CT600 Box 420: Number of Associates Explained

CT600 Box 420 asks for the number of associated companies your company has during the accounting period. This is one of the most impactful — yet most overlooked — boxes on the company tax return. Getting it wrong can mean paying the wrong rate of corporation tax or miscalculating your marginal relief.

Why Box 420 Matters

Since April 2023, UK corporation tax operates on a three-rate system:

Small profits rate: 19% on profits up to £50,000
Marginal relief band: tapered rate for profits between £50,000 and £250,000
Main rate: 25% on profits over £250,000

These thresholds assume your company stands alone. The moment your company has associated companies, both thresholds are divided equally among all companies in the group. Box 420 tells HMRC how many associated companies exist so that the correct adjusted thresholds can be applied to your return.

For the full breakdown of rates and thresholds, see our UK Corporation Tax Rates guide.

What Is an Associated Company?

An associated company is a company that is related to yours through common control. Two companies are associated if one controls the other, or if both are controlled by the same person or group of persons.

Control typically means owning more than 50% of the ordinary share capital or voting rights. Common scenarios include:

A director running multiple companies: If you own and control two separate limited companies, they are associated with each other
Family-owned companies: Companies controlled by connected persons — spouse, parent, civil partner, sibling — may be treated as associated depending on the degree of involvement
Holding companies and subsidiaries: A parent company and its wholly-owned subsidiaries are associated companies
Dormant companies: A dormant company still counts as associated if it is under common control — dormancy alone does not remove the association

The rules draw on sections 25 and 449 of the Corporation Tax Act 2010. HMRC looks at the substance of control, not just formal share ownership.

How the Threshold Division Works

The lower (£50,000) and upper (£250,000) thresholds are divided by the total number of companies in the group — which means your company plus all associates.

The formula is straightforward:

> Adjusted threshold = Standard threshold ÷ (1 + number of associates)

Here is how this plays out in practice:

Associates	Total companies	Lower threshold	Upper threshold
0	1	£50,000	£250,000
1	2	£25,000	£125,000
2	3	£16,667	£83,333
3	4	£12,500	£62,500
4	5	£10,000	£50,000

A company with just one associate has its thresholds halved. With four associates, the lower threshold drops to £10,000 — meaning a company with even modest profits will pay at the main 25% rate.

What to Enter in Box 420

Enter the number of associates only — not the total number of companies, and not including your own company.

If you run two companies and they are associated: Box 420 = 1
If you run four associated companies: Box 420 = 3
If you run only one company with no associated companies: Box 420 = 0

This is a common point of confusion. The box asks for associates, not the total count. Your own company is assumed; it is not included in the figure.

Timing: The figure should represent the position during the accounting period. If a company became associated or ceased to be associated during the period, the rules are more nuanced. In general, HMRC looks at whether companies were associated at the beginning of the accounting period, but if significant changes occurred mid-year, professional advice is recommended.

When Box 420 Is Zero

The majority of small companies filing a CT600 will enter 0 in Box 420. This is appropriate if:

You own a single limited company
Your company has no subsidiaries
No other company shares control with yours
No connected persons control other companies

With Box 420 at zero, the standard thresholds of £50,000 and £250,000 apply in full, and your corporation tax is calculated in the straightforward way.

The Impact on Marginal Relief

Marginal relief smooths the transition between the 19% small profits rate and the 25% main rate for companies with profits in the band between the lower and upper thresholds. But if you have associates, those thresholds fall — which can mean:

A company that would previously have qualified for the small profits rate now sits in the marginal relief band
A company that would have been in the marginal relief band now pays the full main rate
A higher effective tax rate on the same profit level

Example: Imagine ABC Consulting Ltd has taxable profits of £40,000. Without any associates, it qualifies for the small profits rate of 19% — a tax bill of £7,600.

However, ABC has one associated company. The lower threshold falls to £25,000. Now, with profits of £40,000, ABC falls within the marginal relief band. Its effective rate will be somewhere between 19% and 25% — higher than it would pay without the associate.

For a full explanation of how marginal relief is calculated, see our Marginal Relief for Corporation Tax guide.

Box 420 and Short Accounting Periods

Both thresholds are also reduced for accounting periods shorter than 12 months. If your period is, say, 9 months, the thresholds are multiplied by 9/12.

When combined with the associated company reduction, a short-period company with associates can find its lower threshold reduced significantly:

> Lower threshold = £50,000 × (days in period ÷ 365) ÷ (1 + associates)

Filing software handles this calculation automatically. If you are filing manually or checking figures, always apply both adjustments — not just one.

How TinyTax Handles Box 420

In TinyTax, you are asked how many associated companies you have as part of the filing setup. Once entered:

The adjusted thresholds are calculated automatically
The correct corporation tax rate is applied to your profits
Marginal relief (if applicable) is calculated on the adjusted lower and upper limits
Box 420 on the CT600 is populated with the figure you provided

You simply need to know your answer before you begin. If you are unsure whether another company qualifies as an associate — particularly where family members are involved or where control is shared — seek advice from an accountant before proceeding.

Common Questions About Box 420

Does a dormant company count as an associate? Yes. A dormant company under common control still counts as an associated company for Box 420 purposes. This catches many directors off guard — a dormant holding company or a second company registered but not yet trading is still relevant.

My spouse owns a separate company. Does that count? Possibly. The rules on connected persons include spouses and civil partners. Whether the companies are treated as associated depends on whether the connected persons are acting together in relation to both companies. HMRC guidance on "substantial commercial interdependence" is relevant here — if the companies share customers, premises, staff, or finance, they are more likely to be associated.

What about overseas companies? Overseas companies can count as associates if they meet the control criteria. The rules apply regardless of where the associated company is resident.

What if the number of associates changed during the year? As a general rule, the position at the start of the accounting period is used. However, if there were significant changes — for example, a new subsidiary was incorporated, or you disposed of shares in a connected company — the rules can require a more nuanced approach. Seek advice if your situation is not straightforward.

Does Box 420 affect any boxes other than the tax rate? Box 420 directly feeds into the marginal relief calculation and can also affect instalment payment obligations (very large companies must pay tax in instalments, and associated companies are counted when assessing whether a company qualifies as "large"). For most small companies, the tax rate impact is the primary concern.

Once Box 420 is established and the correct thresholds are applied, corporation tax is calculated on the profits shown in CT600 Box 410 (Total Profits). The connection between Box 410 (what you earned) and Box 420 (how many companies share your thresholds) is central to arriving at the right tax liability.

Summary

CT600 Box 420 records the number of associated companies your business has, and it has a direct, material impact on your corporation tax rate. More associates mean lower thresholds, which means higher effective tax on the same profit level. Most single-company owner-directors will enter 0. If you do have associated companies — including dormant ones — enter the correct count to ensure your marginal relief calculation and overall tax liability are accurate. Remember: enter the number of associates only, not the total including your own company.