Associated companies and your Corporation Tax rate

Boxes 326, 327 and 328Changes the rate, not the profitEvery return of a long periodWhere you see it: Financial Data › Tax adjustments › Associated companies and quarterly instalments

Before entering figures, the filing setup questions can set the existing destination and CT600 route for an ordinary limited company. They keep the full accounts dates beside the CT600 dates. You can also continue with the controls below without opening the questions.

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Common mistake: counting your own company

Box 326 is the number of other associated companies. A director who owns Hornbeam Example Ltd and one other company enters 1, not 2. Counting your own company divides the limits by one more than it should. With £40,000 of profit for 12 months:

More help: What does not count · HMRC CTM03940: associated companies

Before you start

The companies under common control

A list of every company you or the same people controlled at any time in the period, including companies outside the UK. What counts

Your accounting period

The dates of each CT600. A long period has two, each with its own count.

Instalment status

Only if the company pays Corporation Tax by quarterly instalments. You decide this. Large and very large companies

The previous period’s count

Only for an instalment payer: the number at the end of the previous accounting period.

The company and all figures on this page are fictional.

Where to enter it

1. Company Profile & Period

   Accounting period

   1 April 2025 to 31 March 2026 in this example

   Trading status

   ActiveThe form starts on Dormant, so make sure you change it.

   What the company does

   Trading

   Click Next →.

2. Financial Data

   Previous year

   Last year’s figures, from your previous accountsRequired before you continue. Figures from Companies House fill in where available. Check them, and enter 0 where a line had no amount.

   Turnover

   100000The example company. Enter your own figures.

   Cost of raw materials and consumables

   0

   Staff costs

   40000

   Other charges

   20000

   Balance sheet

   Your balance sheet at the end of the period

   Average number of employees

   Your average number, or 0

   Tax adjustments

   Scroll to this section, below the profit and loss figures

   + Show all adjustment options

   Click it, above or below the table

   Associated companies and quarterly instalments

   Click it to open the rowsThe help icon beside it links to this guide.

   326 Associated companies

   1 in this exampleThe first return starts at 0. Read the definitions below when preparing the count.

   327 Associated companies in the first financial year

   Leave blank unless the return straddles 1 April and the count changedShown only for a return that straddles 1 April. Use it with box 328 instead of box 326. Which box to use

   328 Associated companies in the second financial year

   Leave blank unless you entered box 327Once one of 327 or 328 has a figure, the other shows a dimmed 0 and files as 0 unless you change it.

   630 Liable to pay by quarterly instalments as a large company

   Leave unticked unless you have determined the company is largeFor a very large company tick 631 Liable to pay by quarterly instalments as a very large company instead. It appears for periods beginning on or after 1 April 2019.

   Associated companies at the end of the previous accounting period

   Leave blank unless you ticked box 630 or 631Appears once you tick box 630 or 631. Older periods show the related 51% group count instead.

   For two CT600s, the rows repeat under Return 1 and Return 2 with each return's dates. A blank Return 2 count uses the Return 1 figure shown beside the field. Enter 0 explicitly when the second count is zero. Then click Next →.

   More help: Dividends received and your rate

3. Review & file

   The Corporation tax due card shows the limits applied and the division. For Hornbeam Example Ltd with one associated company:

   Corporation tax due

   £8,725 .00

   On taxable total profits of £40,000 at 25.0% · marginal relief · effective 21.81% · limits applied £25,000 to £125,000 (£50,000 and £250,000 ÷ 2 for 1 associated company)

   Change a count

   Use the edit link on the review page to return to the card

   Preview your documents (free)

   Check the tax computationIt shows the count and the lower and upper limit applied for each return.

If a field message appears, correct the named count or combination. These checks concern the form’s consistency, not whether the company’s association assessment is correct. Exempt dividends from 51% group companies belong under Dividends received, not in a company-count field.

This article is general guidance, not tax advice. The rules are HMRC's: CTM03940 to CTM03955 for the small profits rate, CTM92520 to CTM92800 for instalments, and the Company Tax Return guide for boxes 326 to 328, 625, 630 and 631.

What counts as associated

Two companies are associated when one controls the other, or when the same person or the same group of people control both (Corporation Tax Act 2010, sections 18E to 18J). Control usually means holding more than half of the shares or voting rights, or having the right to more than half of the income or assets. The most common cases are:

• A director who wholly owns a consultancy and a separate property company: each has one associated company.
• Three SPVs owned by the same two shareholders: each has two associated companies.
• A holding company and its trading subsidiary: each has one associated company.

