GP corporation tax runs from 19% to 25%: 19% on taxable profits up to £50,000, 25% above £250,000, and an effective 26.5% on the profit between those limits. Incorporation is a private-work decision, because an NHS GMS or PMS contract sits with GPs, their partnerships or a company limited by shares whose shareholders all qualify, and not with a doctor's ordinary personal service company. Whether to incorporate at all is answered in GP limited company tax benefits and drawbacks and medical practice incorporation step by step.
What are the corporation tax rates 2026/27 for a medical company?
The current corporation tax rate turns on how much profit your company makes, not on your profession. For the financial year beginning 1 April 2026 the small profits rate is 19%, the main rate is 25%, and corporation tax marginal relief tapers between the two.
| Taxable profit | How it is charged | Effective rate on the next £1 |
|---|---|---|
| Up to £50,000 | 19% small profits rate | 19% |
| £50,001 to £250,000 | Main rate less marginal relief, standard fraction 3/200 | 26.5% |
| Over £250,000 | 25% main rate | 25% |
The £50,000 and £250,000 limits are divided by the number of associated companies, so if you control a property company or a second trading company alongside the practice company, you work to narrower bands. They are also time-apportioned for an accounting period shorter than 12 months. The measure is augmented profits, which adds dividends received from companies outside the group to taxable total profits (CTA 2010 section 18L), so a shareholding outside the group can move a company up the rate scale.
If your profit lands between the two limits, the next pound you make is taxed at the highest of the three effective rates, which is why the band repays an exact calculation.
Dr B, a consultant whose private company made £120,000
Dr B is illustrative. The company has an accounting period ending 31 March 2027, taxable profit of £120,000 and no associated companies, so the profit sits inside the marginal relief band and the calculation starts at the main rate:
- 25% of £120,000 = £30,000.
- Marginal relief = 3/200 x (£250,000 less £120,000) = 3/200 x £130,000 = £1,950.
- Corporation tax due = £30,000 less £1,950 = £28,050, an effective rate of 23.4% across the whole profit.
Add £1,000 of profit and the bill becomes 25% of £121,000 less 3/200 of £129,000, which is £30,250 less £1,935, or £28,315. That extra £1,000 of profit costs £265 of tax, and 26.5p in the pound is where the marginal rate comes from. One associated company would change the answer: the limits halve to £25,000 and £125,000, and the same £120,000 of profit then costs £29,925.
How corporation tax differs from personal tax for doctors
Payment comes before filing
Corporation tax is not deducted as you earn it. Your company pays first and files second, and the gap between those two dates is where the discipline lives: the bill lands months after you made the profit, so you set the money aside during the year and do not go looking for it when your accounts are prepared. Quarterly instalment payments start only where augmented profits run at more than £1.5 million a year, and that threshold is divided by associated companies too, so it almost never reaches a medical company.
Two layers of tax
Company profit is taxed once inside the company and again when you take it out, as income tax and National Insurance on salary or as dividend tax on dividends. Once the £500 dividend allowance is used, 2026/27 dividends carry 10.75% at the ordinary rate, 35.75% at the upper rate and 39.35% at the additional rate, and the split between salary and dividends is worked through in the guide to salary versus dividend for a medical limited company.
On the salary side the company pays employer secondary Class 1 National Insurance at 15% on pay above the £5,000 secondary threshold, and the £10,500 Employment Allowance is not available to a company whose only employee is a single director. Draw more than the company has available as dividends and you create an overdrawn director's loan, which carries a section 455 charge at 35.75% on loans made on or after 6 April 2026, refunded under section 458 only well after the loan is cleared: the mechanics sit on the consultant's director's loan account and section 455. What to do with the profit that stays in the company is a separate decision, set out in surplus cash in a medical limited company.
Does company income build NHS pension?
No, and for a GP that answer usually settles the incorporation question on its own. An ordinary personal service company cannot hold an NHS contract, and company income and dividends are not NHS-pensionable, so every pound of private income routed through a company is a pound that builds no NHS pension. Accrual runs only on income taken in your own name and certified through the NHS pension machinery: the Type 1 Annual Certificate of Pensionable Profits, the Type 2 self-assessment and Locum forms A and B. Which of those applies depends on how you are engaged, and that fork is set out in the GP partner and salaried GP tax comparison.
So any corporation tax saving has to be set against the pension accrual you give up. The annual allowance is the one place that logic reverses: a doctor whose pension growth is near the taper can find that keeping some private income outside pensionable pay is itself a reason to incorporate, because it slows growth that would otherwise produce an annual allowance charge. That is a fine judgement rather than a default, and the figures behind it sit on the NHS pension annual allowance calculator, with the wider detail in the guide to GP pension contributions and tax relief.
