The existence of associated companies means that the corporation tax limits of £1.5m and £300,000 are divided equally among all of the associated companies. It is these revised limits that are used in any marginal relief calculation.

With the unification of corporation tax rates from 1 April 2015, the existing rules will be replaced with effect from 1 April 2015 as they will no longer be necessary. As well as for the purpose of ascertaining which corporation tax rates apply to associated companies, there are other instances where associated companies rules are required. These are for the purpose of the patent box, the capital allowances long life assets rules and the quarterly instalment payment rules. Finance Bill 2014 includes new, simpler associated companies rules based on a 51% group company test for these purposes.

This guidance note from TolleyGuidance discusses the current associated companies rules which continue to apply until 1 April 2015.

Download the full guidance note