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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Corporation Tax: small companies: the starting rate - financial years 2000 to 2005

For financial years 2000 to 2005 ICTA88/S13AA extended relief for small companies by providing a rate of CT even lower than the small companies’ (see CTM03505) rate. This was known as the CT starting rate. It applied to companies with profits not exceeding £10,000.

Companies with profits between £10,000 (the ‘first relevant amount’) and £50,000 (the ‘second relevant amount’) were entitled to marginal relief calculated in the same way as small companies marginal relief except the basic profits were charged at small companies rate, rather than the full rate of CT, against which the marginal relief was set (see CTM03540). Where profits exceed the second relevant amount, the basic profits were charged at the small companies’ rate up to but not exceeding the lower relevant maximum amount.

The approach of the starting rate legislation in terms of calculation of profits, excluded companies, associated companies, length of accounting periods, straddling accounting periods and so forth was the same as the legislation for the small companies’ rate at ICTA88/S13.

Earlier versions of CTM paragraphs contained more detail on the operation of the starting rate, including examples at former CTM03651 and CTM03652, and these are available from CTIAA (Technical) See ‘Technical Help’ on the left hand toolbar.

The starting rate of CT, relevant limits and fractions applicable to small companies were as follows

### Financial year ### Rate ### First relevant amount where no associated company* ### Second relevant amount where no associated company* ### ICTA88/S13AA fraction
2000 10% £10,000 £50,000 1/40
2001 10% £10,000 £50,000 1/40
2002 0% £10,000 £50,000 19/400
2003 0% £10,000 £50,000 19/400
2004 0% £10,000 £50,000 19/400
2005 0% £10,000 £50,000 19/400

Small Companies Starting Rate was withdrawn from Financial Year 2006

*based on a 12 month accounting period.