Understanding Your Tax Calculation

Understand how corporation tax is calculated from your accounting profit. Explains key CT600 boxes, disallowable expenses, capital allowances, and tax rates.

TinyTax calculates your corporation tax automatically based on the figures you enter. This guide explains how the calculation works and what the key numbers mean.

Select your company type to customise this guide:

Trading Company

Property Company

Mixed Income

The Tax Computation Section

When you complete your P&L and Balance Sheet, TinyTax generates a Tax Computation showing exactly how your tax is calculated:

Tax computation

Show all ▾

Trading profit before tax
Add back: Depreciation (disallowable for tax)
Add back: Disallowable expenses
Less: Annual Investment Allowance	()
165Net trading profits
315Profits chargeable to corporation tax
Tax @ 19%
440Corporation Tax Payable

The tax computation shows how your accounting profit is adjusted for tax purposes. Box numbers correspond to CT600 form fields. Specialist rows (e.g. associated companies, R&D, marginal relief inputs) live behind chevrons that open on demand or auto-open when they hold a value.

This section shows:

Your accounting profit adjustments
Your taxable profit (Box 315)
The tax rate applied
Any marginal relief
Your final tax liability (Box 440)

From Accounting Profit to Taxable Profit

Your accounting profit (from your P&L) is not the same as your taxable profit. Several adjustments are made:

Add Back: Disallowable Expenses

Some expenses reduce your accounting profit but are not allowed for tax:

Expense	Why It's Disallowed
Depreciation	Replaced by capital allowances
Client entertaining	Not tax deductible
Personal expenses	Not business related
Fines and penalties	Not deductible as a deterrent

Expense	Why It's Disallowed
Depreciation	Replaced by capital allowances
Property improvements	Capital expenditure, not repairs
Personal use portion	Not business related
Fines and penalties	Not deductible as a deterrent

ℹ Depreciation is the most common add-back. You charge depreciation in your accounts, but for tax purposes, you claim capital allowances instead.

Deduct: Capital Allowances

Instead of depreciation, you can claim capital allowances on qualifying assets:

Allowance	What It Covers	Limit
Annual Investment Allowance (AIA)	Plant, machinery, equipment	£1,000,000/year
Writing Down Allowance	Assets over AIA limit	18% or 6% per year
First Year Allowance	Certain new assets	Up to 100%

Key Box Numbers Explained

These CT600 box numbers appear in your tax computation:

Box	Name	What It Represents
145	Turnover	Your total sales/revenue
165	Net Trading Profits	Trading profit after all adjustments
170	Other Income	Bank interest, investment income
315	Profits Chargeable to CT	The amount you pay tax on
430	Tax Before Reliefs	Gross tax at the applicable rate
435	Marginal Relief	Reduction for medium-sized companies
440	Corporation Tax Payable	Your final tax bill

ℹ Box 315 (Profits Chargeable to CT) is the most important number - this is what your tax rate is applied to.

These CT600 box numbers appear in your tax computation:

Box	Name	What It Represents
170	Property Income	Rent received and other property income
190	Total Property Income	Property income after adjustments
315	Profits Chargeable to CT	The amount you pay tax on
430	Tax Before Reliefs	Gross tax at the applicable rate
435	Marginal Relief	Reduction for medium-sized companies
440	Corporation Tax Payable	Your final tax bill

ℹ Property companies report income in Box 170 (not Box 145). Box 315 is still your final taxable profit.

Mixed income companies use boxes from both tables above. Your trading income flows through Box 145 → Box 165, while property income flows through Box 170 → Box 190. Box 315 (Profits Chargeable to CT) combines both: Box 165 + Box 190 + any other income.

Corporation Tax Rates (2023/24 onwards)

Since April 2023, the rate depends on your profit level:

Profit Level	Rate	Description
Up to £50,000	19%	Small profits rate
£50,001 - £250,000	19-25%	Marginal rate with relief
Over £250,000	25%	Main rate

What is Marginal Relief?

If your profits fall between £50,000 and £250,000, you do not jump straight to 25%. Instead, you get marginal relief — a reduction that creates a smooth transition.

The formula is: ``` Marginal Relief = (Upper Limit - Profits) × 3/200 ```

For example, with £100,000 profit:

Tax at 25% = £25,000
Marginal Relief = (£250,000 - £100,000) × 3/200 = £2,250
Net Tax = £22,750
Effective rate: 22.75%

Associated Companies

If your company has associated companies (companies under common control), the profit thresholds are divided by the number of associated companies plus one.

Associates	Lower Threshold	Upper Threshold
0	£50,000	£250,000
1	£25,000	£125,000
2	£16,667	£83,333

What counts as associated?

Companies are associated if they are under common control (same person or group controls 50%+ of both). 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)

Dormant companies with no assets and that have never traded are excluded.

Where to enter this in TinyTax

You will find the Associated companies field (Box 326) in the Tax computation section, below the balance sheet. The field lives inside the Specialist adjustments chevron — click Show ▾ next to that heading to reveal it, then enter the number of other associated companies (not including the company you are filing for).

⚠ If you have associated companies, enter the correct number to ensure your tax thresholds are calculated accurately. Getting this wrong could mean paying the wrong rate of tax.

