The measure

The Government will replace the associated companies rules with simpler rules based on 51% group membership in April 2015, when the main rate and small profits rate of corporation tax are unified at 20%.

Who will be affected?

Companies which currently use the associated company legislation to determine, for example, whether corporation tax quarterly instalments are due.


April 2015.

Our view

We welcome the change. The main purpose of the associated companies legislation was to determine the limits for the small profits rate of corporation tax. Whilst companies in the same group were associated and normally fairly easily identified as such, many other companies could be associated, but not so easily identified. The legislation led to many difficult problems.

From April 2015 the main rate of corporation tax will be the same as the small profits rate. The Government is taking the opportunity to simplify the legislation, which obviously will not be as relevant in future.

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