A company counts if it was associated at any time in the accounting period, even for a single day. There is no pro-rating for part of a period. Companies outside the UK count in the same way as UK companies.

Companies owned by a relative (spouse, civil partner, parent, child, brother or sister) count only where the two businesses are substantially interdependent: shared finance, shared customers or suppliers, shared premises, staff or management. Two companies owned separately by two spouses with nothing in common between the businesses are not associated. HMRC explains the test in CTM03950.

What does not count

• Your own company. Enter the number of other companies.
• A company that carried on no trade or business at any time in the period, which is what most dormant companies are (CTM03945).
• A passive holding company carrying on an investment business that meets all of HMRC's conditions throughout the accounting period:
  • It carries on no trade and has one or more 51% subsidiaries.
  • Its only assets are shares in those subsidiaries.
  • Its only income is dividends. Any dividends arising are passed on to shareholders and are exempt distributions of a qualifying kind.
  • No chargeable gains arise.
  • It incurs no management expenses of its investment business.
  • No qualifying charitable donations are deductible from its total profits.
  See HMRC's passive-company conditions, including the meaning of a qualifying exempt distribution. If any condition is not met, this exclusion does not apply. Check the normal control test and any other applicable exclusion.

If you are not sure whether a company counts, HMRC's guidance at CTM03940 to CTM03955 sets out the rules, and an accountant can confirm the position. We file the number you give us.

How the limits are divided

The small profits limit of £50,000 and the upper limit of £250,000 are each divided by the number of associated companies plus one. These are the limits for a 12-month return:

• No associated companies: £50,000 and £250,000.
• One: £25,000 and £125,000.
• Two: £16,666.67 and £83,333.33.
• Three: £12,500 and £62,500.

Both limits are divided by the same number, so marginal relief always exists between them, however many associated companies there are. For an accounting period shorter than 12 months the divided limits are then reduced in proportion to the period's length. Dividends received (other than from 51% group companies) are added to your profits before the limits are applied, exactly as they are for a company with no associates. See dividends received and your rate.

More help: Short returns have reduced limits · GOV.UK: Marginal Relief

Boxes 326, 327 and 328: which one to use

Box 326 is the number of associated companies for the whole accounting period. It is the box almost everyone uses, and it defaults to 0 in our return.

Boxes 327 and 328 replace box 326 when your accounting period straddles 1 April and either the number of associated companies was different in each financial year, or the Corporation Tax limits changed between the two years (they did on 1 April 2023). Box 327 is the number for the part of the period before 1 April, and box 328 for the part from 1 April. How the two numbers are then applied depends on the period. For a period straddling 1 April 2023(when the limits were introduced) each part is restricted by its own number, as HMRC's manual describes. For a period straddling a later 1 April, HMRC's own calculation applies the higher of the two numbers to the whole period (a company associated at any time in the period counts for the period), and we calculate the same way so that HMRC accepts the return. HMRC accepts box 326 or boxes 327 and 328 together, never all three, so we only offer boxes 327 and 328 when your period actually straddles 1 April, and we will not file a return that completes both forms. In practice: leave box 326 at 0 to use boxes 327 and 328. Once one of them has a figure the other shows a dimmed 0 and files as 0 unless you change it. While box 326 is above 0 the other two boxes will not take a figure, and the other way round, and the reason appears under the box.

When box 326 is filed, and when it is left blank

Box 326 is not a box every return carries. HMRC's Company Tax Return guide says: "You must complete this box if the company's profits are chargeable at the small profits rate, the company is entitled to Marginal Relief, or the company is large or very large for quarterly instalment payments (QIPs) purposes." The count exists to divide the limits that set the rate of tax, so on a return with no profits chargeable to Corporation Tax (box 315 nil, for example a loss-making year or a first year with no income) there is nothing for it to divide. HMRC's electronic return places box 326 inside the rate section alongside box 329 and the financial-year rows in boxes 330 to 395, and that whole section is omitted when box 315 is nil.

So we file box 326, or boxes 327 and 328, on a return whose profits are taxed at the small profits rate or with marginal relief, and on any return where box 630 or 631 is ticked. On a nil or loss-making return the box is left blank, in the PDF preview and in the electronic return HMRC receives, and the return is accepted without it. Your saved figure is not lost or changed to zero: the review page still shows it, and it is filed with the divided limits the moment a return has taxable profits. On a period longer than 12 months each return is judged on its own, so one return can carry box 326 while the other does not.