Corporation tax relief on pension contributions
The company can pay into a personal or stakeholder pension for you and deduct the contribution against corporation tax. No salary multiple caps it: under BIM46035 the contribution is allowable unless the payment has a non-trade purpose, the failure case being a total package excessive for the value of the work done, and the head-to-head against a dividend sits on the salary versus dividend guide. FA 2004 section 196 gives the relief on a paid basis, so a contribution reduces the profit of whichever accounting period it actually clears the company's bank account in. Neither side pays National Insurance on it, which is what makes the route beat salary, since salary is deductible too. The contribution builds a separate defined contribution pot and does not restore NHS accrual, and it is limited by your annual allowance, which an NHS pension input amount may already have consumed.
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Which costs reduce a medical company's corporation tax bill?
Costs incurred wholly and exclusively for the company's trade reduce taxable profit and so reduce your corporation tax bill. For your company they commonly include the GMC annual retention fee, medical indemnity (MDU, MPS or MDDUS), Royal College or specialty membership and the BMA subscription where the body is on HMRC's approved List 3 (the BMA's List 3 entry restricts relief to 85% of the annual subscription), CPD genuinely relevant to current practice, professional and accountancy fees, and the business proportion of phone, internet and a home office.
Business miles you drive between work sites can be reimbursed at HMRC's approved rates, which rose on 6 April 2026 to 55p per mile for the first 10,000 business miles and 25p a mile after that for 2026/27. Travel from home to your first site of the day is ordinary commuting and is not allowable.
Equipment and capital allowances
Diagnostic kit, IT, instruments and consulting-room furniture come out of taxed profit unless a capital allowance covers them, and for the equipment you buy one of the routes below usually does.
| Allowance | Rate | Conditions |
|---|---|---|
| Annual Investment Allowance | 100% on up to £1,000,000 a year | Permanent limit; cars excluded (CAA 2001 sections 38A and 51A) |
| Full expensing | 100% | New, unused main-rate plant; companies only (CAA 2001 section 45S); for a company this takes precedence over the 40% first-year allowance |
| First-year allowance | 40% | New, unused main-rate plant from 1 January 2026 (FA 2026 section 29, inserting CAA 2001 section 45U); cars excluded; for a company it reaches only expenditure that full expensing excludes, and it is the route for an unincorporated practice |
| Main-rate writing-down allowance | 14% | Fell from 18% for relief from 1 April 2026 (FA 2026 section 28); hybrid rate for a straddling period |
| Special-rate writing-down allowance | 6% | Integral features such as electrical, water and heating systems; unchanged |
For most spend the Annual Investment Allowance at 100% is still the first port of call, and its £1 million limit is permanent. Once the AIA for the year is used up, your company's route on new, unused main-rate plant is full expensing at 100% (CAA 2001 section 45S); the 40% first-year allowance (FA 2026 section 29, inserting CAA 2001 section 45U, for expenditure incurred on or after 1 January 2026) reaches only what full expensing excludes, and it is the route for an unincorporated practice. The main-rate writing-down allowance fell from 18% to 14% for relief from 1 April 2026 for corporation tax, with a time-apportioned hybrid rate where your accounting period straddles that date, while the special-rate pool stays at 6%.
On a clinic fit-out the split between the main-rate pool and the special-rate pool decides how fast the relief arrives, and AIA is best pointed at the 6% items first. On a premises purchase that includes fixtures, a joint election under CAA 2001 section 198 fixes the value attributed to those fixtures between seller and buyer. The election carries a two-year time limit under section 201, and missing it forfeits the buyer's fixtures allowances altogether, which is a common and entirely preventable loss.
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.
What are the filing deadlines and penalties?
Your incorporated practice files a CT600 company tax return and pays whatever that return calculates. The two dates fall in an unexpected order: payment comes first, filing second.
| Obligation | Deadline | For a 31 March 2027 year end |
|---|---|---|
| Pay the corporation tax | 9 months and 1 day after the end of the accounting period | 1 January 2028 |
| File the CT600 return | 12 months after the end of the accounting period | 31 March 2028 |
| Pay by quarterly instalments | Only where augmented profits exceed £1.5 million a year, divided by associated companies | Rare for a medical company |
Late filing runs on a fixed scale: £200 the day after the deadline, another £200 at three months, then 10% of the unpaid tax at six months and a further 10% at twelve months. File three of your returns late in a row and the two £200 penalties become £1,000 each. Interest runs separately on the tax you pay late. The £100 figure often quoted for a late company return is the Self Assessment penalty and does not apply to a CT600.
Making Tax Digital for Income Tax does not reach a limited company, because 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 has been in scope since 6 April 2026. HMRC still expects your company to keep full digital records, invoices, expense receipts and bank statements, behind the corporation tax computation.
Corporation tax on a medical company is worth advice at the point of spend or structure rather than at the year end: significant equipment or premises purchases, a second company that divides the limits, mixed NHS and private income, or a first year with profit landing in the marginal band. For NHS and private income generally, see the guide to private practice tax: NHS and private income, and for whole-of-practice support the GP accountant overview.
Medical Accountants UK works with GPs, consultants and other doctors, including incorporated private work and locum companies, and our services are built around medical professionals. To model your GP corporation tax position alongside the NHS pension picture, please contact us.
This article is general information and does not constitute 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.