Tax calculation

Tax calculation shows how the company's Corporation Tax liability has been calculated.

The information shown on Tax calculation is taken from details entered elsewhere in the software, and you should not enter any figures directly on to Tax calculation.

To see the calculation of profits chargeable to corporation tax, go to Tax computation.

For a detailed calculation of the marginal relief shown on the Tax calculation or if it applies, click the Marginal relief linked value on the Tax calculation screen or view the Standard small profits rate and Marginal relief calculation report (A3).

Further information about the rate(s) of tax etc.

With effect from the financial year (FY) 2023 (which starts on 01/04/2023 and ends on 31/03/2024) the rate(s) of corporation tax that apply(ies) for a company's accounting period (AP) will depend on the amount of the company's "augmented profits" in that AP. An AP that straddles 01/04/2023 will be divided into two notional APs with the first ending on 31/03/2023 and the second starting on 01/04/2023. The regime that applies from FY 2023 is similar to that which applied up to FY 2014 before being abolished from FY 2015.

For FY 2023, the following apples to the non-ring fence profits of a company:

  • The main rate of Corporation Tax is 25% and applies where "augmented profits" exceed the marginal relief upper limit. The main rate (without any marginal relief) applies to a company which is a close investment-holding company and to a company in liquidation chargeable at the main rate, which applies in APs starting after the first AP following the start of the liquidation. Unit trusts and open-ended investment companies are charged at the Basic rate of income tax (20%) (without any marginal relief)
  • The standard small profits rate is 19% and applies where "augmented profits" do not exceed the lower marginal relief limit
  • Marginal relief is given where "augmented profits" exceed the lower marginal relief limit but do not exceed the upper marginal relief limit
  • The lower marginal relief limit is £50,000 for a singleton company for a 12-month AP
  • The upper marginal relief limit is £250,000 for a singleton company for a 12-month AP
  • The standard marginal relief fraction is 3/200
  • Both the lower marginal relief limit and upper marginal relief limit are divided by 1 plus the number of "associated companies" and are also proportionately reduced for an AP of less than 12 months
  • "Augmented profits" are the company's taxable total profits plus any non-group exempt ABGH distributions (i.e. distributions falling within CTA 2010, s1000(1), paras A, B, G or H)
  • An "associated company" is one that falls within CTA 2010, s18E (as introduced by FA 2021, s 7 and Schedule 1)
  • SCT has been updated to include the new rates, limits etc. In particular:
  • The Marginal relief value in the Corporation Tax Calculation screen is now a linked value in APs ending before 01/04/2015 and in APs ending on or after 01/04/2023 unless the company is a close investment-holding company, a company in liquidation chargeable at the main rate, a unit trust or open-ended investment company; clicking the linked value will open the Marginal Relief Calculation screen.
  • Report A3 (Standard small profits rate or Marginal relief calculation) will be included in the list of available reports when relevant.
  • The Return Information screen includes new fields to enter the number of associated companies (from 01/04/2023) and any increases and/or decreases since the start of the period (or since 01/04/2023). The new fields must be completed on the basis that the company itself is excluded from the numbers. Note: SCT will add 1 to the relevant number when comparing the augmented profits with the lower and upper limits, as adjusted where relevant. You must check/update these fields and Save this screen in each AP.
  • The Return Information screen includes the field Number of 51% group companies (up to 31/03/2023) and must be completed on the basis that the company itself is included in the number. Note: the term "51% group company" ceases to be relevant with effect from 01/04/2023.

For further information about how Tax calculation interacts with other sections of the software, see Basic workflow.