Associated Companies and Marginal Relief

How associated companies affect your corporation tax thresholds and marginal relief calculation in TinyTax.

How do associated companies affect your corporation tax? If your company's profits are between £50,000 and £250,000, marginal relief reduces your tax bill — but having associated companies changes the thresholds. This guide explains how it works in TinyTax.

Corporation Tax Rates (From April 2023)

Profit level	Rate	What happens
Up to £50,000	19% (small profits rate)	Pay 19% on all profits
£50,001 to £249,999	Between 19% and 25%	Pay 25% minus marginal relief
£250,000 and above	25% (main rate)	Pay 25% on all profits

ℹ These thresholds apply to a standard 12-month period with no associated companies. Both thresholds are adjusted if you have associated companies or a short accounting period.

For accounting periods ending before 1 April 2023, the rate was a flat 19% for all companies regardless of profit level.

What Is Marginal Relief?

Marginal relief is a tax reduction for companies with profits between the small profits threshold (£50,000) and the upper threshold (£250,000). It ensures the effective tax rate gradually increases from 19% to 25% as profits rise, rather than jumping from 19% to 25% at a fixed point.

TinyTax calculates marginal relief automatically. You don't need to work it out yourself — just enter your figures and the tax computation handles the rest.

How It's Calculated

The formula is:

Marginal Relief = (Upper Limit - Augmented Profits) x 3/200

If your company receives exempt distributions (e.g., dividends from UK companies), the formula is adjusted:

Marginal Relief = (Upper Limit - Augmented Profits) x 3/200 x (Taxable Profits / Augmented Profits)

Where:

Augmented profits = your taxable profits plus any exempt distributions (UK dividends received)
The result is deducted from the tax calculated at 25%

What Are Associated Companies?

Companies are associated if they're under common control — the same person or group controls 50% or more of both companies. This includes:

Companies you personally control
Companies controlled by close family members (if commercially interdependent)
Dormant companies that hold assets (e.g., shares in subsidiaries)

Excluded: Dormant companies with no assets that have never traded do not count.

How Associated Companies Affect Your Tax

The £50,000 and £250,000 thresholds are divided by the total number of companies (your company plus its associates).

Associated companies	Total companies	Small profits 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

With 4 or more associated companies, the small profits threshold equals the upper threshold — meaning marginal relief disappears and the full 25% rate applies to profits above £10,000.

Where to Enter Associated Companies in TinyTax

The Associated companies field (Box 326) is in the Tax Computation section, below the balance sheet.

Click Show all in the Tax Computation section header to reveal hidden fields
Find the Associated companies field
Enter the number of other associated companies (not including the company you're filing for)

ℹ The default is 0. If you have no associated companies, you don't need to change anything — TinyTax will use the full £50,000 / £250,000 thresholds automatically.

Short and Extended Periods

Short Periods (Less Than 12 Months)

For accounting periods shorter than 12 months, the thresholds are pro-rated based on the number of days in the period. For example, a 6-month period would have thresholds of approximately £25,000 and £125,000.

Extended Periods (More Than 12 Months)

TinyTax automatically splits extended periods into two CT600 submissions. Marginal relief is calculated independently for each period, with thresholds pro-rated for each sub-period.

Periods Straddling 1 April 2023

If your accounting period crosses 1 April 2023, profits are apportioned between the two financial years. The pre-April 2023 portion is taxed at the flat 19% rate, and the post-April 2023 portion uses the new rates with marginal relief where applicable.

Common Questions

Q: My company has profits of £60,000 — what rate do I pay? A: With no associated companies, your profits fall in the marginal relief band. You'll pay 25% minus marginal relief. TinyTax calculates the exact amount automatically — you'll see it in your tax computation.

Q: I own two companies — are they associated? A: If you control 50% or more of both companies, yes. Enter 1 in the Associated companies field when filing for each company.

Q: My other company is dormant with no assets — does it count? A: No. Dormant companies with no assets and that have never traded are excluded.

Q: Where can I see the marginal relief amount? A: In the tax computation section of your filing. Box 435 shows the marginal relief amount, and Box 440 shows your final tax payable after the relief is deducted.

Q: Do I enter associated companies for each filing? A: Yes. The number of associated companies can change between periods, so you set it for each filing. The field is in the Tax Computation section — click Show all to reveal it.

Still Have Questions?

If you're unsure whether your companies are associated or how it affects your tax, get in touch.

Last updated: February 2026

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