CTM03956 - Small profits rate: financial year 2023 onwards: examples - change in number of associated companies but no change in rates or thresholds

Company A with an accounting period 1/10/2023 to 30/9/2024 has profits of £55,000. It has one associated company for the first half of the accounting period and 2 for the second half. Its CT liability is calculated as follows.

The accounting period straddles the financial year but, as there is no change in the rate or the lower and upper limits, there is no need to apportion the profits because the number of associated companies has changed throughout the year. S18E(2) CTA10 confirms that companies are treated as associated companies for the whole period even if they are associated for only part of it.

The upper and lower thresholds are adjusted for the number of associated companies as follows:

Lower limit £50,000/3 = £16,667

Upper limit £250,000/3 = £83,333

CT computation

The £55,000 profits fall between the thresholds so marginal relief applies.

£55,000 x 25% = £13,750

Less marginal relief

(£83,333 - £55,000) x 3/200 = (£425)

CT liability = £13,325