Guidance

Marginal Relief for Corporation Tax

You can reduce your Corporation Tax bill by claiming Marginal Relief, if your company’s profits before 1 April 2015 were between £300,000 and £1.5 million.

What Marginal Relief is

Marginal Relief provides a gradual increase in Corporation Tax rate between the small profits rate and the main rate.

This applies where the profits of a company for an accounting period exceed a ‘lower limit’ but do not exceed an ‘upper limit’.

Who can claim Marginal Relief

Your company or organisation may be able to claim Marginal Relief and pay less Corporation Tax if its taxable profits before 1 April 2015 are between:

  • £300,000 (the lower limit)
  • £1.5 million (the upper limit)

If your company has one or more associated companies, these limits are divided by the total number of associated companies.

A company is an associated company of another at a given time, if at that time:

  • one of the companies has control of the other
  • both companies are controlled by the same companies or people

For example, if one company owns 3 others, divide the thresholds by 4. The lower limit becomes £75,000 and the upper limit becomes £375,000.

If your accounting period is shorter than 12 months these limits are proportionately reduced. This means that for a 6 month accounting period the lower limit is halved to £37,500 and the upper limit to £187,500.

Definition of Control

Control for this purpose is the definition used for close companies.

A person has control of a company if they exercise, are able to exercise, or are entitled to acquire, direct or indirect control over the company’s affairs.

This includes possession or entitlement to the greater part of the voting power, share capital, distributed income or assets on a winding up of the company.

Find out further information about associated companies and close companies.

Check how much relief you can claim

Calculate how much relief you may be able to claim by using the Marginal Relief tool.

You cannot use this tool to calculate Marginal Relief if your company gets its income from oil rights or extraction.

How to claim Marginal Relief

You can either:

Published 1 January 2007
Last updated 28 May 2019 + show all updates
  1. Page updated to provide more guidance on who can claim Marginal Relief and how to claim Marginal Relief for Corporation Tax
  2. The overview section has been updated to show the new rules 'before 1 April 2015'.
  3. First published.