CTM03930 - Small profits rate: financial year 2023 onwards: no associated companies: accounting period less than 12 months

CTA10/18D(4)

Where the accounting period is less than twelve months, the upper and lower limits are reduced proportionately.

For example, Company X with profits of £55,000 has a 9-month accounting period of 1 January 2024 to 30 September 2024. The upper and lower limits applicable to this company will be:

Upper limit = £250,000 x 9/12 = £187,500

Lower limit = £50,000 x 9/12 = £37,500

(Note that strictly the calculation should be carried out by reference to the number of days in the short AP rather than months).

The CT due on its profits is calculated as follows:

The profits fall above the lower limit so they are chargeable at the main rate with marginal relief

£55,000 x 25% = £13,750

Less marginal relief

3/200 x (£187,500 - £55,00) = (£1,987.50)

CT liability = £13,750 - £1,987.50 = £11,762.50