CTM92520 - CTSA: quarterly instalments: large companies

A company is 'large' for the purposes of quarterly instalment payments if its profits for an accounting period exceed the profit threshold (currently £1.5m) in force at the end of the accounting period. The way in which the profit threshold is arrived at changed for accounting periods ending on or after 1 April 2015.

For accounting periods beginning on or after 1 April 2019, the definition of a large company has been modified by SI 2017/1072 to one that has taxable profits in an AP of more than £1.5m but do not exceed £20m.  If a company has taxable profits exceeding £20m, it is defined as a 'very large company' and will be required to make all its instalment payments in the AP to which its liability relates.  See CTM92795 onwards.

Accounting periods beginning before 1 April 2015

For accounting periods beginning before 1 April 2015, the profit threshold was the CTA10/S24 amount of the upper relevant maximum amount (URMA) in force at the end of the accounting period.  For financial years up to 2014, this was £1.5m. As with CTA10/S24:

  • 'Profits' means profits chargeable to CT plus franked investment income received other than from a company in the same group;
  • The profit threshold is reduced proportionately when the accounting period is less than twelve months;
  • The profit threshold, when the company has associated companies, is reduced by dividing it by the total number of companies associated, including the reference company.

In considering the number of associated companies, follow the guidance at CTM03570.

Accounting periods beginning between 1 April 2015 and 31 March 2023

For accounting periods beginning on or after 1 April 2015 to 31 March 2023, the profit threshold is set by SI1998/3175 (as amended by SI2014/2409) at £1.5m. The profit threshold is adjusted as follows:

  • 'profits' means profits chargeable to CT plus any exempt ABGH distributions received other than from a company in the same group,
  • the profit threshold reduces proportionately when the accounting period is less than twelve months,
  • the profit threshold is reduced by dividing the number of related 51% group companies, including the reference company.

A related 51% group company is defined in CTA10/S279F to S279H. For this purpose, “A” is a related 51% group company of “B” if:

  • A is a 51% subsidiary of B,
  • B is a 51% subsidiary of A, or
  • A and B are 51% subsidiaries of the same company.

“51% subsidiary” takes its meaning from CTA10/S1154, that is, A is a 51% subsidiary of B if more than 50% of its ordinary share capital is beneficially owned (directly or indirectly) by B.

Two companies are related 51% group companies of a company even if they are related 51% group companies for different parts of that company’s accounting period. For example, company C has an accounting period from 1 April 2015 to 31 March 2016.  A is a 51% subsidiary of C from 1 April 2015 to 30 June 2015.  B is a 51% subsidiary of C from 1 July 2015 to 31 March 2016. A and B are both related 51% group companies of C for its  accounting period from 1 April 2015 to 31 March 2016.

A related 51% group company is ignored if it did not carry on a trade or business during the accounting period, or if it was only a related group company for part of an accounting period, if it did not carry on a trade or business in that part of the accounting period.  Whether a trade or business is carried on should be decided on the same basis as for associated companies, and the guidance at CTM03590 should be followed.

Accounting periods beginning on or after 1 April 2023

For accounting periods beginning on or after 1 April 2023 the profit threshold remains as set by SI 1998/3175 but reverts back to being proportionately reduced by the number of associated companies a company has.

Guidance on associated companies is at CTM03940.

The examples below demonstrate how the number of associated companies and short accounting periods affect the profit threshold for quarterly instalments.

Example 1

  • Company A has five associated companies.  Its profits for the 12-month accounting period ended 30 November 2021 are £200,000 
  • Company A is not a large company for this accounting period because its profits do not exceed the profit threshold of £250,000 (£1,500,000 / 6 [1 + 5] =£250,000).

Example 2

  • Company B has three associated companies.  Its profits for the 9-month accounting period ended 31 March 2026 are £300,000
  • Company B is a large company for this accounting period because its profits exceed the profit threshold of £375,000 (£1,500,000 x 9/12 = £1,125,000 / 4 [1 + 3] =  £281,250