Introduction Background Note
5.Companies with profits up to £300,000 pay corporation tax at the small companies’ rate.
6.Companies with profits between £300,000 and £1,500,000 (the lower and upper limits) benefit from small companies’ marginal relief from the main rate.
7.Marginal relief has the effect of gradually increasing the rate of tax for a company as its profits move from the lower to the upper profits limit.
8.The example below illustrates the effect of marginal relief for a company with taxable non-ring fence profits of £500,000. Its tax liability is calculated as follows:
9.The example below illustrates the effect of marginal relief for a company with taxable ring fence profits of £500,000. Its tax liability is calculated as follows:
10.Where two or more companies are associated with one another, the profits limits are divided by the number of associated companies.