There are two rates of Corporation Tax effective from 1 April 2023. Taxable profits up £50,000 continue to be taxed at the 19% Small Business Profits Rate. Taxable profits in excess of £250,000 will be taxed at 25%, the main rate. Taxable profits between £50,000 and £250,000 will pay a rate that gradually increases from 19% to 25% by claiming marginal relief.
These thresholds (£50,000 and £250,000) will be reduced for the number of associated companies and for short accounting periods.
A company is an ‘associated company’ of another company if one of the two has control of the other, or both are under the control of the same person or persons.
The £250,000 limit will be divided by the total number of associated companies. For example, if two companies are deemed to be associated, both companies would pay the main CT rate of 25%, from 1 April 2023 at half the usual threshold, namely at £125,000 rather than £250,000.
HMRC’s manuals make it clear that a company may be an associated company no matter where it is resident for tax purposes.