A worked example

Hornbeam Example Ltd has taxable profits of £40,000 for a full year. On its own it pays 19%, which is £7,600. With one associated company the limits become £25,000 and £125,000, so £40,000 is in the marginal relief band: tax at 25% is £10,000, less marginal relief of 3/200 of (£125,000 minus £40,000), which is £1,275, giving £8,725. With two associated companies the relief shrinks again and the bill is £9,350. The review page and your tax computation show the limits we actually applied so you can check the working.

No associated companies

£7,600 at 19%, limits £50,000 and £250,000

One associated company

£8,725, effective 21.81%, limits £25,000 and £125,000

Two associated companies

£9,350, effective 23.38%, limits £16,666.67 and £83,333.33

The company and all figures on this page are fictional.

Quarterly instalments: boxes 630 and 631

HMRC treats a company as large when its profits, including dividends received, are more than £1.5 million divided by the number of associated companies plus one, and very large above £20 million on the same basis. Large and very large companies pay Corporation Tax in quarterly instalments and tick box 630 (large) or box 631 (very large, for accounting periods beginning on or after 1 April 2019) on the return. Because associated companies shrink the threshold, a company with several associates can reach it on modest profits: with three associates it is £375,000. There are exceptions, for example a company that is large for the first time with profits under £10 million, or whose tax bill is under £10,000.

We do not work out whether your company is large. The boxes are yours to tick in the Tax adjustments section, we file what you tick, and we never calculate the instalments, their dates, interest or penalties. If you tick a box, HMRC also asks for the number of associated companies at the end of the previous accounting period (not during this one), which we file in box 326 in place of the ordinary count. HMRC's guidance is at Corporation Tax: paying in instalments.

Periods before April 2023 and box 625

Before 1 April 2023 Corporation Tax was a flat rate with no small profits rate and no marginal relief, so the number of associated companies did not affect the tax, and HMRC's rules do not allow boxes 326 to 328 on a return ending before that date. For those returns we show no associated-company boxes at all: there is nothing to enter.

Before April 2023 the instalment threshold was divided among related 51% group companies rather than associated companies, and an instalment payer entered that count in box 625. Unlike box 326, the box 625 count includes your own company, and HMRC says to leave it blank when there were none. If you tick box 630 or 631 on a return ending on or before 31 March 2023, we offer box 625 and file it as you enter it. For a transition period that starts before 1 April 2023 and ends on or after it, HMRC asks for the 51% group count but files it in box 326, and our return labels the field accordingly.

Periods longer than 12 months

An accounting period that ends more than 12 months after it starts, even by one day, is filed as two Corporation Tax returns, and HMRC counts associated companies for each return separately. We show one box 326 for each return, and boxes 327 and 328 for whichever return straddles 1 April. Return 1 starts at 0. A blank Return 2 count uses the Return 1 figure, so enter 0 if the second count is zero. The second return covers fewer than 12 months, so its divided limits are also reduced to its days. The review card shows the total for both returns without limits, and each return's tax computation shows its own. We also ask you to say which return any dividends received, chargeable gains and capital losses belong to, because those arise on a particular day and are not spread across the period.

More help: Periods longer than 12 months and the rate · Amounts that belong to one date

What we check, what we calculate, what we trust you on

• We check structure only: box 326 with 327/328, an incomplete 327/328 pair, 327/328 on a return that does not straddle 1 April or for an instalment payer, both instalment boxes at once, box 631 before April 2019, box 625 on a return ending after March 2023, and counts that are not whole numbers. Each of these would be rejected by HMRC or could not be calculated, so we tell you at once.
• We calculate: the divided limits and the marginal relief, applying boxes 327 and 328 the way HMRC does for your period (each part on its own number across 1 April 2023, the higher number for the whole period after that). The review page and the filed computation show the same figures.
• We trust you on: whether companies are associated, how many there are, whether the company is liable to pay by instalments, and the previous-period counts. Your declaration on the return is that these facts are correct.

Group relief (CT600C), group accounts and consolidation into a parent remain outside what we file. See which company types we support.

If a count combination is incomplete or one HMRC would refuse, the reason appears below the fields and Next remains unavailable until you correct it. The review page then shows the accepted counts with a link back to change them.

Related guides

Open the guide that matches what you want to check.

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Official sources

• HMRC Company Tax Return guide: box 326
• HMRC CTM03940: associated companies
• HMRC CTM03945: exclusions
• HMRC CTM03950: substantial commercial interdependence
• HMRC CTM03955: periods straddling 1 April
• Corporation Tax Act 2010, section 18E
• GOV.UK: Marginal Relief for Corporation Tax
• GOV.UK: Corporation Tax paying in instalments