Associated companies calculator

It counts every subsidiary you enter, plus the holding company unless you mark it as passive. The £50,000 and £250,000 limits are then divided by that number. So an active holding company with two subsidiaries gives three companies, and each company's limits become £16,667 and £83,333. If you mark the holding company passive, only the two subsidiaries count and the limits are £25,000 and £125,000.

It shows the corporation tax each company would pay if it had no associated companies at all, with the full £50,000 and £250,000 limits. The headline figure is the difference between the group total and that total. If your companies are already sister companies under your personal control, they're associated today, so the 'On its own' figure isn't your current position and the real cost of adding a holding company is smaller than the headline.

Because a company with profits above £250,000 pays the 25% main rate whatever its limits are. Association only costs tax where a company's profit falls below £250,000 and above its reduced lower limit, so that it loses some or all of its small profits rate or marginal relief. If every company in your group makes more than £250,000, or every company is below its reduced lower limit, the extra tax is nil.

Its own taxable profit for the year, such as management charges to the subsidiaries, interest or rent, after its costs. Don't include dividends from its subsidiaries, which are normally exempt from corporation tax. Many holding companies have little or no taxable profit, which is why the box starts at £0. Even with nil profit, an active holding company still counts as an associated company and reduces everyone else's limits.

The holding company drops out of the count and out of the table, so the limits are divided only between the subsidiaries. With one subsidiary, that means it keeps the full £50,000 and £250,000 limits. Passive status under s18F CTA 2010 is narrow, though: the holding company can hold only shares in its subsidiaries, receive only dividends, pay them all on to its shareholders, and have no gains or management expenses.

No. A company that hasn't carried on any trade or business at any time in the accounting period isn't counted as an associated company, so leave it out or remove it. The same applies to a company that was associated for only part of the period and didn't carry on a business during that part. A company with a small amount of activity, such as letting a property or holding investments, does count, even with little profit.

Add them as extra rows using 'Add a subsidiary' and enter their profits. The calculator only has rows for subsidiaries, but association depends on control, so companies you or your connected persons control outside the group count in exactly the same way. The rows are named Company C, Company D and so on. The calculator takes up to six rows plus the holding company.

It's the company's effective corporation tax rate: its tax in the group divided by its profit. A company with profits at or below its reduced lower limit shows 19%, one above its reduced upper limit shows 25%, and one in between shows a rate between the two because of marginal relief. Comparing it with the 'On its own' column shows how far sharing the limits has pushed each company's rate up.

Because its lower limit has been divided. With the calculator's starting figures, three companies are counted, so each company's limits are £16,667 and £83,333. TradeCo B's £60,000 profit is then in the marginal relief band, giving tax of £14,650, an effective rate of about 24.4%. On its own it would pay £12,150. The difference across all three companies, £3,550 a year at those figures, is the headline result.

No. It assumes a 12-month accounting period for every company. For a shorter period, the £50,000 and £250,000 limits are reduced in proportion to the length of the period, before being divided between associated companies. That often happens in the year a holding company is set up or a new subsidiary is formed, so the first year's figures can differ from the calculator's even if the profits are the same.

Yes. A company counts as associated if it's under common control at any time in the accounting period, even for a day, and the limits are divided for the whole period, not pro rata. So buying or forming a company shortly before a year end can reduce every group company's limits for that year. The calculator treats every company you enter as associated for the full year, which matches this rule.

The calculator takes up to six subsidiaries plus the holding company, which covers most owner-managed groups. For a larger group, the rule is the same: divide £50,000 and £250,000 by the number of companies counted. With ten companies, for example, each company's limits are £5,000 and £25,000, so most profitable companies will pay close to 25%. At that size, the main rate is usually the realistic planning assumption.

No. It applies the small profits rate and marginal relief to every company you enter. A company that exists mainly to hold portfolio investments is usually a close investment-holding company, which pays 25% on all its profits whatever its size. If your group includes one, the calculator will understate its tax. A holding company of trading or commercially letting subsidiaries isn't a close investment-holding company.

Only if the holding company meets every condition in s18F CTA 2010 throughout the period. It can't keep cash, own property, lend money, make management charges, have chargeable gains or incur management expenses, and it must pay out at least the dividends it receives. Most holding companies set up to protect cash or hold property fail this, so 'No, it's active' is the safer starting point. Check the detail before relying on passive status.

It uses the statutory formula for the financial year 2026. Tax is first charged at 25%, then reduced by 3/200 of the difference between the company's upper limit and its profit. With the limits divided, that upper limit is lower, so the relief is smaller. It assumes augmented profits equal taxable profits, which is right unless the company receives dividends from companies outside its group.