the financial year from 1 April 2026 the rates are:

  • 19% small profits rate on taxable profits up to £50,000.
  • 25% main rate on taxable profits over £250,000.
  • Marginal relief on profits between £50,000 and £250,000, which produces an effective marginal rate of around 26.5% in that band (the standard marginal relief fraction is 3/200).

These same rates and thresholds applied in the 2025/26 financial year, so a company with an accounting period straddling 1 April does not see a rate change. The £50,000 and £250,000 limits are divided by the number of associated companies, so if you control more than one company the bands shrink, and the limits are also time-apportioned for accounting periods shorter than 12 months.

Most incorporated GP and consultant companies sit in the £50,000 to £250,000 marginal relief band, where the effective rate is the highest of the three. That makes the choice between leaving profit in the company, paying a salary, or drawing dividends a real planning question rather than an afterthought.

How Corporation Tax Differs from Personal Tax for Doctors

If you have only ever been taxed through PAYE as a salaried GP or hospital consultant, or through self-assessment as a partner or sole-trader locum, company taxation works differently in two ways that matter for cash flow.

Payment Timing

Corporation tax is paid 9 months and 1 day after the company's accounting year end, not deducted as you earn. That gives a cash-flow gap you can use, but it also means the money has to be set aside, because the bill lands months after the profit was earned. Only large companies (broadly profits over £1.5 million, again divided by associated companies) pay by quarterly instalments, which almost never applies to a medical company.

Two Layers of Tax

Company profit is taxed once inside the company (corporation tax) and again when you extract it personally (income tax on salary, or dividend tax on dividends). The art of running a medical company is managing those two layers together rather than looking at corporation tax in isolation.

Profit Extraction: Salary, Dividends and Pension

Once the company has paid GP corporation tax, the retained profit can be extracted in several ways, each taxed differently:

  • Salary: deductible for corporation tax, but subject to income tax and National Insurance. The company also pays employer (secondary Class 1) NIC at 15% on salary above the £5,000 secondary threshold. The Employment Allowance (£10,500) is not available to a company whose only employee is a single director, which is why one-director medical companies often set a modest salary at or near that secondary threshold.
  • Dividends: paid out of taxed profits, with no National Insurance, and taxed at the dividend rates below after a £500 allowance.
  • Employer pension contributions: the company can contribute to your pension and deduct it for corporation tax on a paid basis, with no NIC, subject to the annual allowance.

Dividend Tax Rates 2026/27

The dividend rate you pay depends on your total income. For 2026/27 (from 6 April 2026) the rates are:

  • Ordinary (basic) rate: 10.75%
  • Upper (higher) rate: 35.75%
  • Additional rate: 39.35% (unchanged)

These apply after the £500 dividend allowance. They are a rise on the 2025/26 rates of 8.75% ordinary and 33.75% upper (the additional rate stayed at 39.35%). Because most incorporated GPs draw dividends in the higher-rate band, the April 2026 increase directly reduces the take-home from a dividend strategy, so the salary-versus-dividend balance is worth re-running for 2026/27.

A Note on the Director's Loan Trap

A medical company is a close company, so drawing more than the profits available as dividends can leave you with an overdrawn director's loan. An overdrawn loan that is still outstanding 9 months and 1 day after the period end triggers a section 455 charge at the dividend upper rate: 33.75% on loans made in 2025/26 and 35.75% on loans made on or after 6 April 2026. The charge is refundable once the loan is repaid, but the refund is deferred, so it is a cash-flow cost worth avoiding.

NHS Pension and Incorporated GPs: the Decisive Issue

This is where many GP incorporation decisions are won or lost. Because a company cannot hold an NHS contract and company income and dividends are not NHS-pensionable, every pound of private income you route through a company is a pound that builds no NHS pension. For a GP partner or salaried GP, NHS pension accrues only on income taken in your own name and certified through the NHS pension machinery (the Type 1 Annual Certificate of Pensionable Profits for partners, the Type 2 self-assessment for salaried GPs, and Locum forms A and B for freelance locums). For a hospital consultant, only the NHS post is pensionable; private work, whether sole trader, partnership or company, never is.

So any corporation tax saving has to be set against the value of the NHS pension you give up by taking that income through a company. The annual allowance is £60,000 for 2025/26 (the limit rose from £40,000 to £60,000 in April 2023), tapering where threshold income exceeds £200,000 and adjusted income exceeds £260,000, down to a floor of £10,000. For doctors close to the taper, deliberately keeping some private income outside pensionable NHS pay can actually be a reason to incorporate, because it reduces pension growth that would otherwise trigger an annual allowance charge. That is a genuine planning lever, but it is a fine judgement, not a default.

For the detail, see our guides to the NHS pension annual allowance and GP pension contributions and tax relief. The short version: never model an incorporation tax saving without modelling the pension-accrual loss alongside it.

