Associated Companies Tax Calculator, 2026/27

How this is calculated

Corporation tax has a 19% small profits rate up to £50,000, a 25% main rate above £250,000, and marginal relief in between using a 3/200 fraction. Where a company has associated companies, both the £50,000 and £250,000 limits are divided by the total number of associated companies, including the company itself, before the tax due is worked out.

This calculator divides both thresholds by the number you enter, then applies the corporation tax bands to your profit using the reduced limits, and compares the result with what the same profit would attract if the company stood entirely alone with full £50,000 and £250,000 thresholds.

The difference shown as extra tax is the direct cost of association: profits that would have sat in the 19% band, or attracted a lower marginal rate, are pushed into the marginal relief band or the full 25% rate because the thresholds have shrunk.

What makes companies associated

Two companies are associated if one controls the other, or both are under the control of the same person, or the same group of people acting together, at any time in the accounting period, even briefly. Control generally means owning more than 50% of the shares or voting rights, though rights held by associates such as close family can sometimes be attributed.

The rules catch situations directors do not always expect, such as a spouse owning a separate trading company, or siblings each running their own company where HMRC considers them to be acting together in relation to those companies.

Reducing the impact

Genuinely dormant companies, and holding companies that only hold shares in other group companies without trading themselves, are usually excluded from the associated companies count, which can materially change the divided thresholds.

Where group structure is driving an unwelcome tax cost, some businesses review whether every entity is still needed, since striking off a dormant shell can restore the full thresholds to the remaining trading companies from the following accounting period.

What counts as an associated company?

A company controlled by the same person, or the same group of people acting together, as another company, including where one company controls another directly. Control usually means holding more than 50% of shares or voting rights.

Are dormant companies counted as associated?

Generally no. A company that is dormant throughout the accounting period, with no significant accounting transactions, is normally excluded from the associated companies count for corporation tax purposes.

How many associated companies before it stops mattering?

It always matters mathematically, since thresholds keep dividing, but the practical impact is largest when a company's profit sits near £50,000 or £250,000, where dividing the threshold pushes profit into a higher-rate band.

Does a spouse's separate company count as associated?

It can, if HMRC considers the spouses to be acting together in relation to both companies, for example through financial interdependence between the businesses. Each case depends on the facts, so specific advice is worthwhile.