Periods Spanning Financial Years

If your accounting period spans 1 April (the start of a new financial year), profits are apportioned between the years:

Period	FY Dates	Days
1 Jan 2024 to 31 Dec 2024	FY2023: 1 Jan - 31 Mar (91 days)	25%
	FY2024: 1 Apr - 31 Dec (275 days)	75%

Tax is calculated separately for each portion at the rates in force during that financial year.

Example Tax Calculation

Here's a complete example for a trading company:

Starting point:

Turnover: £200,000
Expenses: £150,000
Accounting profit: £50,000

Adjustments:

Add back: Depreciation £5,000
Less: AIA claim (£8,000)
Taxable profit (Box 165): £47,000

Tax calculation:

Profit £47,000 is below £50,000 threshold
Rate: 19%
Corporation Tax (Box 440): £8,930

✓ At 19%, this company pays the small profits rate with no marginal relief calculation needed.

Here's a complete example for a property company:

Starting point:

Rental income: £80,000
Property expenses: £30,000
Accounting profit: £50,000

Adjustments:

Add back: Depreciation £3,000
Less: AIA claim on furnishings (£2,000)
Taxable profit (Box 315): £51,000

Tax calculation:

Profit £51,000 is in the marginal relief band
Tax at 25% = £12,750
Marginal Relief = (£250,000 - £51,000) × 3/200 = £2,985
Corporation Tax (Box 440): £9,765

✓ Marginal relief reduces the effective rate from 25% to about 19.15% for this company.

Common Questions

"Why is my tax different from 19% or 25% of my profit?"

Several reasons:

Marginal relief — If profit is £50k–£250k, you get relief
Period length — Short or extended periods affect thresholds (see below)
Associated companies — Reduce your thresholds
Financial year spanning — Different rates may apply to portions

"My annual income is below £50,000 but my short period shows 25% — why?"

HMRC pro-rates the tax thresholds for accounting periods shorter than 12 months. The £50,000 small profits limit is not a fixed annual allowance — it is scaled down proportionally to match your period length.

Formula: ``` Pro-rated threshold = £50,000 × (days in period ÷ 365) ```

Example — 14-day stub period:

Pro-rated small profits limit = £50,000 × 14 ÷ 365 = £1,918
Pro-rated upper limit = £250,000 × 14 ÷ 365 = £9,589

If your profit for those 14 days exceeds £1,918, you are above the pro-rated small profits threshold — even if your annualised income would be well below £50,000.

ℹ The 25% rate shown in the preview is the statutory main rate before marginal relief. If your profit falls between the pro-rated lower limit and the upper limit for your period, marginal relief is applied automatically, reducing your effective rate below 25%.

This is standard HMRC treatment and applies to all short accounting periods — including the stub return when an extended accounting period is split.

"What's the difference between Box 165 and Box 315?"

Box 165 (Net Trading Profits): Just your trading profit after adjustments
Box 315 (Profits Chargeable): Your total taxable profit including investment income

For most trading companies, Box 315 = Box 165 + Box 170 (bank interest and other income).

"What's the difference between Box 170, Box 190, and Box 315?"

Box 170: Your total property income (rent received)
Box 190: Property income after allowable deductions
Box 315: Your total taxable profit (what tax is calculated on)

For most property companies, Box 315 is based on Box 190 plus any bank interest income.

"Why does my P&L profit not match the taxable profit?"

Your P&L shows accounting profit — calculated using accounting rules (like depreciation).

Your taxable profit is calculated using tax rules — which disallow some expenses and allow different deductions (like capital allowances).

The tax computation bridges these two figures.

"How does TinyTax handle losses?"

If you have:

Current year loss: No tax to pay; loss can be carried forward or back
Losses brought forward: Offset against this year's profits first

Trading losses: Can offset against trading income and certain other income

Property losses: Can offset against property income (with restrictions on carrying forward)

TinyTax applies losses in the correct order per HMRC rules.

"Can I change the tax calculation?"

You cannot manually override the tax calculation — it is computed based on your inputs. If the calculation seems wrong:

Check your P&L figures are correct
Check your capital allowance claims
Verify the number of associated companies
Ensure your period dates are accurate

The Tax Computation Document

TinyTax generates the Corporation Tax Computation document automatically from the figures you enter in the form. You do not need to prepare a separate computation document or fill in a separate template.

The computation is built and finalised at the Preview stage. When you submit, it is attached to the CT600 filing sent electronically to HMRC — no separate upload, PDF, or postal submission is needed.

What goes into the computation

The computation is assembled from specific fields you enter in TinyTax:

Adjustment	Where to enter in TinyTax
Capital allowances (AIA)	Capital Allowances section — AIA field
Writing Down Allowance (WDA) for assets/pools	Capital Allowances section — Advanced CA grid (Show ▾)
Depreciation add-back	Adjustments section — Depreciation add-back
Other disallowable expenses	Adjustments section — individual add-back fields
Trading losses brought forward	Losses section — Losses brought forward (Box 250)

The final computation document shows the full adjustment chain:

Accounting profit per P&L
Add-backs (depreciation, disallowable expenses)
Capital allowances deduction
Adjusted trading profit
Losses set off
Taxable profit (Box 315)
Tax calculation and any marginal relief

PDF download

At the Preview stage, you can download the Corporation Tax Computation as a PDF for your own records or client files. The same document is automatically attached to the CT600 sent to HMRC — this is the "tax computation" that HMRC requires as part of the filing.

Still Confused?

Tax calculations can be complex. If your situation does not match these examples or you are unsure about your calculation:

Last updated: 2026-04-13

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