Corporation Tax marginal relief

The ordinary-company calculation between the adjusted lower and upper limits.

Exact calculation and filing-output boundary

Reviewed · Current · Sterling explanation · From 1 April 2023

Sterling preserves rational precision through the calculation and does not claim that its displayed amount is a CT600 filing value.

HMRC's CTM03955 worked example rounds intermediate profits and differs by two pence from exact arithmetic and HMRC's live calculator. CT600 serialization and rounding remain a separate explicit coverage gap.

Authority conflict

• CTM03955: periods straddling 1 April 2023 — The displayed worked-example total uses rounded segment profits and is two pence below exact arithmetic and HMRC's live calculator for the same fictitious facts.

Ordinary-company eligibility must be established

Reviewed · Current · Law · From 1 April 2023

The ordinary small-profits and marginal-relief routes depend on UK residence, close investment-holding-company status and the presence of ring-fence profits.

Sterling asks for these facts and fails closed rather than silently applying the ordinary formula to a different regime.

Exceptions and branches

• Section 18A can apply the small-profits rate to non-ring-fence profits in some mixed cases, but those cases require the separate Part 8 calculation.

Ordinary-company marginal-relief formula

Reviewed · Current · Law · From 1 April 2023

3/200

Where adjusted lower limit L is below augmented profits A and A does not exceed adjusted upper limit U, relief is F × (U − A) × (N ÷ A).

N is taxable total profits and F is the enacted financial-year fraction. At the upper limit the statutory branch still applies, but relief is zero.

Exceptions and branches

• The fraction is enacted for each financial year and must not be extrapolated from an earlier year's value.
• Ring-fence and mixed-profit cases follow the separate Part 8 regime.

Worked example

A UK-resident ordinary company has a 365-day accounting period in FY2025, taxable total profits and augmented profits of £75,000, no other associated company and no ring-fence profits. Gross tax at 25% is £18,750. Marginal relief is 3/200 × (£250,000 − £75,000) = £2,625.

£16,125

Sterling preserves exact arithmetic and rounds only at an explicit display boundary. This is an explanatory estimate, not a CT600 filing value.

Related concepts

• Corporation Tax rates

• Augmented profits

• Associated companies for Corporation Tax

• Corporation Tax accounting periods and financial years

Linked from

• Corporation Tax rates

• Augmented profits

• Associated companies for Corporation Tax

• Corporation Tax accounting periods and financial years

Sources

• CTM03925: marginal relief — Formula and examples. Official guidance.

• CTM03955: periods straddling 1 April 2023 — Strict-time split and worked example. Official guidance.

• Corporation Tax Act 2010, Part 3A — Sections 18A to 18C. Primary authority.

• Corporation Tax Act 2010, Part 8 Chapter 3A — Sections 279A to 279H. Primary authority.

• Corporation Tax Act 2010, Part 3A — Section 18B. Primary authority.

• Corporation Tax marginal relief — Eligibility; calculation inputs; distributions; associated companies. Official guidance.

How sources are ranked

Knowledge version: sterling-knowledge@2026-09-11.7. Last checked 11 September 2026.