Corporation Tax Act 2010 section 18D

The lower limit and the upper limit

Section 18D defines the lower profit limit (£50,000) and upper profit limit (£250,000) used to determine which rate of corporation tax applies to a company, and explains how these limits are reduced where the company has associated companies or a short accounting period.

• A company with no associated companies has a lower limit of £50,000 and an upper limit of £250,000 for a full twelve-month accounting period.
• Where a company has associated companies, both limits are divided by one plus the number of associated companies, sharing the thresholds across the group.
• For example, a company with two associated companies has a lower limit of £16,667 (£50,000 ÷ 3) and an upper limit of £83,333 (£250,000 ÷ 3).
• If the accounting period is shorter than twelve months, both limits are further reduced proportionately to reflect the shorter period.