Can a close investment-holding company claim marginal relief?
Short version. No. A close investment-holding company cannot claim marginal relief or use the small profits rate. From 1 April 2023 the full main rate is 25%. Having profits below £50,000 does not change that exclusion.
On this page
1. Understand the treatment
CTA 2010 section 18A excludes CIHCs from the standard small profits rate. Section 18B excludes them from marginal relief. HMRC uses company status as well as profit figures to determine the tax.
For an ordinary UK-resident company with no ring fence profits, the standard 12-month limits are £50,000 and £250,000. Short periods and associated companies reduce those limits. The marginal-relief formula also distinguishes taxable total profits from augmented profits. Those conditions do not override the CIHC exclusion.
2. Fictional worked example
This fictional example covers 1 April 2025 to 31 March 2026, with no associated companies, no ring fence profits and £100,000 taxable total profits equal to augmented profits. The ordinary company satisfies the other marginal-relief conditions.
| Calculation | Ordinary company | CIHC |
|---|---|---|
| Tax at 25% | £25,000 | £25,000 |
| Marginal relief | £2,250 | £0 |
| Corporation Tax | £22,750 | £25,000 |
Ordinary relief is 3/200 × (£250,000 − £100,000). The taxable-to-augmented-profit ratio is one in this example. Different figures or reduced limits change the ordinary result.
3. Common mistakes
- Applying the ordinary small-profits threshold before checking company status.
- Assuming every investment company is a CIHC without applying the purpose test.
- Using a blended headline rate to check a return crossing financial years. Check the computation for each year.
4. How to file
SimpleCompanyTax prepares supported micro-company returns from your figures. Follow the exact filing steps and review each return’s computation before approving the filing. For more background, read the CIHC purpose test and the ordinary marginal-relief calculation.
This is general guidance. Your company’s treatment depends on its circumstances. Decide the classification and claims yourself or with your accountant.