Glossary · UK
What is Associated Companies Rule?
A Corporation Tax rule that splits the small profits threshold between companies under common control.
Full Definition
The associated companies rule requires the Corporation Tax lower and upper profit thresholds (which determine whether the small profits rate, marginal relief, or the main rate applies) to be divided by the number of companies under common control, including the company itself. This stops a business from artificially splitting its trade across multiple companies purely to keep each one below the small profits threshold, and "control" for these purposes generally follows the same tests used elsewhere in UK tax law, including certain rights held by associates such as close family members.
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