Corporation Tax Relief on Pension Contributions

The company can pay into a personal or stakeholder pension for you and deduct it against corporation tax (on a paid basis, wholly and exclusively for the trade), with no National Insurance on the contribution. These payments count towards your annual allowance, and unused allowance can be carried forward from the previous three tax years. This is a separate, private (defined contribution) pot, not NHS pension, so it does not replace the NHS accrual you lose by incorporating.

Allowable Expenses and Capital Allowances

Costs incurred wholly and exclusively for the company's trade reduce taxable profit and so reduce corporation tax. For a medical company these commonly include GMC retention fees, medical indemnity (MDU, MPS or MDDUS), relevant Royal College or specialty membership and BMA subscriptions where on HMRC's approved list, CPD genuinely relevant to current practice, professional and accountancy fees, and business use of phone, internet and a home office.

Business mileage between work sites can be reimbursed at HMRC's approved rate, which rose for 2026/27 to 55p per mile for the first 10,000 business miles and 25p thereafter (up from 45p, effective 6 April 2026). Travel from home to your first work site of the day is ordinary commuting and is not allowable.

Equipment and Capital Allowances

Most clinical and consulting equipment qualifies for the Annual Investment Allowance (AIA), giving 100% relief on up to £1 million of qualifying plant and machinery each year. The £1m limit is permanent, and cars are excluded. Diagnostic kit, IT, instruments and consulting-room furniture typically qualify.

For 2026/27 there are two further points to weigh:

  • The main-rate writing-down allowance falls from 18% to 14% for relief from 1 April 2026 (corporation tax), with a time-apportioned hybrid rate for an accounting period straddling that date. The special-rate pool (integral features such as electrical and heating systems) stays at 6%.
  • A new 40% first-year allowance applies to new (unused, not second-hand) main-rate plant and machinery from 1 January 2026, and full expensing (100% on new main-rate plant) remains available to companies. For most spend the AIA at 100% is still the simplest first port of call.

On a clinic fit-out or a premises purchase that includes fixtures, the way costs are split between pools, and a CAA 2001 section 198 election on a purchase, can materially change the relief, so this is worth getting right at the point of spend.

IR35 and Corporation Tax for Locum Companies

If you locum through a personal service company, IR35 (the off-payroll rules) decides whether your engagements are taxed as if employed. Inside IR35, the fee-payer deducts PAYE and NIC before the company is paid, so that income cannot be extracted efficiently as salary and dividend, and the usual corporation tax planning largely falls away. For NHS trust and other public-sector work the trust or agency in the chain decides status and operates the deductions, not the locum, although the determination can be challenged through the disagreement process. For medium and large private clients the hirer decides; for small private clients the company itself still decides.

IR35 has not been abolished, and a locum can hold a mix of inside and outside determinations across different hirers in the same year. For how this works in practice, see our guide to locum doctor IR35.

Filing, Deadlines and Records

An incorporated medical practice must file a corporation tax return (CT600) and pay any tax due. The key dates are:

  • Pay corporation tax: 9 months and 1 day after the accounting year end.
  • File the CT600 return: within 12 months of the year end.
  • Quarterly instalments: only for large companies (rare for medical companies).

Late filing triggers automatic penalties (starting at £100) and interest runs on overdue tax. Note that Making Tax Digital for Income Tax does not apply to limited companies: it is an income tax regime for sole traders and landlords, so a locum trading through a company stays outside it, while a sole-trader locum or unincorporated private GP with qualifying income over £50,000 is in scope from 6 April 2026. HMRC expects a medical company to keep full digital records (invoices, expense receipts, bank statements) supporting the corporation tax computation.

Is Incorporation Worth It for Your Private Work?

At 2025/26 rates the pure tax saving from incorporating private medical work is often modest at typical profit levels, and the 2026/27 dividend-rate rise narrows it further. The genuine drivers tend to be managing the annual allowance taper, retaining profit in the company rather than drawing it all, family-shareholder planning, and limited liability, rather than a headline rate saving. And every one of those has to be balanced against the NHS pension accrual you give up on income taken through the company.

Consider specialist advice if you are weighing up incorporation for your private work, structuring locum arrangements around IR35, planning significant equipment spend, or running mixed NHS and private income. For NHS-versus-private income generally, see our guide to private practice tax: NHS and private income, and for whole-of-practice support our GP accountant overview.

At Medical Accountants UK we focus on the tax affairs of GPs, consultants and other doctors, including incorporated private work and locum companies. Our services are built around medical professionals. If you would like help modelling your GP corporation tax position alongside the NHS pension picture, please contact us for guidance tailored to your situation.

This article is general information, not personal tax advice. Rates and thresholds are stated for the tax years shown and can change. Always take advice on your own circumstances before acting.