Small profits rate

When the £50,000 limit is lower

• Associated companies: the limit is divided by the number of associated companies plus one. A company with three associated companies has a limit of £12,500.
• Short accounting periods: the limit is reduced in proportion. A six-month period has a limit of roughly £25,000, because HMRC strictly works it out by days.

Which profit figure counts

The test uses augmented profits: taxable total profits plus exempt dividends received from companies outside the group. A company with £45,000 of taxable profits and £10,000 of dividends from an unrelated company has augmented profits of £55,000, so Marginal Relief applies instead of the flat 19%.

Who cannot use it

Close investment-holding companies are excluded, and non-UK resident companies generally cannot use it either. What a company pays at each profit level is set out in current Corporation Tax rates.